UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 24, 1998
GALEY & LORD, INC.
Exact name of registrant as specified in its charter
DELAWARE 56-1593207
State or other jurisdiction of IRS Employer Identification No.
incorporation or organization
980 Avenue of the Americas, New York, New York 10018
Address of principal executive offices Zip Code
212/465-3000
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year, if changed since
last report.
<PAGE>
ITEM 5. OTHER EVENTS.
On January 29, 1998, Galey & Lord, Inc. (the "Company", "Galey & Lord" or
"Galey") entered into a Master Separation Agreement with Polymer Group Inc.
("Polymer"), DT Acquisition, Inc. ("DTA"), a subsidiary of Polymer, Dominion
Textile Inc. ("Dominion") and certain other parties thereto, pursuant to which
the Company acquired the apparel fabrics business (the "Acquired Business") of
Dominion from DTA (the "Acquisition").
Incorporated by reference herein and attached as an exhibit hereto is the press
release of the Company dated February 24, 1998 announcing that the Company had
closed its private offering of $300 million of Senior Subordinated Notes due in
2008 with a coupon rate of 9.125% (the "Notes").
Net proceeds from the offering will be used to repay $275 million principal
amount of borrowings under a senior subordinated bridge financing facility (the
"Bridge Financing Facility") incurred to acquire the apparel fabrics businesses
of Dominion and for general corporate purposes.
The offering and sale of the Senior Subordinated Notes has not been registered
under the Securities Act of 1933, as amended, and the Senior Subordinated Notes
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following are historical financial statements of the Acquired Business and
the pro forma combined financial statements of the Company and the Acquired
Business.
<TABLE>
<CAPTION>
Financial Statements of the Acquired Business
<S> <C>
UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS OF THE APPAREL FABRICS
BUSINESS OF DOMINION TEXTILE INC.:
Unaudited Condensed Combined Statements of Income and Deficit for
the Three-Month and Six-Month Periods Ended December 31, 1996
and 1997 3
Unaudited Condensed Combined Balance Sheets as of June 30, 1997
and December 31, 1997 4
Unaudited Condensed Combined Statements of Cash Flows for the
Three-Month and Six-Month Periods Ended December 31, 1996
and 1997 5
Notes to Unaudited Condensed Combined Financial Statements 6 - 10
Pro Forma Combined Financial Statements of the Company
Unaudited Pro Forma Combined Balance Sheet as of
December 27, 1997 12
Notes to Unaudited Pro Forma Combined Balance Sheet 13 -14
Unaudited Pro Forma Combined Statement of Operations for the
Year Ended September 27, 1997 15
Unaudited Pro Forma Combined Statement of Operations for the
Three Months Ended December 27, 1997 16
Notes to Unaudited Pro Forma Combined Statement of Operations 17 - 19
</TABLE>
2
<PAGE>
APPAREL FABRICS BUSINESS
UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME AND DEFICIT
FOR THE THREE-MONTH AND THE SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
Three-month periods Six-month periods
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Sales......................................... $152,353,791 $134,195,565 $304,874,995 $286,364,569
Cost of goods sold............................ 136,214,962 118,358,594 273,626,477 250,731,480
----------- ----------- ----------- -----------
Gross profit.................................. 16,138,829 15,836,971 31,248,518 35,633,089
-------------- -------------- --------------- --------------
Selling expenses.............................. 5,310,798 4,533,586 10,290,758 8,858,607
Administrative expenses....................... 7,935,518 6,163,811 15,796,796 13,414,229
Goodwill amortization......................... 528,339 517,175 1,026,332 1,014,211
-------------- ------------- --------------- --------------
13,774,655 11,214,572 27,113,886 23,287,047
-------------- -------------- --------------- --------------
Operating income.............................. 2,364,174 4,622,399 4,134,632 12,346,042
Interest expense, net......................... (4,339,389) (4,268,838) (9,121,657) (8,692,628)
Share in net income of associated
companies................................... 2,003,359 796,513 3,983,112 2,035,811
Other income (expense), net................... (685,357) 685,671 (1,158,347) 742,517
Costs related to the change of control
(Note 1).................................... -- (16,469,871) -- (16,469,871)
-------------- ----------- -------------- -----------
Loss before recovery of income taxes.......... (657,213) (14,634,126) (2,162,260) (10,038,129)
Recovery of income taxes...................... 2,035,332 2,539,587 3,170,492 2,717,211
-------------- -------------- -------------- --------------
Net income (loss)............................. 1,378,119 (12,094,539) 1,008,232 (7,320,918)
Deficit, at beginning......................... (116,296,849) (125,259,658) (115,926,962) (130,033,279)
------------ ------------ ------------ ------------
Deficit, at end............................... (114,918,730) (137,354,197) (114,918,730) (137,354,197)
============ ============ ============ ============
</TABLE>
See notes to the unaudited condensed combined financial statements.
3
<PAGE>
APPAREL FABRICS BUSINESS
UNAUDITED CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1997
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents..................................................... $36,797,072 $16,655,525
Receivables
Trade, net of allowance for doubtful accounts of $1,361,534
($2,214,213 as of June 30, 1997)........................................... 118,459,831 96,149,682
Other......................................................................... 17,987,082 13,451,431
Inventories................................................................... 84,972,495 83,317,621
Other current assets.......................................................... 11,392,840 9,009,039
-------------- --------------
269,609,320 218,583,298
Investments and other advances................................................... 6,576,251 7,317,448
Property, plant and equipment, net............................................... 244,025,312 229,884,523
Intangible assets, net........................................................... 62,213,219 61,076,663
Other assets..................................................................... 8,688,738 13,116,581
-------------- --------------
Total assets..................................................................... 591,112,840 529,978,513
=========== ===========
Liabilities and stockholders' equity
Current liabilities
Short-term borrowings......................................................... -- 789,275
Accounts payable.............................................................. 32,999,742 25,305,670
Payroll, related taxes and other employee related liabilities................. 15,951,978 10,302,273
Other accrued liabilites...................................................... 37,578,824 26,406,498
Interest payable.............................................................. 5,656,732 5,782,054
Income taxes payable.......................................................... 4,320,246 6,723,110
Long-term debt due within one year............................................ 1,535,908 191,108,417
-------------- -----------
98,043,430 266,417,297
Long-term debt................................................................... 197,971,915 144,231
Deferred income taxes............................................................ 30,291,948 28,656,976
Other non-current liabilities.................................................... 43,293,000 38,567,062
-------------- --------------
Total liabilities................................................................ 369,600,293 333,785,565
----------- -----------
Stockholders' equity
Additional paid-in capital.................................................... 370,598,557 355,285,490
Deficit....................................................................... (130,033,279) (137,354,197)
Cumulative translation adjustment............................................. (19,052,731) (21,738,345)
-------------- --------------
Total stockholders' equity....................................................... 221,512,547 196,192,948
----------- -----------
Total liabilities and stockholders' equity....................................... 591,112,840 529,978,513
=========== ===========
</TABLE>
See notes to the unaudited condensed combined financial statements.
4
<PAGE>
APPAREL FABRICS BUSINESS
UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
For the Three-Month and Six-Month Periods ended December 31, 1996 and 1997
<TABLE>
<CAPTION>
Three-month periods Six-month periods
1996 1997 1996 1997
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................................. $ 1,378,119 $(12,094,539) $ 1,008,232 $ (7,320,918)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities.
Depreciation and amortization................. 8,776,267 8,378,941 17,732,103 16,709,296
Deferred income taxes......................... 968,293 (666,497) (2,748,132) (1,634,790)
Loss (gain) on disposal of property plant and
equipment................................... (190,984) 457,751 (319,177) 167,363
Share in net income of associated companies... (2,003,359) (796,513) (3,983,112) (2,035,811)
Other non-cash items.......................... (2,787,897) -- (2,787,897) --
Changes in assets and liabilities
Receivables, net................................ 6,103,685 17,911,977 17,811,073 27,027,251
Inventories..................................... 6,061,116 (1,911,081) (1,565,963) 1,374,936
Other current assets............................ 3,215,512 2,220,738 7,791,346 2,724,557
Other assets.................................... (336,776) (4,559,354) 29,919 (4,348,216)
Current liabilities............................. (20,740,831) (23,870,136) (22,876,380) (22,169,366)
Other liabilities............................... (199,907) (4,053,475) 503,554 (4,182,787)
Other, net...................................... 44,807 (4,589,847) 4,674,064 (2,968,162)
--------------- ---------- --------- ----------
Net cash provided by (used in) operating activities 288,045 (23,572,035) 15,269,630 3,343,353
--------------- --------------- --------------- ---------------
INVESTING ACTIVITIES
Capital expenditures............................... (2,691,268) (2,897,947) (7,005,000) (6,379,161)
Proceeds from sale of property, plant and equipment 1,788,267 3,452,041 2,542,367 3,851,385
Investment in associated companies and other....... (4,834,158) 771,160 (5,199,258) 2,010,003
Other, net......................................... (208,119) 1,619,415 (686,933) 394,152
--------------- --------------- --------------- ---------------
Net cash used in (provided by) investing activities (5,945,278) 2,944,669 (10,348,824) (123,621)
--------------- --------------- --------------- ---------------
FINANCING ACTIVITIES
Repayment of short-term borrowings................. (1,100,434) -- (1,100,434) --
Repayment of long-term debt........................ (407,256) (2,901,296) (45,888,632) (8,284,412)
Issue of short-term borrowings..................... -- 226,466 1,162,401 789,275
Issue of long-term debt............................ -- 29,237 773,143 29,237
Changes in additional paid-in capital.............. (651,687) (6,942,826) 45,739,654 (15,313,067)
--------------- --------------- --------------- ---------------
Net cash (used in) provided by financing activities (2,159,377) (9,588,419) 686,132 (22,778,967)
--------------- --------------- --------------- ---------------
Effect of changes in exchange rates on cash and cash
equivalents..................................... (170,712) (268,005) (331,536) (582,312)
--------------- --------------- ---------------- ---------------
Net increase (decrease) in cash and cash equivalents (7,987,322) (30,483,790) 5,275,402 (20,141,547)
Cash and cash equivalents, at beginning............ 30,959,123 47,139,315 17,696,400 36,797,072
--------------- --------------- --------------- ---------------
Cash and cash equivalents, at end.................. 22,971,801 16,655,525 22,971,802 16,655,525
=============== =============== =============== ===============
Supplemental disclosure of cash flow information
Net cash paid during the period for:
Interest..................................... 8,386,132 8,936,049 9,268,866 9,325,864
--------------- --------------- --------------- ---------------
Income taxes................................. 1,296,300 2,018,107 2,834,697 2,062,095
--------------- --------------- --------------- ---------------
</TABLE>
See notes to the unaudited condensed combined financial statements.
5
<PAGE>
APPAREL FABRICS BUSINESS
BASIS OF PRESENTATION
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
GENERAL
The consolidated financial statements of Dominion Textile Inc. (the
"Corporation"), a Canadian company, have been issued to the stockholders.
All dollar amounts in the combined financial statements are stated in US
dollars.
The combined financial statements of the Apparel Fabrics Business of
Dominion Textile Inc. (the "Business") include the operations of Swift Denim,
Inc., Klopman International S.p.A. and Swift Textiles Europe Limited which were
operated as subsidiaries or associated companies of Dominion Textile Inc. On
December 19, 1997, pursuant to a takeover offer, DT Acquisition Inc., an
affiliate of Polymer Group, Inc. ("PGI") acquired all shares tendered which
approximated 98% of the outstanding common stock of the Corporation. In
connection with the change of control, PGI entered into a preliminary agreement
with Galey & Lord, Inc., to sell it certain operations. In contemplation of the
change in control and the subsequent sale of certain operations, the operations
and the net assets of the Corporation have been essentially divided into two
groups: the Apparel Fabrics Business and the Nonwovens Business.
The combined financial statements have been prepared using the
Corporation's historical basis in the assets and liabilities and historical
results of operations related to the Business. Changes in additional paid-in
capital represent the Corporation's contribution of its net operating investment
plus net cash transfers to or from the Corporation. The combined financial
statements reflect the results of operations, financial position and cash flows
of the Business as if it had operated as a separate entity for all periods
presented and may not be indicative of actual results of operations and
financial position of the Business under different ownership.
ALLOCATIONS
The basis of allocation selected herein is not necessarily indicative of
the application of the provisions contained in the separation agreement entered
into by PGI and Galey & Lord, Inc. and dated January 29, 1998.
The combined financial statements include allocations of certain
corporate headquarters' assets, liabilities (excluding deferred income taxes),
and net expenses. All significant intergroup transactions and balances have been
eliminated.
The liabilities of the Business include outstanding direct third-party
indebtedness and the amount of debt based on the ratio of the Business' average
net operating investment to the aggregate net operating investment of the two
groups. Interest expense shown in the combined financial statements reflects the
interest expense associated with the aggregate borrowings for each period
presented principally based on a blend of the Corporation's long-term weighted
average interest rates for the applicable period.
General corporate overhead related to the Corporation's headquarters has
been allocated to the Business based on the ratio of the Business' sales to the
aggregate sales of the Corporation. The costs of the services charged to the
Business are not necessarily indicative of the costs that would have been
incurred if the Business had performed these functions as a stand-alone entity.
Additionally, income taxes on allocated general corporate overhead are
calculated using the Corporation's statutory tax rate.
Management believes that the basis of allocation is reasonable.
6
<PAGE>
APPAREL FABRICS BUSINESS
BASIS OF PRESENTATION (CONTINUED)
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
The following table illustrates the results of applying the allocation
method described above on various financial statement items:
<TABLE>
<CAPTION>
Three-month periods Six-month periods
ended December 31 ended December 31
----------------- -----------------
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net impact on gross profit................ $(1,377,374) $(470,109) $(531,285) $(1,591,959)
General corporate overhead, net........... (2,818,459) (2,012,564) (5,463,328) (4,834,297)
Costs related to the change of
control.................................. -- (14,510,565) -- (14,510,565)
Recovery of income taxes.................. 1,627,983 2,432,684 2,325,910 3,962,794
--------- --------- --------- ---------
(2,567,850) (14,560,554) (3,668,703) (16,974,027)
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1997 1997
<S> <C> <C>
Net assets excluding long-term debt............................................... $ 14,539,529 $ (5,631,557)
Long-term debt, inclusive of the portion due within one year...................... 197,049,432 189,557,867
Cumulative translation adjustment................................................. (4,252,709) (2,237,144)
</TABLE>
7
<PAGE>
APPAREL FABRICS BUSINESS
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
1. COSTS RELATED TO THE CHANGE OF CONTROL
In fiscal 1997, as part of its strategy to provide added-value to its
stockholders, Dominion Textile Inc. together with its financial advisers,
considered different growth opportunities for its core businesses. The takeover
offer discussed in the basis of presentation was among those opportunities. This
offer was recommended by the Board of Directors for acceptance on November 17,
1997.
The change of control triggered among other things, the accelerated
funding of certain benefit plans for executives and the payments under benefits
programs. As a result, Dominion Textile Inc. recorded a $26.1 million charge
which includes professional fees amounting to $11.2 million. The Business' share
of this charge is $16.5 million.
2. SUBSEQUENT EVENTS
Pursuant to a Master Separation Agreement dated January 29, 1998, Galey
& Lord, Inc. acquired from DT Acquisition Inc. the Apparel Fabrics Business and
certain other assets and assumed certain related liabilities.
Also on January 29, 1998, Dominion Textile (USA) Inc. redeemed all of
its outstanding $275.0 million senior notes at a price of $310.4 million,
including accrued interest. Consequently, they were reclassified within current
liabilities.
3. SUPPLEMENTAL CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION
In connection with the note offering, each of the Apparel Fabrics
Business' operating subsidiaries located in the United States ("the Guarantor
Subsidiaries") will fully and unconditionally guarantee Galey & Lord, Inc.'s
("Galey") performance under the Notes on a joint and several basis. The
Guarantor Subsidiaries are direct or indirect wholly-owned subsidiaries of
Galey. The remaining subsidiaries are direct or indirect foreign subsidiaries of
Galey. The following condensed combined financial data provides information
regarding the financial position, results of operations and cash flows of the
Guarantor Subsidiaries prior to their acquisition by Galey.
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS
Three-month period ended December 31, 1996 Three-month period ended December 31, 1997
------------------------------------------------- ----------------------------------------------
NON- ELIMINATION APPAREL NON- ELIMINATION APPAREL
GUARANTOR GUARANTOR AND FABRICS GUARANTOR GUARANTOR AND FABRICS
SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales................. $94,020 $62,275 $(3,941) $152,354 $ 78,092 $ 58,817 $ (2,713) $134,196
Gross Profit.......... 9,282 8,234 (1,377) 16,139 8,542 7,765 (470) 15,837
--------- --------- -------- ---------- ---------- ----------- ---------- ----------
Operating income (loss) 3,222 3,277 (4,135) 2,364 3,551 3,785 (2,714) 4,622
Interest expense, income
taxes and other, net 4,730 (2,177) (1,567) 986 4,213 656 11,848 16,717
--------- --------- -------- ---------- ---------- ----------- --------- ----------
Net income (loss)..... (1,508) 5,454 (2,568) 1,378 (662) 3,129 (14,562) (12,095)
========= ========== ======== ========== ========== =========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS)
Six-month period ended December 31, 1996 Six-month period ended December 31, 1997
------------------------------------------------ ---------------------------------------------
NON- APPAREL NON- APPAREL
GUARANTOR GUARANTOR FABRICS GUARANTOR GUARANTOR FABRICS
SUBSIDIARIES SUBSIDIARIES ELIMINATION COMBINED SUBSIDIARIES SUBSIDIARIES ELIMINATION COMBINED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales................. $197,422 $115,905 $(8,452) $304,875 $180,073 $112,485 $ (6,193) $286,365
Gross Profit.......... 17,756 14,025 (532) 31,249 22,216 22,216 (1,592) 35,633
---------- ---------- --------- ---------- ---------- ---------- --------- ----------
Operating income (loss) 5,396 4,655 (5,916) 4,135 11,679 11,679 (6,335) 12,346
Interest expense, income
taxes and other, net 8,714 (3,328) (2,259) 3,127 6,392 1,883 11,392 19,667
--------- ----------- --------- ----------- ---------- ---------- --------- ----------
Net income (loss)..... (3,318) 7,983 (3,657) 1,008 5,287 5,119 (17,727) (7,321)
========= =========== ========= =========== ========== ========== ========= ===========
</TABLE>
8
<PAGE>
APPAREL FABRICS BUSINESS
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
3. SUPPLEMENTAL CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION--CONTINUED
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS)
June 30, 1997 December 31, 1997
------------------------------------------------ --------------------------------------------------
NON- ELIMINATION APPAREL NON- ELIMINATION APPAREL
GUARANTOR GUARANTOR AND FABRICS GUARANTOR GUARANTOR AND FABRICS
SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets........ $118,997 $107,602 $43,010 $269,609 $ 97,914 $ 96,839 $ 23,830 $218,583
Property, plant and
equipment, net...... 157,233 84,813 1,979 244,025 150,748 78,937 200 229,885
Investments and other
advances............ -- 6,576 -- 6,576 -- 7,317 -- 7,317
Intangible assets, net 59,639 897 1,677 62,213 58,660 884 1,533 61,077
Other assets.......... 2,493 398 5,798 8,689 7,344 1,701 4,072 13,117
Total assets........ 338,362 200,286 52,464 591,112 314,666 185,678 29,635 529,979
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities... 29,443 48,184 20,416 98,043 149,978 95,237 21,203 266,418
Long-term debt........ 165,564 32,408 -- 197,972 144 -- -- 144
Other non-current
liabilities......... 42,722 13,536 17,327 73,585 40,855 13,408 12,961 67,224
------ ------ ------ ------ ------ -------- ------ -------
Total liabilities... 237,729 94,128 37,743 369,600 190,977 108,645 34,164 333,786
------- ------ ------ ------- ------- ------- ------ -------
Stockholders' equity.. 100,633 106,158 14,721 221,512 123,689 77,033 (4,529) 196,193
------- ------- ------ ------- ------- -------- -------- -------
Total liabilities and
stockholders' equity 338,362 200,286 52,464 591,112 314,666 185,678 29,635 529,979
======= ======= ====== ======= ======= ======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS)
Three-month period ended December 31, 1996 Three-month period ended December 31, 1997
------------------------------------------------ ----------------------------------------------
NON- ELIMINATION APPAREL NON- ELIMINATION APPAREL
GUARANTOR GUARANTOR AND FABRICS GUARANTOR GUARANTOR AND FABRICS
SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash flows
Net cash provided by
(used in) operating
activities.......... $ 3,344 $ (2,865) $ (191) $ 288 $ 16,800 $(17,087 $(23,285) $(23,572)
Net cash provided by
(used in) investing
activities.......... (1,088) (5,031) 174 (5,945) (3,644) 5,461 1,128 2,945
Net cash provided by
(used in) financing
activities.......... (2,246) 1,395 (1,479) (2,330) (12,160) 9,958 (7,655) (9,857)
-------- ------- ------- -------- -------- ------- --------- -------
Net change in cash and
cash equivalents.... 10 (6,501) (1,496) (7,987) 996 (1,668) (29,812) (30,484)
Cash and cash
equivalents, at
beginning........... 29 8,405 22,525 30,959 (1,004) 5,467 42,677 47,140
--------- -------- ------ ------- --------- ------- ------- --------
Cash and cash
equivalents, at end. 39 1,904 21,029 22,972 (8) 3,799 12,865 16,656
========= ======== ====== ======= ========== ======= ======= ========
</TABLE>
9
<PAGE>
APPAREL FABRICS BUSINESS
NOTES TO THE UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED DECEMBER 31, 1996 AND 1997
3. SUPPLEMENTAL CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION--CONTINUED
<TABLE>
<CAPTION>
(IN THOUSANDS OF DOLLARS)
Six-month period ended December 31, 1996 Six-month period ended December 31, 1997
------------------------------------------------ ---------------------------------------------
NON- ELIMINATION APPAREL NON- ELIMINATION APPAREL
GUARANTOR GUARANTOR AND FABRICS GUARANTOR GUARANTOR AND FABRICS
SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED SUBSIDIARIES SUBSIDIARIES ALLOCATIONS COMBINED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash flows
Net cash provided by
(used in) operating
activities.......... $ 220 $ 5,828 $ 9,222 $ 15,270 $ 22,770 $(12,144) $ (7,283) $ 3,343
Net cash provided by
(used in) investing
activities.......... (4,435) (7,400) 1,486 (10,349) (3,553) 264 3,165 (124)
Net cash provided by
(used in) financing
activities.......... 4,233 (2,003) (1,875) 355 (19,244) 8,920 (13,038) (23,361)
-------- ------- ------- --------- -------- ------- ------- ----------
Net change in cash and
cash equivalents.... 18 (3,575) 8,833 5,276 (27) (2,960) (17,156) (20,143)
Cash and cash
equivalents, at
beginning........... 21 5,479 12,196 17,696 19 6,759 30,021 36,799
-------- -------- ------- -------- -------- -------- ------ --------
Cash and cash
equivalents, at end. 39 1,904 21,029 22,972 (8) 3,799 12,865 16,656
======== ======== ======= ========= ========= ======== ======= =========
</TABLE>
10
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF THE COMPANY
The following unaudited pro forma combined financial statements of the
Company give effect to the Acquisition and the financing thereof as if they had
occurred at December 27, 1997 in the case of the Unaudited Pro Forma Combined
Balance Sheet and at the beginning of each of the periods presented in the case
of the Unaudited Pro Forma Combined Statement of Operations. Such financial
statements have been derived from Galey & Lord's audited financial statements
for its fiscal year ended September 27, 1997 and its unaudited financial
statements for the three months ended December 28, 1996 and December 27, 1997
and from the Acquired Business' combined audited financial statements for its
fiscal year ended June 30, 1997 and its unaudited financial statements for the
three months ended September 30, 1996 and September 30, 1997 and the three and
six months ended December 31, 1996 and December 31, 1997.
The Acquisition was accounted for using the purchase method of accounting.
The total cost of the Acquisition has been preliminarily allocated to the assets
acquired and liabilities assumed based upon their respective fair values as
determined through preliminary appraisals and internal estimates that the
Company believes are reasonable. The actual allocation of purchase cost,
however, and the resulting effect on income may differ from the pro forma
amounts included herein.
The following unaudited pro forma combined financial information is
presented for illustrative purposes only, does not purport to be indicative of
the Company's financial position or results of operations as of the date hereof,
or as of or for any other future date, and is not necessarily indicative of what
the Company's actual financial position or results of operations would have been
had the foregoing transactions occurred on December 27, 1997, September 28,
1997, December 29, 1996 or September 29, 1996, nor does it give effect to (i)
any transactions other than the foregoing transactions and those described in
the accompanying notes to unaudited pro forma combined financial information of
the Company or (ii) Galey & Lord's or the Acquired Business' results of
operations since December 27, 1997 and December 31, 1997, respectively.
11
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 27, 1997
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Galey & Lord Acquired Business
(December 27, 1997) (December 31, 1997) Adjustments Combined
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash....................................... $ 6,198 $16,655 $(3,238) (1) $ 19,615
Accounts receivable........................ 87,043 109,601 (1,259) (1) 201,885
6,500 (2a)
Inventories................................ 95,934 83,318 (3,030) (2b) 176,222
Income taxes receivable.................... 2,516 -- -- 2,516
Prepaid expenses and other current
assets................................... 2,973 9,009 (3,446) (2c) 11,589
4,138 (2h)
(1,085) (1)
------------ ------------- --------
Total current assets..................... 194,664 218,583 (1,420) 411,827
Property, plant and equipment, net......... 133,779 229,885 61,316 (2d) 424,980
Note receivable............................ 141,000 -- (141,000) (3a) --
Goodwill, net.............................. 37,567 61,077 (61,077) (2e) 145,658
108,091 (2)
Other assets, net.......................... 6,661 20,434 (858) (1) 48,559
9,639 (3b)
12,683 (2f)
Total assets............................. $ 513,671 $ 529,979 $(12,626) $1,031,024
============ ============= ======== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings......................$ -- $789 $ -- $ 789
Accounts payable........................... 21,440 25,306 -- 46,746
Accrued expenses........................... 8,524 42,491 (3,807) (1) 72,324
25,116 (2g)
Income taxes payable....................... -- 6,723 (3,014) (1) 3,709
Current portion of long-term debt.......... 1,431 191,108 (189,557) (1) 5,632
2,650 (4)
Total current liabilities................ 31,395 266,417 (168,612) 129,200
Long-term debt............................. 360,004 144 330,513 (4) 690,661
Deferred income taxes...................... 18,486 28,658 24,790 (2h) 71,934
Other non-current liabilities.............. -- 38,567 (3,124) (1) 35,443
------------ ------------- --------- -----------
Total liabilities........................ 409,885 333,786 183,567 927,238
------------ ------------- --------- -----------
Stockholders' equity:
Common stock............................... 121 -- -- 121
Additional paid-in capital................. 35,980 355,285 (355,285) (5) 35,980
Retained earnings.......................... 69,932 (137,354) 137,354 (5) 69,932
Treasury stock............................. (2,247) -- -- (2,247)
Currency translation adjustment............ -- (21,738) 21,738 (5) --
------------ ------------- ---------- -----------
Total stockholders' equity............... 103,786 196,193 (196,193) 103,786
------------ ------------- ---------- -----------
Total liabilities and stockholders'
equity.................................. $ 513,671 $ 529,979 $(12,626) $1,031,024
============ ============= ======== ==========
</TABLE>
12
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(1) Certain assets and liabilities primarily related to the operations of the
corporate function of Dominion Textile Inc. were historically allocated to
the Acquired Business on a different basis than allocated pursuant to the
agreement by which the Acquisition was effected. The following adjusts
these allocations to that specified in the above described agreement.
<TABLE>
<CAPTION>
<S> <C> <C>
Historical net assets of the Acquired Business................... $196,193
Adjustments to the net assets of the Acquired Business
Cash.......................................................... (3,238)
Accounts receivable........................................... (1,259)
Other current assets.......................................... (1,085)
Other assets, net............................................. (858)
Accrued expenses.............................................. 3,807
Income taxes payable.......................................... 3,014
Other non-current liabilities................................. 3,124
-----
Net adjustments.................................................. 3,505
Long-term debt not assumed....................................... 189,557
----------
Book value of net assets acquired................................ $389,255
========
(2) The Purchase Price has been preliminarily allocated as follows:
Purchase Price.................................................... $464,524
Less net book value of assets acquired............................ 389,255
----------
Excess of cost over net book value of assets acquired............. $ 75,269
Adjustments to record assets and liabilities acquired at estimated
fair value:
Accounts receivable............................................ 6,500 (a)
Inventory...................................................... (3,030) (b)
Deferred costs recorded in other current assets................ (3,446) (c)
Property, plant and equipment.................................. 61,316 (d)
Intangibles.................................................... (61,077) (e)
Investments and advances....................................... 12,683 (f)
Accrued liabilities............................................ (25,116) (g)
Deferred taxes................................................. (20,652) (h)
--------
32,822
Excess of cost over fair value of net assets acquired (goodwill).. $108,091
========
</TABLE>
(a) Represents a receivable from the seller of the Acquired Business for
certain shared tax benefits.
(b) Reflects the write-down of raw materials inventory to fair value.
(c) Reflects the adjustment to write off the unamortized balance of debt
issuance costs of the Acquired Business.
(d) Reflects a preliminary adjustment to record the Acquired Business'
fixed assets at fair value. The preliminary adjustment is based upon
preliminary appraisals and internal estimates and is allocated as
follows:
<TABLE>
<CAPTION>
<S> <C>
Land............................................... $14,720
Buildings.......................................... 26,445
Machinery and Equipment............................ 20,151
--------
$61,316
</TABLE>
(e) Reflects the write-off of the goodwill of the Acquired Business.
(f) Reflects the adjustment to record the joint venture investment at fair
value.
13
<PAGE>
(g) Reflects the assumption of the following liabilities:
<TABLE>
<CAPTION>
<S> <C>
Severance and other employee benefits................................ $ 7,582
Acquisition related tax liabilities.................................. 2,800
Liability for unfavorable cotton commitments......................... 7,647
Future lease costs associated with facilities of the Acquired
Business that will no longer be used.............................. 3,318
Professional fees.................................................... 700
Other................................................................ 3,069
--------
$25,116
</TABLE>
(h) To record the deferred tax liability related to the temporary difference
between the financial statement carrying amount as adjusted and the tax
basis of the assets of the Acquired Business at an assumed income tax
rate of 38.8%. Of this amount, $4,138 was recorded as a current deferred
tax asset and $24,790 was recorded as a long-term deferred tax
liability.
(3) Reflects the adjustments to record the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Additional borrowings under the Senior Credit Facility............. $178,781
Gross proceeds from the issuance and sale of the Notes............. 300,000
Total cash paid for the Acquired Business.......................... 464,524
Less: Amounts paid during the December quarter..................... (141,000) (a)
--------
Cash paid at closing............................................... (323,524)
Repayment of the Bridge Financing Facility......................... (145,618)
Financing costs.................................................... (9,639) (b)
--------
Net cash adjustment................................................ --
=============
</TABLE>
(a) On December 19, 1997, Galey & Lord paid $141,000 to DT Acquisition,
Inc. ("DTA"), an affiliate of Polymer Group, Inc, for funds to
effect DTA's initial acquisition of Dominion. In return, Galey &
Lord received a note from DTA that was to be canceled at the time
the Acquisition was consummated.
(b) Total financing costs incurred were $16,300 of which $6,661 were
paid in the December 1997 quarter.
(4) Reflects the adjustment to long-term debt for total debt outstanding
immediately after the Acquisition.
<TABLE>
<CAPTION>
<S> <C>
Additional borrowings under the Senior Credit Facility.............. $ 178,781
Gross proceeds from the issuance and sale of the Notes.............. 300,000
Less repayment of the Bridge Financing Facility..................... (145,618)
----------
Total adjustment to debt............................................ 333,163
Adjustment to current portion of long-term debt..................... (2,650)
Adjustment to long-term debt........................................ $(330,513)
---------
--
=========
</TABLE>
(5) Reflects the adjustment to eliminate the Acquired Business' net equity.
14
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year Ended September 27, 1997
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Galey & Lord Acquired Business
(Year Ended (Year Ended
September 27, 1997) September 30, 1997) Adjustments Combined
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales................................. $493,362 $610,221 $ -- $1,103,583
Cost of sales............................. 439,207 547,631 (5,195) (1) 981,643
Restructuring charges..................... -- 17,816 -- 17,816
---------- ---------- -------- -----------
Gross profit............................. 54,155 44,774 5,195 104,124
Selling, general and administrative
expenses................................. 18,123 51,046 (12,661) (2) 56,508
Amortization of goodwill.................. 1,679 1,987 715 (1) 4,381
---------- ---------- -------- -----------
Operating income (loss).................. 34,353 (8,259) 17,141 43,235
Other (income) expense:
Interest expense, net.................... 12,326 17,055 29,434 (3) 58,815
Other expense (income), net.............. -- (456) -- (456)
Share in net income of associated
companies.............................. -- (6,669) 631 (4) (6,038)
---------- ---------- -------- -------------
Income (loss) before income taxes......... 22,027 (18,189) (12,924) (9,086)
Income tax expense (benefit).............. 8,350 (9,227) (4,492) (6) (5,369)
---------- ---------- -------- -------------
Net income (loss)......................... $ 13,677 $ (8,962) $ (8,432) $ (3,717)
========= ========= ======== =============
Other Operating Data:
Depreciation and amortization............. $15,183 $34,845 $ (3,849) $46,179
Capital expenditures...................... 36,626 16,331 -- 52,957
EBITDA (7)(8)............................. 50,086 54,321 12,661 117,068
Cash interest expense..................... 12,027 15,695 28,395 56,117
Ratio of EBITDA to cash interest
expense (9).............................. 4.16x 3.46x 2.09x
Ratio of earnings to fixed charges
(10).................................... 2.56x -- --
</TABLE>
15
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Three Months Ended December 27, 1997
(in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
Galey & Lord Acquired Business
(Three Months Ended (Three Months Ended
December 27, 1997) December 31, 1997) Adjustments Combined
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales.................................. $127,147 $134,196 $ -- $261,343
Cost of sales.............................. 117,351 118,359 (862) (1) 234,848
--------- --------- -------- --------
Gross profit............................. 9,796 15,837 862 26,495
Selling, general and administrative
expenses................................. 3,387 10,698 (2,859) (2) 11,226
Amortization of goodwill................... 421 517 158 (1) 1,096
--------- --------- -------- --------
Operating income......................... 5,988 4,622 3,563 14,173
Other (income) expense:
Interest expense, net.................... 3,879 4,269 7,443 (3) 15,591
Other expense (income), net.............. 2,745 (685) -- 2,060
Share in net income of associated
companies............................... -- (797) 159 (4) (638)
Costs related to the change of
control................................. -- 16,470 (14,511) (5) 1,959
--------- --------- -------- --------
Income (loss) before income taxes.......... (636) (14,635) 10,472 (4,799)
Income tax expense (benefit)............... (526) (2,540) 59 (6) (3,007)
--------- --------- -------- ---------
Net income (loss).......................... $ (110) $(12,095) $10,413 $(1,792)
======== ======== ======= =======
Other Operating Data:
Depreciation and amortization.............. $ 4,119 $ 8,379 $ (545) $11,953
Capital expenditures....................... 8,086 2,898 -- 10,984
EBITDA (7)(8).............................. 10,204 13,798 2,859 26,861
Cash interest expense...................... 3,827 3,929 6,961 14,717
Ratio of EBITDA to cash interest
expense (9).............................. 2.67x 3.51x 1.83x
Ratio of earnings to fixed charges
(10).................................... -- -- --
</TABLE>
16
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(1) Reflects incremental depreciation and amortization expense as a result of
the preliminary adjustment to fair value of the Acquired Business'
property, plant and equipment and the excess of cost over fair market value
of the net assets acquired as follows:
<TABLE>
<CAPTION>
Estimated Year Ended Three Months Ended
Useful Life September 27, 1997 December 27, 1997
----------- ------------------ -----------------
<S> <C> <C> <C>
Depreciation adjustment on
Acquired Business' property,
plant and equipment............................ 9.8 years $(5,195) $(862)
Amortization of excess of cost
over fair value of net assets
acquired....................................... 40 years $ 715 $158
</TABLE>
(2) Reflects the elimination of the following:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
September 27, 1997 December 27, 1997
------------------ -----------------
<S> <C> <C>
Duplicative corporate overhead expenses (a)....... $10,196 $2,243
Duplicative Swift overhead expenses (b)........... 3,365 841
Additional Galey & Lord overhead
expenses (c).................................... (900) (225)
-------- -------
$12,661 $2,859
======= ======
</TABLE>
(a)Represents the elimination of the Dominion corporate historical
overhead expenses allocated to the Acquired Business.
(b)Reflects the elimination of certain overhead functions performed by
Swift that will be performed by the corporate function at the Company.
(c)Reflects additional corporate overhead expenses expected to be
incurred by the Company as a result of the Acquisition.
(3) Reflects an adjustment to record additional interest expense and
amortization of debt issuance costs incurred in connection with the
additional debt. Interest expense is calculated based on an average interest
rate of 9.1%. For each .125% change in the assumed effective interest rate,
interest expense would change by $420 for the year ended September 27, 1997
and $113 for the three months ended December 31, 1997.
(4) To reflect the amortization of the excess of the fair value of the
investment in associated companies over the portion of the historical net
equity attributable to Galey & Lord at the time of the Acquisition. Such
excess is being amortized over 20 years.
(5) During the December 1997 quarter, Dominion incurred certain severance and
other costs specifically related to its acquisition by DTA. This entry
reflects the elimination of those costs that were not identifiable with the
businesses being acquired by Galey & Lord.
(6) Reflects the income tax expense (benefit) related to the effects of the pro
forma adjustments based upon an assumed composite income tax rate of 38.8%.
(7) EBITDA is defined as income (loss) before income taxes, interest expense,
other (income) expense, depreciation and amortization expense, noncash
compensation expense, write-off of merger costs, Bridge Financing Facility
interest expense, loss on foreign currency hedges, costs related to the
change of control and provision for restructuring. EBITDA is presented
because it is a widely accepted financial indicator of a company's ability
to service and/or incur indebtedness; however, EBITDA should not be
considered as an alternative to net income (loss) as a measure of operating
results or to cash flows as a measure of liquidity in accordance with
generally accepted accounting principles.
17
<PAGE>
Pro forma EBITDA for the year ended September 27, 1997 is calculated as
follows:
<TABLE>
<CAPTION>
Pro Forma
Acquired
Galey & Lord Business Adjustments Combined
<S> <C> <C> <C> <C>
Income (loss) before income taxes............... $22,027 $(18,189) $(12,924) $ (9,086)
Interest expense, net........................... 12,326 17,055 29,434 58,815
Other (income) expense.......................... -- (456) -- (456)
Depreciation and amortization................... 15,183 34,845 (3,849) 46,179
Noncash compensation expense.................... 550 -- -- 550
Provision for restructuring*.................... -- 21,066 -- 21,066
-------- --------- ---------- ----------
EBITDA.......................................... $50,086 $ 54,321 $ 12,661 $117,068
======= ======== ========= ========
</TABLE>
Pro forma EBITDA for the three months ended December 27, 1997 is calculated
as follows:
<TABLE>
<CAPTION>
Pro Forma
Acquired
Galey & Lord Business Adjustments Combined
<S> <C> <C> <C> <C>
Income (loss) before income taxes.................. $ (636) $(14,635) $ 10,472 $ (4,799)
Interest expense, net.............................. 3,879 4,269 7,443 15,591
Other (income) expense............................. 2,745 (685) -- 2,060
Depreciation and amortization...................... 4,119 8,379 (545) 11,953
Noncash compensation expense....................... 97 -- -- 97
Costs related to the change of control............. -- 16,470 (14,511) 1,959
------- --------- -------- --------
EBITDA............................................. $10,204 $ 13,798 $ 2,859 $26,861
======= ======== ======== =======
</TABLE>
* Includes $3,250 recorded as part of cost of sales.
(8) Pro forma EBITDA, as presented, includes the effect of the pro forma
adjustments and does not reflect certain additional adjustments which the
Company believes are relevant to evaluating its future operating performance
of the Company. The following additional adjustments, which eliminate the
impact of certain nonrecurring charges and reflect the estimated impact of
the Company's business and operating strategy, are based on estimates and
assumptions made and believed to be reasonable by the Company and are
inherently uncertain and subject to change. There can be no assurance that
the estimated impact of the Company's business and operating strategy will
be realized or that there will not be delays in achieving the estimated
improvements or enhancements described below. The following calculation
should not be viewed as indicative of actual or future results. The
following table reflects the effects of these items:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
September 27, 1997 December 27, 1997
------------------ -----------------
<S> <C> <C>
Pro forma EBITDA................................... $117,068 $26,861
Additional adjustments:
Tralee savings(a).................................. 6,500 1,625
Swift savings(b)................................... 5,521 --
Other personnel reductions(c)...................... 1,273 318
Exclude Home Fashion Fabrics bad debt(d)........... 2,988 --
Society Hill improvements(e)....................... 4,063 1,808
--------- --------
Total additional adjustments.................... 20,345 3,751
--------- --------
Adjusted Pro Forma EBITDA.......................... $137,413 $30,612
======== =======
</TABLE>
(a) In October 1997, the Acquired Business' plant located in Tralee, Ireland
was closed. This adjustment gives effect to the lower cost of materials
that the Company anticipates will be realized from the purchase of
materials from third party suppliers rather than having materials
produced at the Tralee, Ireland plant.
18
<PAGE>
(b) This adjustment gives effect to cost reductions at Swift which the
Company believes can be realized from reductions in personnel beyond
those taken into account in calculating pro forma EBITDA and from
savings realized from purchasing materials at lower costs. As of the
date hereof, these additional savings are being realized.
(c) This adjustment gives effect to cost reductions that the Company
believes can be derived from further Company wide reductions in
personnel which have not yet been specifically identified.
(d) This adjustment reflects the write-off of a bad debt taken due to the
bankruptcy of a Home Fashion Fabrics customer. The Company believes that
this write-off was unusual based on historic trends.
(e) This adjustment gives effect to the improvements in operating
efficiencies at the Company's Society Hill, South Carolina plant, which
the Company believes will be realized as a result of the addition of a
new continuous dye-range at this plant in January 1998.
(9) Cash interest expense is calculated as total interest expense less
amortization of debt issuance costs.
(10) In calculating the ratio of earnings to fixed charges, earnings consist of
income (loss) before income taxes plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest expense (which includes
amortization of deferred financing costs), whether expensed or capitalized,
and that portion of rental expense estimated to be attributable to
interest. For the Acquired Business for the year ended September 30, 1997
and on a pro forma basis for the Company for the fiscal year ended
September 27, 1997, earnings were insufficient to cover fixed charges by
$18,189 and $9,086, respectively. For the Company, for the Acquired
Business and on a pro forma basis for the Company for the December 1997
quarter, earnings were insufficient to cover fixed charges by $636, $14,635
and $4,799, respectively.
19
<PAGE>
FORWARD-LOOKING STATEMENTS
This Form 8-K contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Those statements
include statements regarding the intent, belief or current expectations of the
Company and its management team. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements. Such risks and
uncertainties include, among other things, competitive and economic factors in
the textile, apparel and home furnishings markets, raw material and other costs,
weather-related delays, general economic conditions and other risks and
uncertainties that may be detailed herein.
Exhibits
1 Press Release of Galey & Lord, Inc., dated February 24, 1998.
2 Indebenture, dated as of February 24, 1998 among Galey & Lord, Inc.,
Galey & Lord Industries, Inc., G&L Service Company, North America,
Inc., Swift Textiles, Inc. and Swift Denim Services, Inc., and Suntrust
Bank, Atlanta.
3 Note Purchase Agreement, dated February 19, 1998 among Galey & Lord,
Inc., Galey & Lord Industries, Inc., G&L Service Company, North
America, Inc., Swift Textiles, Inc. and Swift Denim Services, Inc., and
First Union Capital Markets, a division of Wheat First Securities, Inc.
4 Form of Initial Global Note
5 Form of Initial Certificated Note
20
<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 hereunto duly authorized.
Galey & Lord, Inc.
---------------------
(Registrant)
/s/ Michael R. Harmon
Michael R. Harmon
Executive Vice-President,
Chief Financial Officer
(Principal Financial and
Accounting Officer),
Treasurer and Secretary
March 10, 1998
Date
21
<PAGE>
GALEY & LORD P.O. Box 35528
Greensboro, North Carolina 27425-0528
[GRAPHIC OMITTED] Contact: Michael R. Harmon
EVP/CFO
(336) 665-3037
GALEY & LORD, INC. ANNOUNCES COMPLETION OF NOTE OFFERING
GREENSBORO, NC, FEBRUARY 24, 1998/PRNewswire - Galey & Lord, Inc. (NYSE: GNL)
announced today that it closed its private offering of $300 million of Senior
Subordinated Notes due in 2008 with a coupon rate of 9.125%. The offering was
increased from $275 million to take advantage of attractive interest rates. Net
proceeds from the offering will be used to repay $275 million principal amount
of borrowings under a senior subordinated bridge financing facility incurred to
acquire the apparel fabrics businesses of Dominion Textile Inc. and for general
corporate purposes. First Union Capital Markets acted as placement agent in the
offering.
The offering and sale of the Senior Subordinated Notes has not been registered
under the Securities Act of 1933, as amended, and the Senior Subordinated Notes
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
Galey & Lord is a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim and corduroy, as well as a major international
manufacturer of workwear fabrics. The Company, through its garment manufacturing
operations, offers its apparel fabric customers a complete package of fabrics
and garments from one source. The Company also is a manufacturer of dyed and
printed fabrics for use in home fashions.
====================================================================
GALEY & LORD, INC.,
Issuer
GALEY & LORD INDUSTRIES, INC.
G&L SERVICE COMPANY, NORTH AMERICA, INC.
SWIFT TEXTILES, INC.
SWIFT DENIM SERVICES, INC.
Guarantors
$300,000,000
9 1/8% Senior Subordinated Notes Due 2008
INDENTURE
Dated as of February 24, 1998
SUNTRUST BANK, ATLANTA,
Trustee
====================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
- ----------- -----------------
310(a)(1)..................................... 7.10
(a)(2).................................... 7.10
(a)(3).................................... N.A.
(a)(4).................................... N.A.
(b)....................................... 7.08; 7.10
(c)....................................... N.A.
311(a)........................................ 7.11
(b)....................................... 7.11
(c)....................................... N.A.
312(a)........................................ 2.05
(b)....................................... 13.03
(c)....................................... 13.03
313(a)........................................ 7.06
(b)(1).................................... N.A.
(b)(2).................................... 7.06
(c)....................................... 13.02
(d)....................................... 7.06
314(a)........................................ 4.02; 4.11; 13.02
(b)....................................... N.A.
(c)(1).................................... 13.04
(c)(2).................................... 13.04
(c)(3).................................... N.A.
(d)....................................... N.A.
(e)....................................... 13.05
(f)....................................... 4.11
315(a)........................................ 7.01
(b)....................................... 7.05; 13.02
(c)....................................... 7.01
(d)....................................... 7.01
(e)....................................... 6.11
316(a)(last sentence)......................... 13.06
(a)(1)(A)................................. 6.05
(a)(1)(B)................................. 6.04
(a)(2).................................... N.A.
(b)....................................... 6.07
317(a)(1)..................................... 6.08
(a)(2).................................... 6.09
(b)....................................... 2.04
318(a)........................................ 13.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
i
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1.01. Definitions........................................................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.................................................22
SECTION 1.03. Rules of Construction.............................................................................22
ARTICLE 2
THE NOTES
SECTION 2.01. Form and Dating...................................................................................23
SECTION 2.02. Execution and Authentication......................................................................26
SECTION 2.03. Registrar and Paying Agent........................................................................27
SECTION 2.04. Paying Agent To Hold Money in Trust...............................................................28
SECTION 2.05. Global Notes......................................................................................28
SECTION 2.06. Transfer and Exchange.............................................................................29
SECTION 2.07. Replacement Notes.................................................................................35
SECTION 2.08. Outstanding Notes.................................................................................35
SECTION 2.09. Temporary Notes...................................................................................36
SECTION 2.10. Cancellation......................................................................................36
SECTION 2.11. Payment of Interest; Interest Rights Preserved....................................................36
SECTION 2.12. CUSIP Numbers.....................................................................................37
SECTION 2.13. Transfers, etc....................................................................................37
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee................................................................................38
SECTION 3.02. Selection of Notes To Be Redeemed.................................................................38
SECTION 3.03. Notice of Redemption..............................................................................38
SECTION 3.04. Effect of Notice of Redemption....................................................................39
SECTION 3.05. Deposit of Redemption Price.......................................................................39
SECTION 3.06. Notes Redeemed in Part............................................................................39
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes..................................................................................40
SECTION 4.02. Maintenance of Office or Agency...................................................................40
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SECTION 4.03. Money for the Note Payments to be Held in Trust...................................................41
SECTION 4.04. Corporate Existence...............................................................................41
SECTION 4.05. Maintenance of Property...........................................................................41
SECTION 4.06. Payment of Taxes and Other Claims.................................................................42
SECTION 4.07. SEC Reports.......................................................................................42
SECTION 4.08. Limitation on Indebtedness........................................................................42
SECTION 4.09. Limitation on Restricted Payments.................................................................42
SECTION 4.10. Limitation on Restrictions on Distributions from Restricted Subsidiaries..........................44
SECTION 4.11. Limitation on Sales of Assets and Subsidiary Stock................................................45
SECTION 4.12. Limitation on Affiliate Transactions..............................................................48
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries....................49
SECTION 4.14. Change of Control.................................................................................50
SECTION 4.15. Limitation on Liens...............................................................................53
SECTION 4.16. Limitation on Layered Indebtedness................................................................53
SECTION 4.17. Compliance Certificate............................................................................53
SECTION 4.18. Waiver of Stay, Extension or Usury Laws...........................................................53
SECTION 4.19. Investment Company Act............................................................................54
SECTION 4.20. Further Instruments and Acts......................................................................54
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer Assets.........................................................54
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.................................................................................55
SECTION 6.02. Acceleration......................................................................................57
SECTION 6.03. Other Remedies....................................................................................57
SECTION 6.04. Waiver of Past Defaults...........................................................................58
SECTION 6.05. Control by Majority...............................................................................58
SECTION 6.06. Limitation on Suits...............................................................................58
SECTION 6.07. Rights of Holders To Receive Payment..............................................................59
SECTION 6.08. Collection Suit by Trustee........................................................................59
SECTION 6.09. Trustee May File Proofs of Claim..................................................................59
SECTION 6.10. Priorities........................................................................................59
SECTION 6.11. Undertaking for Costs.............................................................................60
SECTION 6.12. Waiver of Stay or Extension Laws..................................................................60
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ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.................................................................................60
SECTION 7.02. Rights of Trustee.................................................................................61
SECTION 7.03. Individual Rights of Trustee......................................................................62
SECTION 7.04. Trustee's Disclaimer..............................................................................62
SECTION 7.05. Notice of Defaults................................................................................62
SECTION 7.06. Reports by Trustee to Holders.....................................................................62
SECTION 7.07. Compensation and Indemnity........................................................................63
SECTION 7.08. Replacement of Trustee............................................................................63
SECTION 7.09. Successor Trustee by Merger.......................................................................64
SECTION 7.10. Eligibility; Disqualification.....................................................................64
SECTION 7.11. Preferential Collection of Claims Against Company.................................................65
SECTION 7.12. Trustee's Application for Instructions from the Company...........................................65
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance.......................................................65
SECTION 8.02. Conditions to Defeasance..........................................................................66
SECTION 8.03. Application of Trust Money........................................................................68
SECTION 8.04. Repayment to Company..............................................................................68
SECTION 8.05. Indemnity for Government Obligations..............................................................68
SECTION 8.06. Reinstatement.....................................................................................68
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders........................................................................68
SECTION 9.02. With Consent of Holders...........................................................................69
SECTION 9.03. Compliance with Trust Indenture Act...............................................................70
SECTION 9.04. Revocation and Effect of Consents and Waivers.....................................................70
SECTION 9.05. Notation on or Exchange of Notes..................................................................71
SECTION 9.06. Trustee To Sign Amendments........................................................................71
SECTION 9.07. Payment for Consent...............................................................................71
ARTICLE 10
SUBORDINATION OF THE NOTES
SECTION 10.01. Agreement To Subordinate.........................................................................71
SECTION 10.02. Liquidation, Dissolution, Bankruptcy.............................................................71
SECTION 10.03. Default on Senior Indebtedness of the Company....................................................72
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SECTION 10.04. Acceleration of Payment of Notes.................................................................73
SECTION 10.05. When Distribution Must Be Paid Over..............................................................73
SECTION 10.06. Subrogation......................................................................................73
SECTION 10.07. Relative Rights..................................................................................73
SECTION 10.08. Subordination May Not Be Impaired by Company.....................................................73
SECTION 10.09. Rights of Trustee and Paying Agent...............................................................73
SECTION 10.10. Distribution or Notice to Representative.........................................................74
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate.........................74
SECTION 10.12. Trust Moneys Not Subordinated....................................................................74
SECTION 10.13. Trustee Entitled To Rely.........................................................................74
SECTION 10.14. Trustee To Effectuate Subordination..............................................................75
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.........................................75
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions...........................75
ARTICLE 11
NOTE GUARANTEES; RELEASE OF NOTE GUARANTEES; ADDITIONAL NOTE GUARANTEES
SECTION 11.01. Note Guarantees..................................................................................75
SECTION 11.02. Successors and Assigns...........................................................................77
SECTION 11.03. No Waiver........................................................................................77
SECTION 11.04. Modification.....................................................................................77
SECTION 11.05. Limitation of Note Guarantors' Liability.........................................................77
SECTION 11.06. Release of Note Guarantees.......................................................................78
SECTION 11.07. Additional Note Guarantees.......................................................................78
ARTICLE 12
SUBORDINATION OF THE NOTE GUARANTEES
SECTION 12.01. Agreement To Subordinate.........................................................................78
SECTION 12.02. Liquidation, Dissolution, Bankruptcy.............................................................79
SECTION 12.03. Default on Senior Indebtedness of the Note Guarantors............................................79
SECTION 12.04. Demand for Payment...............................................................................80
SECTION 12.05. When Distribution Must Be Paid Over..............................................................80
SECTION 12.06. Subrogation......................................................................................80
SECTION 12.07. Relative Rights..................................................................................80
SECTION 12.08. Subordination May Not Be Impaired by Note Guarantors.............................................80
SECTION 12.09. Rights of Trustee and Paying Agent...............................................................81
SECTION 12.10. Distribution or Notice to Representative.........................................................81
SECTION 12.11. Article 12 Not To Prevent Defaults Under the Note Guarantees or Limit Right To Demand
Payment.................................................................................81
SECTION 12.12. Trustee Entitled To Rely.........................................................................81
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SECTION 12.13. Trustee To Effectuate Subordination..............................................................82
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of Note Guarantors......................82
SECTION 12.15. Reliance by Holders of Senior Indebtedness on Subordination Provisions...........................82
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.....................................................................82
SECTION 13.02. Notices..........................................................................................82
SECTION 13.03. Communication by Holders with Other Holders......................................................83
SECTION 13.04. Certificate and Opinion as to Conditions Precedent...............................................83
SECTION 13.05. Statements Required in Certificate or Opinion....................................................83
SECTION 13.06. When Notes Disregarded...........................................................................84
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.....................................................84
SECTION 13.08. Legal Holidays...................................................................................84
SECTION 13.09. Governing Law....................................................................................84
SECTION 13.10. No Recourse Against Others.......................................................................84
SECTION 13.11. Successors.......................................................................................85
SECTION 13.12. Multiple Originals...............................................................................85
SECTION 13.13. Table of Contents; Headings......................................................................85
SECTION 13.14. Severability.....................................................................................85
SECTION 13.15. Further Instruments and Acts.....................................................................85
</TABLE>
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INDENTURE dated as of February 24, 1998, among GALEY & LORD,
INC., a Delaware corporation (the "Company"), GALEY & LORD INDUSTRIES, INC., a
Delaware corporation, G&L SERVICE COMPANY, NORTH AMERICA, INC., a Delaware
corporation, SWIFT TEXTILES, INC., a Delaware corporation and SWIFT DENIM
SERVICES, INC., a Delaware corporation (the "Note Guarantors") and SUNTRUST
BANK, ATLANTA, a Georgia banking corporation (the "Trustee").
RECITALS
The Company has duly authorized the creation and issue of its
9 1/8% Senior Subordinated Notes Due 2008 (the "Initial Notes") of substantially
the tenor and amount hereinafter set forth and to provide therefor and for, if
and when issued in exchange for the Initial Notes pursuant to this Indenture and
the Registration Rights Agreement, the Company's 9 1/8% Senior Subordinated
Notes Due 2008 (the "Exchange Notes" and together with the Initial Notes, the
"Notes"), and the Company has duly authorized the execution and delivery of this
Indenture.
Each of the Note Guarantors has duly authorized the execution
and delivery of this Indenture to provide a Guarantee of the Notes and of
certain of the obligations of the Company hereunder.
All things necessary to make the Notes, when executed by the
Company and authenticated and delivered by the Trustee hereunder and duly issued
by the Company, the valid obligations of the Company, and to make this Indenture
a valid instrument of the Company and each of the Note Guarantors, in accordance
with their respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that for and in
consideration of the premises and the purchase of the Initial Notes by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows;
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means, with respect to any Person, (i)
any Indebtedness or Disqualified Stock of any other Person existing at the time
such Person is merged with or into or becomes a Restricted Subsidiary of such
specified Person, including, without limitation, Indebtedness Incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Restricted Subsidiary of such specified Person, and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person, and in either case for purposes of this Indenture shall be deemed to be
Incurred by such specified Person at the time such other Person is merged with
or into or becomes a Restricted Subsidiary of such specified Person or at the
time such asset is acquired by such specified Person, as the case may be.
"Additional Guarantee" has the meaning assigned to it in
Section 11.07.
1
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"Additional Guarantor" has the meaning assigned to it in
Section 11.07.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" (including with correlative meaning, the terms "controlling,"
"controlled by" and "under common control with") when used with respect to any
Person, means (i) the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise or (ii) the beneficial ownership of 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
such Person.
"Affiliate Transaction" has the meaning assigned to it in
Section 4.12.
"Agent Members" has the meaning assigned to it in Section
2.05(a).
"Asset Acquisition" means (a) an Investment by the Company or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall be merged with or into the Company or any Restricted Subsidiary, or (b)
the acquisition by the Company or any Restricted Subsidiary of the assets of any
Person (other than a Subsidiary of the Company) which constitutes all or
substantially all of the assets of such Person or comprises any division or line
of business of such Person or any other properties or assets of such Person
other than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, lease, assignment, transfer or other disposition for value
(including, without limitation, pursuant to any amalgamation, merger or
consolidation or pursuant to any sale and leaseback transaction) by the Company
or by any of its Restricted Subsidiaries to any Person other than the Company or
any of its Wholly-Owned Restricted Subsidiaries (any such transaction, a
"disposition") of (i) any of the stock of any of the Company's Subsidiaries,
(ii) substantially all of the assets of any division or line of business of the
Company or of any of its Subsidiaries, or (iii) any other assets (whether
tangible or intangible) of the Company or of any of its Subsidiaries; excluding
(a) any disposition of Cash Equivalents or inventory in the ordinary course of
business or obsolete equipment in the ordinary course of business consistent
with past practices of the Company or any of its Subsidiaries or the lease or
sublease of any real or personal property in the ordinary course of business,
(b) dispositions of stock or assets the aggregate value of which does not exceed
$10,000,000 less the aggregate value of all other dispositions of stock or
assets made subsequent to the Issue Date pursuant to this clause (b), (c)
exchanges of properties or assets for other properties or assets, excluding cash
or Cash Equivalents but including the Capital Stock of a Person if, as a result
of such exchange, such Person becomes a Restricted Subsidiary; PROVIDED, that
the property or assets so acquired, or the property or assets of the Person the
Capital Stock of which is so acquired (1) are used in a Related Business and (2)
have a fair market value at least equal to the fair market value of the assets
or properties being exchanged (as evidenced by a resolution of the Company's
Board of Directors), (d) for purposes of Section 4.11 only, a disposition made
in accordance with Section 4.09 and (e) the sale or other transfer or
disposition of Receivables and Related Assets pursuant to a Receivables Program.
2
<PAGE>
"Asset Sale Offer" has the meaning assigned to it in Section
4.11.
"Asset Sale Offer Amount" has the meaning assigned to it in
Section 4.11.
"Asset Sale Offer Period" has the meaning assigned to it in
Section 4.11.
"Asset Sale Purchase Date" has the meaning assigned to it in
Section 4.11.
"Bankruptcy Law" means Title 11, United States Code, or any
other applicable federal, state, or foreign bankruptcy, insolvency or similar
law as nor or hereafter constituted.
"Blockage Notice" has the meaning assigned to it in Section
10.03.
"Board of Directors" means, as the context requires, the Board
of Directors of the Company or the applicable Restricted Subsidiary, as the case
may be, or any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a duly adopted resolution of the
Board of Directors in full force and effect at the time of determination and
certified as such by the Secretary or Assistant Secretary of the Company or a
Restricted Subsidiary, as the case may be.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of Charlotte, North Carolina or
New York, New York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to close.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be capitalized and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) the equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally Guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable 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 one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service,
Inc. ("Moody's); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Moody's; and (iv) certificates of deposit
or bankers'
3
<PAGE>
acceptances maturing within one year from 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 that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; (v) shares of any money market mutual fund that
(a) has its assets invested continuously in the types of investments referred to
in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has the highest rating obtainable from either S&P or Moody's; and (vi)
repurchase agreements with respect to, and which are fully secured by a
perfected security interest in, obligations of a type described in clause (i) or
clause (ii) above and are with any commercial bank described in clause (iv)
above.
"Certificated Notes" means Notes in certificated form.
"Change of Control" has the meaning assigned to it in Section
4.14.
"Change of Control Offer" has the meaning assigned to it in
Section 4.14.
"Change of Control Payment Date" has the meaning assigned to
it in Section 4.14.
"Change of Control Purchase Price" has the meaning assigned to
it in Section 4.14.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Company Order" means a written order signed in the name of
the Company by (i) the Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer or any Vice President of the Company and (ii)
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of the Company for
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis, in
accordance with Article 11 of Regulation S-X under the Securities Act, for the
period of such calculation to (a) the Incurrence or repayment of any
Indebtedness of the Company or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any Incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the Incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Incurrence or repayment, as the case
may be (and the application of the proceeds
4
<PAGE>
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of its Restricted Subsidiaries Incurring, assuming or otherwise
being liable for Acquired Indebtedness and also including any Consolidated
EBITDA attributable to the assets which are the subject of the Asset Acquisition
or Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
occurred on the first day of the Four Quarter Period. If the Company or any of
its Restricted Subsidiaries directly or indirectly Guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the Incurrence of such
Guaranteed Indebtedness as if the Company or such Restricted Subsidiary, as the
case may be, had directly Incurred or otherwise assumed such Guaranteed
Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Coverage Ratio," (i) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (ii) if interest on any Indebtedness actually
Incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Four Quarter
Period; and (iii) notwithstanding clause (i) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Rate or Currency Protection Agreements shall be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated EBITDA" means, with respect to the Company, for
any period, the sum (without duplication) of (i) Consolidated Net Income and
(ii) to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of the Company and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable to
sales or dispositions outside the ordinary course of business), (B) Consolidated
Interest Expense and (C) Consolidated Non-Cash Charges less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Fixed Charges" means, with respect to the
Company for any period, the sum, without duplication, of (a) Consolidated
Interest Expense (including any premium or penalty paid in connection with
redeeming or retiring Indebtedness of the Company and its Restricted
Subsidiaries prior to the stated maturity thereof pursuant to the agreements
governing such Indebtedness), plus (b) the product of (i) the amount of all
dividend payments on any series of Preferred Stock of the Company (other than
dividends paid in Capital Stock that is not Disqualified Stock) paid, accrued or
scheduled to be paid or accrued during such period times (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the
then-current effective consolidated federal, state and local income tax rate of
the Company, expressed as a decimal.
5
<PAGE>
"Consolidated Interest Expense" means, for any period, the sum
of, without duplication: (i) the aggregate of all cash and non-cash interest
expense (minus amortization or write-off of deferred financing costs included in
cash or non-cash interest expense) of the Company and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount,
(b) the net costs under Interest Rate or Currency Protection Agreements, (c) all
capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; PROVIDED
that there shall be excluded therefrom (a) after-tax gains and losses from Asset
Sales or abandonment or reserves relating thereto, (b) items classified as
extraordinary, nonrecurring or unusual gains, losses or charges, and the related
tax effects, each determined in accordance with GAAP, (c) the net income of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary of the Company or is merged or
consolidated with the Company or any Restricted Subsidiary of the Company, (d)
the net income (but not loss) of any Restricted Subsidiary of the Company to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by a contract, operation of
law or otherwise, (e) the net income of any Person, other than a Restricted
Subsidiary of the Company, except to the extent of cash dividends or
distributions paid to the Company or to a Wholly-Owned Restricted Subsidiary of
the Company by such Person, (f) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time after September 30, 1997, (g) income
or loss attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (h) in the case of a successor to the Company
by consolidation or merger or as a transferee of the Company's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to the
taking of any action for the purpose of which the determination is being made,
as (i) the par or stated value of all outstanding Capital Stock of the Company
plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit
and (B) any amounts attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" means with respect to the
Company, for any period, the aggregate depreciation, amortization and other
non-cash expenses of the Company and its Restricted Subsidiaries reducing
Consolidated Net Income of the Company for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
6
<PAGE>
"Corporate National Trust Office" means the principal office
of the Trustee at which at any particular time its corporate trust business
shall be principally administered, which office is, at the date of execution of
this Indenture, 58 Edgewood Avenue, 4th Floor, Atlanta, Georgia, 30302;
PROVIDED, that for purposes of Section 4.02 hereof, "Corporate National Trust
Office" shall mean the office of the Trustee located at First Chicago Trust
Company, 14 Wall Street, 8th Floor, New York, New York 10005.
"Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 2.11
hereof.
"Depositary" means The Depository Trust Company, its nominees,
and their respective successors.
"Designated Senior Indebtedness" means, in respect of the
Company, the Senior Credit Facility and any other Senior Indebtedness of the
Company which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $20,000,000 and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" and, in respect of any Note
Guarantor, any Guarantee by such Note Guarantor of Designated Senior
Indebtedness of the Company.
"Disqualified Stock" means, with respect to any Person, 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 (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes; PROVIDED, however, that any Capital Stock that
would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an Asset Sale or Change of Control
occurring prior to the first anniversary of the Stated Maturity of the Notes
shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are not more favorable to
the holders of such Capital Stock than the provisions described under Section
4.11 and Section 4.14.
"Domestic Restricted Subsidiary" means any direct or indirect
Restricted Subsidiary of the Company that is organized under the laws of the
United States, any state thereof or the District of Columbia.
"Event of Default" has the meaning assigned to it in Section
6.01.
"Excess Proceeds" has the meaning assigned to it in Section
4.11.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Certificated Notes" has the meaning assigned to it
in Section 2.01.
"Exchange Global Note" has the meaning assigned to it in
Section 2.01.
"Exchange Notes" has the meaning assigned to it in the recital
hereto.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth (i) in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) in statements
and pronouncements of the Financial Accounting Standards Board, (iii) in such
other statements by such other entity as approved by a significant segment of
the accounting profession, and (iv) in the published rules and regulations of
the Commission governing the inclusion of financial statements (including pro
forma financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the Commission.
"Global Notes" means the Initial Global Note and the Exchange
Global Note.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; PROVIDED, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Restricted Subsidiary.
The term "Incurrence" when used as a noun shall have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date
of determination, all indebtedness, obligations and liabilities of such Person
(i) for borrowed money, (ii) evidenced by bonds, debentures, notes or other
similar instruments, (iii) Capitalized Lease Obligations, (iv) notes payable and
drafts accepted representing extensions of credit, whether or not representing
obligations for borrowed money, of such Person, (v) any indebtedness, obligation
or liability of
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<PAGE>
such Person owed for all or any part of the deferred purchase price of property
or services (excluding any such obligations Incurred under ERISA), which
purchase price is (a) due more than six months (or a longer period of up to one
year, if such terms are available from suppliers in the ordinary course of
business) from the date of Incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument, (vi) all indebtedness,
obligations and liabilities secured by any Lien on any property or asset owned
or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that
Person except that "Indebtedness" shall not include trade payables and accrued
liabilities Incurred in the ordinary course of business for the purchase of
goods or services which are not secured by a Lien other than a Lien permitted
pursuant to clause (ii) of the definition of Permitted Liens and obligations
under Interest Rate or Currency Protection Agreements, (vii) Guarantees of such
Person in respect of Indebtedness of other Persons and (viii) all Disqualified
Stock issued by such Person with the amount of Indebtedness represented by such
Disqualified Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase
price" of any Disqualified Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified Stock,
such fair market value to be determined reasonably and in good faith by the
board of directors of the issuer of such Disqualified Stock.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Certificated Notes" has the meaning assigned to it in
Section 2.01.
"Initial Global Note" has the meaning assigned to it in
Section 2.01.
"Initial Notes" has the meaning assigned to it in the recital
hereto.
"Initial Purchaser" means First Union Capital Markets, a
division of Wheat First Securities, Inc.
"Insolvency or Liquidation Proceeding" means (i) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relating to the Company or its assets, or (ii) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary or whether or
not involving insolvency or bankruptcy, or (iii) any assignment for the benefit
of creditors or any other marshaling of assets or liabilities of the Company.
"Institutional Accredited Investors" means institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, other than QIBs.
"Interest Payment Date" means each semiannual Interest Payment
Date on March 1 and September 1 of each year, commencing September 1, 1998, in
respect of the Notes.
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<PAGE>
"Interest Rate or Currency Protection Agreement" of any Person
means any interest rate protection agreement (including, without limitation,
interest rate swaps, caps, floors, collars, derivative instruments and similar
agreements), and/or other types of interest hedging agreements and any currency
protection agreement (including foreign exchange contracts, currency swap
agreements or other currency hedging arrangements) in support of the Company's
business and not of a speculative nature.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable on
the balance sheet of such Person) or other extensions of credit (including by
way of Guarantee or similar arrangement) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, indebtedness or other similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary," the definition of
"Restricted Payment" and the covenant described in Section 4.09, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such
Unrestricted Subsidiary at the time of such redesignation as a Restricted
Subsidiary less (y) the portion (proportionate to the Company's equity interest
in such Unrestricted Subsidiary) of the fair market value of the net assets of
such Unrestricted Subsidiary at the time of such redesignation as a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Notes are originally
issued.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form, and
with respect to which the Company and its Restricted Subsidiaries own less than
a majority of the aggregate voting power of all classes of the Capital Stock;
PROVIDED that, as to any such arrangement in corporate form, such corporation
shall not, as to any Person of which such corporation is a Subsidiary, be
considered to be a Joint Venture to which such Person is a party.
"Legal Holiday" has the meaning assigned to it in Section
13.08.
"Lien" means any mortgage, pledge, assignment, security
interest, encumbrance, lien or charge of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Liquidated Damages" has the meaning assigned to it in the
Registration Rights Agreement.
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"Net Available Cash" means, with respect to any Asset Sale,
payments in cash or Cash Equivalents received therefrom net of bona fide direct
costs of sale, including, but not limited to, (i) income taxes reasonably
estimated to be actually payable as a result of such Asset Sale within two years
of the date of such Asset Sale, (ii) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on, any Indebtedness that is
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale, (iii)
out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales commissions)
and (iv) any portion of cash proceeds which the Company determines in good faith
should be reserved for post-closing adjustments or liabilities relating to the
Asset Sale retained by the Company or any of its Restricted Subsidiaries, it
being understood and agreed that on the day that all such post-closing
adjustments have been determined, the amount (if any) by which the reserved
amount in respect of such Asset Sale exceeds the actual post-closing
adjustments, payable by the Company or any of its Restricted Subsidiaries, shall
constitute Net Available Cash on such date.
"Net Cash Proceeds" with respect to any issuance or sale of
Capital Stock, means the proceeds of such issuance or sale in the form of cash
or Cash Equivalents net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually Incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"Non-U.S. Person" means any Person who is not a "U.S. Person,"
as defined in Rule 902(o) under the Securities Act.
"Note Guarantee" means the Guarantee of the Notes by each Note
Guarantor under Article 11 hereof.
"Note Guarantor" means Galey & Lord Industries, Inc., a
Delaware corporation, G&L Service Company, North America, Inc., a Delaware
corporation, Swift Textiles, Inc., a Delaware corporation and Swift Denim
Services, Inc., a Delaware corporation and each Additional Guarantor.
"Note Register" has the meaning assigned to it in Section
2.03.
"Notice of Default" has the meaning assigned to it in Section
6.01.
"Obligations" has the meaning assigned to it in Section 11.01.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Secretary or the Assistant Secretary of the
Company or any Restricted Subsidiary, as the case may be.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company.
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"Paying Agent" has the meaning assigned to it in Section 2.03.
"Payment Blockage Period" has the meaning assigned to it in
Section 10.03.
"Permitted Holders" means (i) Citicorp Venture Capital, Ltd.,
(ii) FMR Corp., (iii) Arthur C. Weiner, his family members and any trusts, the
only beneficiaries of which are Arthur C. Weiner or his family members and (iv)
partnerships, corporations or limited liability companies which control or are
controlled by the persons or entities described in clauses (i), (ii) or (iii).
"Permitted Indebtedness" means each of the following:
(i) Indebtedness under the Notes, this Indenture and the Note
Guarantees;
(ii) Indebtedness under the Senior Credit Facility; PROVIDED
that the aggregate principal amount of Indebtedness outstanding under the Senior
Credit Facility at any one time shall not exceed the greater of $490.0 million
(less the then outstanding principal amount of Indebtedness arising under any
Receivables Program of the Company or any Restricted Subsidiary, other than
Indebtedness described in clause (v) or (vi) below) and the sum of (x) 55% of
the book value of the inventory of the Company and its Restricted Subsidiaries
and (y) 85% of the book value of the accounts receivable of the Company and its
Restricted Subsidiaries (other than accounts receivable subject to any
Receivables Program of the Company or any Restricted Subsidiary), in each case
determined in accordance with GAAP;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Rate or Currency Protection Agreements of the
Company covering Indebtedness of the Company or any of its Restricted
Subsidiaries and Interest Rate or Currency Protection Agreements of any
Restricted Subsidiary covering Indebtedness of such Restricted Subsidiary;
PROVIDED, HOWEVER, that (a) such Interest Rate or Currency Protection Agreements
are entered into to protect the Company and its Subsidiaries from fluctuations
in interest rates on Indebtedness Incurred in accordance with this Indenture to
the extent the notional principal amount of such Interest Rate or Currency
Protection Agreements does not exceed the principal amount of the Indebtedness
to which such Interest Rate or Currency Protection Agreements relates and (b)
such Interest Rate or Currency Protection Agreements do not increase the
Indebtedness of the Company and its Restricted Subsidiaries outstanding other
than as a result of fluctuations in foreign currency exchange rates or by reason
of fees, indemnities and compensation payable thereunder;
(v) Indebtedness of a Restricted Subsidiary to the Company or
to a Wholly-Owned Restricted Subsidiary for so long as such Indebtedness is held
by the Company or a Wholly-Owned Restricted Subsidiary, in each case subject to
no Lien held by a Person other than the Company or a Wholly-Owned Restricted
Subsidiary; PROVIDED that if as of any date any Person other than the Company or
a Wholly-Owned Restricted Subsidiary owns or holds any such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be deemed the
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Incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer
of such Indebtedness;
(vi) Indebtedness of the Company to a Wholly-Owned Restricted
Subsidiary for so long as such Indebtedness is held by a Wholly-Owned Restricted
Subsidiary, subject to no Lien; PROVIDED that (a) any Indebtedness of the
Company to any Wholly-Owned Restricted Subsidiary is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the Notes
and (b) if as of any date any Person other than a Wholly-Owned Restricted
Subsidiary owns or holds any such Indebtedness or any Person holds a Lien in
respect of such Indebtedness, such date shall be deemed the Incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(vii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of day-light overdrafts) drawn against
insufficient funds in the ordinary course of business; PROVIDED, HOWEVER, that
such Indebtedness is extinguished within two business days of Incurrence;
(viii) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the Company or
such Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(ix) Refinancing Indebtedness Incurred in respect of
Indebtedness originally Incurred pursuant to the second sentence of Section 4.08
or pursuant to this clause (ix) or clause (i) or (ii) of this definition;
(x) Additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $20,000,000 at any
one time outstanding for Capitalized Lease Obligations or for purposes of
financing the purchase price or construction cost of equipment, fixtures or
similar property;
(xi) Indebtedness Incurred by a Receivables Subsidiary, other
than Indebtedness described in clause (v) or (vi) above, in an amount not
exceeding 95% of the aggregate unpaid balance of the Receivables and Related
Assets of such Receivables Subsidiary at the time of such Incurrence pursuant to
a Receivables Program; and
(xii) Additional Indebtedness of the Company and its
Restricted Subsidiaries in an aggregate principal amount not to exceed
$20,000,000 at any one time outstanding.
"Permitted Investment" means any of the following:
(i) Investments by the Company or any Restricted Subsidiary in
any Person that is or will become immediately after such Investment a Restricted
Subsidiary or that will merge or consolidate into the Company or a Restricted
Subsidiary;
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<PAGE>
(ii) Investments in the Company by any Restricted Subsidiary;
PROVIDED that any Indebtedness evidencing such Investment is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
under the Notes and this Indenture;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the
Company and its Subsidiaries in the ordinary course of business for bona fide
business purposes not in excess of $2,000,000 at any one time outstanding;
(v) Interest Rate or Currency Protection Agreements entered
into in the ordinary course of the Company's or its Restricted Subsidiaries'
businesses and otherwise in compliance with this Indenture;
(vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(vii) consideration other than cash or Cash Equivalents
received by the Company or its Restricted Subsidiaries in connection with an
Asset Sale made in compliance with Section 4.11;
(viii) Investments by the Company or a Restricted Subsidiary
in a trust, limited liability company, special purpose entity or other similar
entity in connection with a Receivables Program; PROVIDED, HOWEVER, that (x)
such Investment is made by a Receivables Subsidiary and (y) the only assets
transferred to such trust, limited liability company, special purpose or other
similar entity consist of Receivables and Related Assets of such Receivables
Subsidiary; and
(ix) Investments not to exceed $10,000,000 at any one time
outstanding.
"Permitted Liens" means any of the following:
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or the Subsidiaries shall have set aside
on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law Incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(iii) Liens Incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders,
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<PAGE>
statutory obligations, surety and appeal bonds, bids, leases, government
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall not
have been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of the Company or
any of its Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; PROVIDED that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or a Restricted Subsidiary acquired in the ordinary course of
business; PROVIDED, HOWEVER, that (A) the related purchase money Indebtedness
shall not exceed the cost of such property or assets and shall not be secured by
any property or assets of the Company or any Restricted Subsidiary other than
the property and assets so acquired and (B) the Lien securing such Indebtedness
shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty requirements of the
Company or a Restricted Subsidiary, including rights of offset and set-off;
(xi) Liens securing Interest Rate or Currency Protection
Agreements which Interest Rate or Currency Protection Agreements relate to
Indebtedness that is Incurred under this Indenture;
(xii) Liens securing Senior Indebtedness, including, without
limitation, Indebtedness under the Senior Credit Facility;
(xiii) Liens existing on the Issue Date and Liens to secure
any Refinancing Indebtedness which is Incurred to refinance any Indebtedness
which has been secured by a Lien permitted under Section 4.15 and which
Indebtedness has been Incurred in accordance with
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Section 4.08; PROVIDED that such new Liens (A) are no less favorable to the
Holders of Notes and are not more favorable to the lienholders with respect to
such Liens than the Liens in respect of the Indebtedness being refinanced and
(B) do not extend to any property or assets other than the property or assets
securing the Indebtedness refinanced or replaced by such Refinancing
Indebtedness; and
(xiv) Liens securing Acquired Indebtedness Incurred in
accordance with the second sentence of Section 4.08; PROVIDED that (A) such
Liens secured such Acquired Indebtedness at the time of and prior to the
Incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in anticipation of the
Incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and (B) such Liens do not extend to or cover any property or assets
of the Company or any Restricted Subsidiary other than the property or assets
that secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary and are
no more favorable to the lienholders than the Liens securing the Acquired
Indebtedness prior to the Incurrence of such Acquired Indebtedness by the
Company or a Restricted Subsidiary.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Post-Petition Interest" means all interest accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding (and
interest that would accrue but for the commencement of any Insolvency or
Liquidation Proceeding) in accordance with and at the contract rate (including,
without limitation, any rate applicable upon default) specified in the agreement
or instrument creating, evidencing or governing any Indebtedness, whether or
not, pursuant to applicable law or otherwise, the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock" means, as applied to the Capital Stock of
any corporation, Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
"Private Placement Legend" has the meaning assigned to it in
Section 2.01.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
tangible or intangible.
"Public Equity Offering" means an underwritten primary public
offering of any class of common stock of the Company pursuant to an effective
registration statement under the Securities Act.
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"Public Market" means any time after (i) an underwritten
Public Equity Offering of the Company has been consummated and (ii) at least 10%
of the total issued and outstanding common stock of the Company has been
distributed by means of an effective registration statement under the Securities
Act or sales pursuant to Rule 144 under the Securities Act.
"Purchase Agreement" means the purchase agreement relating to
the Notes, dated February 19, 1998, among the Company, the Note Guarantors and
the Initial Purchaser.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Receivables and Related Assets" means accounts receivable,
instruments, chattel paper, obligations, general intangibles and other similar
assets, including interest in merchandise or goods, the sale or lease of which
give rise to the foregoing, related contractual rights, Guarantees, insurance
proceeds, collections, other related assets and proceeds of all the foregoing.
"Receivables Program" means, with respect to any Person, any
accounts receivable securitization program pursuant to which such Person
pledges, sells or otherwise transfers or encumbers its accounts receivable,
including to a trust, limited liability company, special purpose entity or other
similar entity.
"Receivables Subsidiary" means a Wholly-Owned Restricted
Subsidiary (i) created for the purpose of financing receivables created in the
ordinary course of business of the Company and its Subsidiaries and (ii) the
sole assets of which consist of Receivables and Related Assets of the Company
and its Subsidiaries and related Permitted Investments.
"Record Date" means, for the interest payable on any Interest
Payment Date, the date specified in Section 2.11 hereof.
"Redemption Date" means, when used with respect to any Note or
part thereof to be redeemed hereunder, the date fixed for redemption of such
Notes pursuant to the terms of the Notes and this Indenture.
"Redemption Price" means, when used with respect to any Note
or part thereof to be redeemed hereunder, the price fixed for redemption of such
Note pursuant to the terms of the Notes and this Indenture, plus accrued and
unpaid interest thereon, if any, and Liquidated Damages, if any, to the
Redemption Date.
"Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
PROVIDED that: (i) the principal amount of such Refinancing Indebtedness does
not exceed the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
Incurred in connection therewith); (ii) such Refinancing Indebtedness has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
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refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is Incurred either by the Company or by the Restricted Subsidiary of the Company
that is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Registered Exchange Offer" has the meaning set forth in the
Registration Rights Agreement.
"Registrar" has the meaning assigned to it in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement relating to the Notes, dated February 24, 1998 among the Company, the
Note Guarantors and the Initial Purchaser, in substantially the form of Exhibit
J hereto.
"Regulation S" means Regulation S under the Securities Act
(including any successor regulation thereto), as it may be amended from time to
time.
"Related Business" means the businesses of the Company and the
Restricted Subsidiaries on the Issue Date and any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness of the Company.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving such Person) or similar payment to the direct or
indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and
dividends or distributions payable solely to the Company or a Wholly-Owned
Restricted Subsidiary, and other than pro rata dividends or other distributions
made by a Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary
to minority stockholders (or owners of an equivalent interest in the case of a
Subsidiary that is an entity other than a corporation)), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any Restricted Subsidiary held by any Person (other than the
Company or a Wholly-Owned Restricted Subsidiary), or any warrants, rights or
options to acquire shares of any class of such Capital Stock, (iii) the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment of any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) the making of any Investment in any Person (other than a Permitted
Investment).
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"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act (including
any successor regulation thereto), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act
(including any successor regulation thereto), as it may be amended from time to
time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Loan Agreement dated as of
January 29, 1998 among the Company, the guarantors listed therein and First
Union National Bank as lender and agent thereunder, pursuant to which the
Company may borrow up to $490,000,000 in the aggregate at any one time
outstanding, together with the documents related thereto (including, without
limitation, the Wachovia Letter of Credit, any Guarantee agreements and security
documents), as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Senior Indebtedness" means with respect to any Person, (i)
Indebtedness of such Person, whether outstanding on the Issue Date or thereafter
Incurred and (ii) accrued and unpaid interest (including Post-Petition Interest)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable unless, in the
instrument creating or evidencing any of the obligations referred to in clauses
(i) or (ii) or pursuant to which any such obligations are outstanding, it is
provided that such obligations are subordinate in right of payment to the Notes;
PROVIDED, HOWEVER, that Senior Indebtedness shall not include (1) any obligation
of such Person to any Subsidiary, (2) any liability for Federal, state, local or
other taxes owed or owing by such Person, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other Indebtedness
or other obligation of such Person or (5) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of Section 4.08.
"Shelf Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Special Record Date" means a date fixed by the Trustee
pursuant to Section 2.11 for the payment of Defaulted Interest.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company or a Restricted Subsidiary of the Company (whether outstanding on the
Issue Date or thereafter Incurred) which is subordinate or junior in right of
payment to the Notes or the Note Guarantees pursuant to a written agreement to
that effect.
"Subordinated Reorganization Securities" has the meaning
assigned to it in Section 10.02.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of outstanding shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.
"Successor Company" has the meaning assigned to it in Section
5.01.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000 (or
the foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of
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the Company) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-l"
(or higher) according to Moody's or "A-l" (or higher) according to S&P, and (v)
investments in securities with maturities of six months or less from the date of
acquisition issued or fully Guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or "A" by Moody's.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; PROVIDED, HOWEVER, that (A)
either (1) the Subsidiary to be so designated has total assets of $1,000 or less
or (2) if such Subsidiary has assets greater than $1,000, such designation would
be permitted under Section 4.09 and (B) such Subsidiary to be so designated and
each of its Subsidiaries has not at the time of such designation, and does not
thereafter, Incur any Indebtedness pursuant to which the lender has recourse to
any of the assets or properties of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving
effect to such designation (x) the Company could Incur $1.00 of additional
Indebtedness pursuant to the second sentence of Section 4.08 and (y) no Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced by the Company to the Trustee by promptly filing
with the Trustee a copy of the board resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
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"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wachovia Letter of Credit" means that irrevocable letter of
credit no. LC 968-044594 dated May 17, 1994, issued by Wachovia Bank of North
Carolina, National Association in favor of First Citizens Bank & Trust Company,
as trustee under those $7,200,000 South Carolina Jobs-Economic Development
Authority Tax-Exempt Adjustable Mode Economic Development Revenue Bonds (Galey &
Lord Industries, Inc. Project) Series 1994, for the account of Galey & Lord
Industries, Inc. in the original maximum amount of $7,830,000, as such letter of
credit may be modified, supplemented, extended and replaced from time to time.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the product obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payments at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" means a Restricted
Subsidiary all the Capital Stock of which (other than directors' qualifying
shares and shares held by other Persons to the extent such shares are required
by applicable law to be held by a Person other than the Company or a Restricted
Subsidiary) is owned by the Company or one or more Wholly-Owned Restricted
Subsidiaries.
SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes. "indenture security
holder" means a Noteholder. "indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule have the meanings
assigned to them by such definitions.
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 has the meaning assigned to it in
accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural include the
singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or junior to
Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other discount security
at any date shall be the principal amount thereof that would be shown on a
balance sheet of the issuer dated such date prepared in accordance with GAAP and
accretion of principal on such security shall be deemed to be the Incurrence of
Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the maximum
liquidation value of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred Stock,
whichever is greater; and
(9) all references to the date the Notes were originally issued shall refer to
the date the Initial Notes were originally issued. ARTICLE 2
THE NOTES
SECTION 2.01. Form and Dating.(a) The Initial Notes and the
certificate of authentication of the Trustee thereon shall be substantially in
the form of Exhibit A or Exhibit B hereto, as applicable, which are hereby
incorporated in and expressly made a part of this Indenture. The Exchange Notes
and the certificate of authentication of the Trustee thereon shall be
substantially in the form of Exhibit C or Exhibit D hereto, as applicable, which
are hereby incorporated in and expressly made a part of this Indenture.
(b) The Notes may have such letters, numbers or other marks of
identification and such legends and endorsements, stamped, printed, lithographed
or engraved thereon, (i) as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, (ii) as may be required to
comply with this Indenture, any law or any rule of any securities exchange on
which the Notes may be listed and (iii) as may be necessary to conform to
customary usage. Each Note shall be dated the date of its authentication by the
Trustee. The Notes shall be issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof; PROVIDED
that Initial Certificated Notes originally purchased by or transferred to
Institutional Accredited Investors shall be subject to a minimum denomination of
$250,000. Definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of such methods or produced in any other manner
permitted by the rules of any
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securities exchange on which such Notes may be listed, all as determined by the
officers of the Company executing such Notes, as evidenced by their execution of
such Notes.
(c) Initial Notes offered and sold to QIBs in reliance on Rule
144A or Non-U.S. Persons in reliance on Regulation S as provided in the Purchase
Agreement shall be issued initially in the form of a single, permanent global
note in definitive, fully registered form, without coupons, substantially in the
form set forth in Exhibit A hereto and shall bear the legends set forth in
Section 2.01(e)(i), Section 2.01(e)(ii) and Section 2.01(e)(iii) hereof (the
"Initial Global Note"). Upon issuance, such Initial Global Note shall be
registered in the name of the Depositary or its nominee, duly executed by the
Company and authenticated by the Trustee as hereinafter provided and deposited
on behalf of the purchasers of the Initial Notes represented thereby with the
Trustee at its Corporate National Trust Office, as custodian for the Depositary.
Owners of beneficial interests in the Initial Global Note shall be entitled to
receive physical delivery of Certificated Notes pursuant to Section 2.06(b)(ii).
Initial Notes offered and sold to Institutional Accredited Investors as provided
in the Purchase Agreement shall be issued in the form of a note in definitive,
fully registered form, without coupons, substantially in the form set forth in
Exhibit B hereto and shall bear the legend set forth in Section 2.01(e)(i)
hereof, except as provided in Section 2.06(a) (such Notes together with
interests in the Initial Global Note that are subsequently transferred or
exchanged pursuant to Sections 2.06(b)(ii), 2.06(b)(iii), 2.06(b)(iv) or
2.06(c), the "Initial Certificated Notes") Upon issuance, any such Initial
Certificated Note shall be duly executed by the Company and authenticated by the
Trustee as hereinafter provided. Upon transfer of any Initial Certificated Note
to a QIB pursuant to Section 2.06(b)(i) hereof, such Initial Certificated Note
may be exchanged for a beneficial interest in the Initial Global Note, except as
provided in Section 2.06(c).
(d) If the Initial Global Note is tendered in a Registered
Exchange Offer, it shall be exchanged for a single, permanent global note in
definitive, fully registered form, without coupons, substantially in the form
set forth in Exhibit C hereto and shall bear the legends set forth in Section
2.01(e)(ii) and Section 2.01(e)(iv) hereof (the "Exchange Global Note"). Upon
issuance, such Exchange Global Note shall be registered in the name of the
Depositary or its nominee, duly executed by the Company and authenticated by the
Trustee as hereinafter provided and deposited on behalf of the beneficial owners
of the Exchange Notes represented thereby in accordance with the procedures of
the Depositary.
If Initial Certificated Notes are tendered in a Registered
Exchange Offer, they will be exchanged for Certificated Notes in definitive,
fully registered form, without coupons and without legends, substantially in the
form set forth in Exhibit D hereto ("Exchange Certificated Notes"). Upon
issuance, any such Exchange Certificated Note shall be duly executed by the
Company and authenticated by the Trustee as hereinafter provided.
At the option of the Holder thereof, Exchange Notes may be
held either in the form of a beneficial interest in the Exchange Global Note or
as Exchange Certificated Notes.
(e) The following legends shall appear on each Global Note and
each Certificated Note as indicated below:
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(i) Except as provided in Section 2.06(a) hereof, each Initial
Global Note and Initial Certificated Note shall bear the following
legend (the "Private Placement Legend") on the face thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF
SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT
TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION.
(ii) Each Global Note shall bear the following legend on the
face thereof:
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO GALEY & LORD, INC. OR A SUCCESSOR
THEREOF OR THE REGISTRAR FOR REGISTRATION OF TRANSFER OR
EXCHANGE AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
(iii) The Initial Global Note shall bear the following legend
on the face thereof:
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN SECTION 2.06 OF THE INDENTURE, DATED AS OF FEBRUARY 24,
1998 AMONG GALEY & LORD, INC., AS ISSUER, AND GALEY & LORD
INDUSTRIES, INC., G&L SERVICE COMPANY, NORTH AMERICA, INC.,
SWIFT TEXTILES, INC. AND SWIFT DENIM SERVICES, INC. AS NOTE
GUARANTORS, AND SUNTRUST BANK, ATLANTA, AS TRUSTEE, PURSUANT
TO WHICH THIS NOTE WAS ISSUED.
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(iv) The Exchange Global Note shall bear the following legend
on the face thereof:
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE.
SECTION 2.02. Execution and Authentication. The Notes may be
issued in two series, a series of Initial Notes and a series of Exchange Notes.
The aggregate principal amount of Notes outstanding at any time shall not exceed
$300,000,000 except as provided in Section 2.07 hereof. The Notes shall be
executed on behalf of the Company by its Chief Executive Officer, President,
Chief Operating Officer, Treasurer or any Vice President, and shall be attested
by the Company's Secretary or one of its Assistant Secretaries, in each case by
manual or facsimile signature.
The Notes shall be authenticated by manual signature of an
authorized signatory of the Trustee and shall not be valid for any purpose
unless so authenticated.
In case any officer of the Company whose signature shall have
been placed upon any of the Notes shall cease to be such officer of the Company
before authentication of such Notes by the Trustee and the issuance and delivery
thereof, such Notes may, nevertheless, be authenticated by the Trustee and
issued and delivered with the same force and effect as though such Person had
not ceased to be such an officer of the Company.
The Trustee shall, upon receipt of a Company Order requesting
such action, authenticate (a) Initial Notes for original issue up to the
aggregate principal amount not to exceed $300,000,000 outstanding at any given
time, or (b) Exchange Notes for issue pursuant to a Registered Exchange Offer
for Initial Notes in a principal amount equal to the principal amount of Initial
Notes exchanged in such Registered Exchange Offer. Such Company Order shall
specify the amount of Notes to be authenticated and the date on which, in the
case of clause (a) above, the Initial Notes or, in the case of clause (b) above,
the Exchange Notes, are to be authenticated and shall further provide
instructions concerning registration, amounts for each Holder and delivery.
Upon the occurrence of any event specified in Section 2.06(c)
hereof, the Company shall execute and the Trustee shall authenticate and make
available for delivery to each beneficial owner identified by the Depositary, in
exchange for such beneficial owner's interest in the Initial Global Note or
Exchange Global Note, as the case may be, Initial Certificated Notes or Exchange
Certificated Notes, as the case may be, representing Notes theretofore
represented by the Initial Global Note or Exchange Global Note, as the case may
be.
A Note shall not be valid or entitled to any benefits under
this Indenture or obligatory for any purpose unless executed by the Company and
authenticated by the manual signature of one of the authorized signatories of
the Trustee as provided herein. Such signature
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upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered under this Indenture and is
entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably
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. Any authenticating agent of the
Trustee shall have the same rights hereunder as any Registrar or Paying Agent.
Notwithstanding the foregoing, if any Note shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Note to the Trustee for cancellation as
provided in Section 2.10 together with a written statement (which need not be
accompanied by an Opinion of Counsel) stating that such Note has never been
issued and sold by the Company, for all purposes of this Indenture such Note
shall be deemed never to have been authenticated and delivered hereunder and
shall not be entitled to the benefits of this Indenture.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain, pursuant to Section 4.02 hereof, an office or agency where the Notes
may be presented for registration of transfer or for exchange (the "Registrar"),
an office or agency where Notes may be presented for payment (the "Paying
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served.
The Company shall cause to be kept at such office a register
(the "Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and of
transfers of Notes entitled to be registered or transferred as provided herein.
The Trustee, at its Corporate National Trust Office, is initially appointed
Registrar for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may, upon written notice to the Trustee, change the
designation of the Trustee as Registrar and appoint another Person to act as
Registrar for purposes of this Indenture. If any Person other than the Trustee
acts as Registrar, the Trustee shall have the right at any time, upon reasonable
notice, to inspect or examine the Note Register and to make such inquiries of
the Registrar as the Trustee shall in its discretion deem necessary or desirable
in performing its duties hereunder.
The Company shall enter into an appropriate agency agreement
with any Person designated by the Company as Registrar or Paying Agent that is
not a party to this Indenture, which agreement shall incorporate the provisions
of the TIA and shall implement the provisions of this Indenture that relate to
such Registrar or Paying Agent. Prior to the designation of any such Person, the
Company shall, by written notice (which notice shall include the name and
address of such Person), inform the Trustee of such designation. The Trustee, at
its Corporate National Trust Office, is initially appointed Paying Agent under
this Indenture. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
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Subject to Section 2.06 hereof, upon surrender for
registration of transfer of any Note at an office or agency of the Company
designated for such purpose, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the designated
transferee or transferees, one or more new Initial Notes or Exchange Notes, as
the case may be, of any authorized denomination or denominations, of like tenor
and aggregate principal amount, all as requested by the transferor.
Every Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Trustee or
the Registrar) be duly endorsed, or be accompanied by a duly executed instrument
of transfer in form satisfactory to the Company, the Trustee and the Registrar,
by the Holder thereof or such Holder's attorney duly authorized in writing.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or prior
to each due date of the principal, premium, if any, or any payment of interest
or Liquidated Damages, if any, with respect to any Note, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal, premium,
if any, or interest or Liquidated Damages, if any, when so becoming due.
The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that such Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by such Paying Agent for the
payment of principal, premium, if any, or interest or Liquidated Damages, if
any, with respect to the Notes, shall notify the Trustee of any default by the
Company in making any such payment and at any time during the continuance of any
such default, upon the written request of the Trustee, shall forthwith pay to
the Trustee all sums held in trust by such Paying Agent.
The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and to account for any funds disbursed by such
Paying Agent. Upon complying with this Section 2.04, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.05. Global Notes. (a) So long as a Global Note is
registered in the name of the Depositary or its nominee, members of, or
participants in, the Depositary ("Agent Members") shall have no rights under
this Indenture with respect to the Global Note held on their behalf by the
Depositary or the Trustee as its custodian, and the Depositary may be treated by
the Company, the Note Guarantors, the Trustee and any agent of the Company, the
Note Guarantors or the Trustee as the absolute owner of such Global Note for all
purposes. Notwithstanding the foregoing, nothing herein shall (i) prevent the
Company, the Note Guarantors, the Trustee or any agent of the Company, the Note
Guarantors or the Trustee, from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or (ii) impair, as
between the Depositary and its Agent Members, the operation of customary
practices governing the exercise of the rights of a Holder.
(b) The Holder of a Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests in such Global Note
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through Agent Members, to take any action which a Holder is entitled to take
under this Indenture or the Notes.
(c) Whenever, as a result of an optional redemption of Notes
by the Company, a Change of Control Offer, an Asset Sale Offer, a Registered
Exchange Offer or an exchange for Certificated Notes pursuant to the provisions
of Section 2.06(b) or Section 2.06(c) hereof, a Global Note is redeemed,
repurchased or exchanged in part, such Global Note shall be surrendered by the
Holder thereof to the Trustee who shall cause an adjustment to be made to
Schedule A thereof so that the principal amount of such Global Note will be
equal to the portion of such Global Note not redeemed, repurchased or exchanged
and shall thereafter return such Global Note to such Holder, PROVIDED that each
such Global Note shall be in a principal amount of $1,000 or an integral
multiple thereof.
SECTION 2.06. Transfer and Exchange. (a) By its acceptance of
any Initial Note represented by a certificate bearing the Private Placement
Legend, each Holder of, and beneficial owner of an interest in, such Initial
Note acknowledges the restrictions on transfer of such Initial Note set forth in
the Private Placement Legend and agrees that it will transfer such Initial Note
only in accordance with the Private Placement Legend. Upon the registration of
transfer, exchange or replacement of an Initial Note not bearing the Private
Placement Legend, the Trustee shall deliver an Initial Note or Initial Notes
that do not bear the Private Placement Legend. Upon the transfer, exchange or
replacement of an Initial Note bearing the Private Placement Legend, the Trustee
shall deliver an Initial Note or Initial Notes bearing the Private Placement
Legend, unless such legend may be removed from such Note as provided in this
Section 2.06(a). If the Private Placement Legend has been removed from an
Initial Note, as provided herein, no other Initial Note issued in exchange for
all or any part of such Initial Note shall bear such legend, unless the Company
has reasonable cause to believe that such other Initial Note represents a
"restricted security" within the meaning of Rule 144 and instructs the Trustee
in writing to cause a legend to appear thereon. Each Initial Note shall bear the
Private Placement Legend unless and until:
(i) a transfer of such Initial Note is made pursuant to an effective
Shelf Registration Statement, in which case the Private Placement
Legend shall be removed from such Initial Note so transferred at the
request of the Holder; or
(ii) there is delivered to the Company such satisfactory evidence,
which may include an opinion of independent counsel licensed to
practice law in the State of New York, as may reasonably be requested
by the Company confirming that neither such legend nor the restrictions
on transfer set forth therein are required to ensure that transfers of
such Initial Note will not violate the registration and prospectus
delivery requirements of the Securities Act; PROVIDED that the Trustee
shall not be required to determine (but may rely on a determination
made by the Company with respect to) the sufficiency of any such
evidence; and upon provision of such evidence, the Trustee shall
authenticate and deliver in exchange for such Initial Note, an Initial
Note or Initial Notes (representing the same aggregate principal amount
of the Initial Note being exchanged) without such legend.
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(b) Special Transfer Provisions. The following provisions of
this paragraph (b) are applicable only to Initial Notes bearing the Private
Placement Legend:
(i) Transfers to QIBs. If the Holder of an Initial
Certificated Note wishes to transfer such Initial Certificated Note to
a QIB pursuant to Rule 144A, such Holder may, subject to the rules and
procedures of the Depositary, cause the exchange of such Initial
Certificated Note for an equivalent beneficial interest in the Initial
Global Note. Upon receipt by the Trustee, as Registrar, at its
Corporate National Trust Office of (A) such Initial Certificated Note,
duly endorsed as provided herein, (B) instructions from such Holder
directing the Trustee, as Registrar, to credit or cause to be credited
a beneficial interest in the Initial Global Note equal to the principal
amount of the Initial Certificated Note to be exchanged, such
instructions to contain information regarding the participant account
with the Depositary to be credited with such increase and (C) a
certificate in the form of Exhibit E attached hereto from the
transferor, then the Trustee, as Registrar, shall cancel or cause to be
canceled such Initial Certificated Note and shall instruct the
Depositary to increase or cause to be increased such Initial Global
Note by the aggregate principal amount of the beneficial interest in
the Initial Certificated Note to be exchanged and to credit or cause to
be credited to the account of the Person specified in such instructions
a beneficial interest in the Initial Global Note equal to the principal
amount of the Initial Certificated Note so canceled;
(ii) Transfers to Institutional Accredited Investors
and Exchange of Interests in Global Notes:
(A) If a Holder of a beneficial interest in the
Initial Global Note deposited with the Depositary or the
Trustee as custodian for the Depositary wishes at any time to
transfer its interest in such Initial Global Note to an
Institutional Accredited Investor or to exchange such interest
for an Initial Certificated Note evidencing such interest,
such Holder may, subject to the rules and procedures of the
Depositary, cause the transfer or exchange of such interest
for one or more Initial Certificated Notes of any authorized
denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar,
at its Corporate National Trust Office of (I) instructions
from the Depositary directing the Trustee, as Registrar, to
authenticate and deliver one or more Initial Certificated
Notes of the same aggregate principal amount as the beneficial
interest in the Initial Global Note to be transferred or
exchanged, such instructions to contain the name or names of
the designated transferee or transferees, if any, the
authorized denomination or denominations of the Initial
Certificated Notes to be so issued and appropriate delivery
instructions and (II) in the case of a transfer, (x) a
certificate in the form of Exhibit F attached hereto from the
transferor, (y) a certificate in the form of Exhibit G
attached hereto from the transferee and (z) such other
certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements
of the Securities Act, then the Trustee, as Registrar, will
instruct the Depositary to reduce or cause to be reduced such
Initial Global Note by the
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aggregate principal amount of the beneficial interest therein
to be exchanged or transferred and to debit or cause to be
debited from the account of the Person making such exchange or
transfer the beneficial interest in the Initial Global Note
that is being exchanged or transferred, and concurrently with
such reduction and debit the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount in
accordance with the instructions referred to above; and
(B) if a Holder of an Initial Certificated Note
wishes to transfer such Note to an Institutional Accredited
Investor, such Holder may, subject to the restrictions on
transfer set forth herein and in such Initial Certificated
Note, cause the exchange of such Initial Certificated Note for
one or more Initial Certificated Notes of any authorized
denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar,
at its Corporate National Trust Office of (I) such Initial
Certificated Note, duly endorsed as provided herein, (II)
instructions from such Holder directing the Trustee, as
Registrar, to authenticate and deliver one or more Initial
Certificated Notes of the same aggregate principal amount as
the Initial Certificated Notes to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions, (III) a
certificate in the form of Exhibit F attached hereto from the
transferor, (IV) a certificate in the form of Exhibit G
attached hereto from the transferee and (V) such other
certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements
of the Securities Act, then the Trustee, as Registrar, shall
cancel or cause to be canceled such Initial Certificated Note
and concurrently therewith, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount, in
accordance with the instructions referred to above;
(iii) Transfers to Non-U.S. Persons:
(A) If a Holder of a beneficial interest in the
Initial Global Note deposited with the Depositary or the
Trustee as custodian for the Depositary wishes at any time to
transfer its interest in such Initial Global Note to a
Non-U.S. Person pursuant to Regulation S who wishes to take
delivery thereof in the form of a Certificated Note, such
Holder may, subject to the rules and procedures of the
Depositary, cause the exchange of such interest for one or
more Initial Certificated Notes of any authorized denomination
or denominations and of the same aggregate principal amount.
Upon receipt by the Trustee, as Registrar, at its Corporate
National Trust Office of (I) instructions from the Depositary
directing the Trustee, as Registrar, to authenticate and
deliver one or more Initial Certificated Notes of the same
aggregate principal amount as the beneficial interest in the
Initial Global Note to be exchanged, such instructions to
contain the name or names of the
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designated transferee or transferees, the authorized
denomination or denominations of the Initial Certificated
Notes to be so issued and appropriate delivery instructions,
(II) a certificate in the form of Exhibit H attached hereto
from the transferor and (III) a certificate in the form of
Exhibit I attached hereto from the transferee, then the
Trustee, as Registrar, will instruct the Depositary to reduce
or cause to be reduced such Initial Global Note by the
aggregate principal amount of the beneficial interest therein
to be exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial
interest in the Initial Global Note that is being transferred,
and concurrently with such reduction and debit the Company
shall execute, and the Trustee shall authenticate and deliver,
one or more Initial Certificated Notes of the same aggregate
principal amount in accordance with the instructions referred
to above; and
(B) if a Holder of an Initial Certificated Note
wishes to transfer such Note to a Non-U.S. Person pursuant to
Regulation S who wishes to take delivery thereof in the form
of a Certificated Note, such Holder may, subject to the
restrictions on transfer set forth herein and in such Initial
Certificated Note, cause the exchange of such Initial
Certificated Note for one or more Initial Certificated Notes
of any authorized denomination or denominations and of the
same aggregate principal amount. Upon receipt by the Trustee,
as Registrar, at its Corporate National Trust Office of (I)
such Initial Certificated Note, duly endorsed as provided
herein, (II) instructions from such Holder directing the
Trustee, as Registrar, to authenticate and deliver one or more
Initial Certificated Notes of the same aggregate principal
amount as the Initial Certificated Notes to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions, (III) a
certificate in the form of Exhibit H attached hereto from the
transferor and (IV) a certificate in the form of Exhibit I
attached hereto from the transferee, then the Trustee, as
Registrar, shall cancel or cause to be canceled such Initial
Certificated Note and concurrently therewith, the Company
shall execute, and the Trustee shall authenticate and deliver,
one or more Initial Certificated Notes of the same aggregate
principal amount, in accordance with the instructions referred
to above;
(iv) Transfers Pursuant to Other Exemptions.
(A) If a Holder of a beneficial interest in the
Initial Global Note deposited with the Depositary or the
Trustee as custodian for the Depositary wishes at any time to
transfer its interest in such Initial Global Note pursuant to
another applicable exemption from the registration
requirements of the Securities Act, such Holder may, subject
to the rules and procedures of the Depositary, cause the
exchange of such interest for one or more Initial Certificated
Notes of any authorized denomination or denominations and of
the same aggregate principal amount. Upon receipt by the
Trustee, as Registrar, at its Corporate National Trust Office
of (I) instructions from the Depositary directing the Trustee,
as Registrar, to
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authenticate and deliver one or more Initial Certificated
Notes of the same aggregate principal amount as the beneficial
interest in the Initial Global Note to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions and (II) such
certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements
of the Securities Act, then the Trustee, as Registrar, will
instruct the Depositary to reduce or cause to be reduced such
Initial Global Note by the aggregate principal amount of the
beneficial interest therein to be exchanged and to debit or
cause to be debited from the account of the Person making such
transfer the beneficial interest in the Initial Global Note
that is being transferred, and concurrently with such
reduction and debit the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount in
accordance with the instructions referred to above; and
(B) if a Holder of a Initial Certificated Note wishes
to transfer such Initial Certificated Note pursuant to another
applicable exemption from the registration requirements of the
Securities Act, such Holder may, subject to the restrictions
on transfer set forth herein and in such Initial Certificated
Note, cause the exchange of such Initial Certificated Note for
one or more Initial Certificated Notes of any authorized
denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Trustee, as Registrar,
at its Corporate National Trust Office of (I) such Initial
Certificated Note, duly endorsed as provided herein, (II)
instructions from such Holder directing the Trustee, as
Registrar, to authenticate and deliver one or more Initial
Certificated Notes of the same aggregate principal amount as
the Initial Certificated Notes to be exchanged, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Initial Certificated Notes to be so
issued and appropriate delivery instructions and (III) such
certifications, legal opinions or other information as the
Company or the Trustee may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements
of the Securities Act, then the Trustee, as Registrar, shall
cancel or cause to be canceled such Initial Certificated Note
and concurrently therewith, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Initial
Certificated Notes of the same aggregate principal amount, in
accordance with the instructions referred to above.
The Company shall deliver to the Trustee, and the Trustee
shall retain for two years, copies of all documents received pursuant to this
Section 2.06(b). The Company shall have the right to inspect and make copies of
all such documents at its sole expense at any reasonable time upon the giving of
reasonable written notice to the Trustee.
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(c) The Initial Global Note or Exchange Global Note, as the
case may be, shall be exchanged by the Company for one or more Initial
Certificated Notes or Exchange Certificated Notes, as the case may be, if (i)
the Depositary has notified the Company that it is unwilling or unable to
continue as, or ceases to be, a clearing agency registered under Section 17A of
the Exchange Act and a successor to the Depositary registered as a clearing
agency under Section 17A of the Exchange Act is not able to be appointed by the
Company within 90 calendar days, or (ii) the Depositary is at any time unwilling
or unable to continue as Depositary and a successor to the Depositary is not
able to be appointed by the Company within 90 calendar days, or (iii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Notes. If an Event of Default
occurs and is continuing, the Company shall, at the request of the Holder
thereof, exchange all or part of the Initial Global Note or Exchange Global
Note, as the case may be, for one or more Initial Certificated Notes or Exchange
Certificated Notes, as the case may be; PROVIDED that the principal amount of
each of such Initial Certificated Note or Exchange Certificated Note, as the
case may be, and such Global Note, after such exchange, shall be $1,000 or an
integral multiple thereof. Whenever a Global Note is exchanged as a whole for
one or more Initial Certificated Notes or Exchange Certificated Notes, as the
case may be, it shall be surrendered by the Holder thereof to the Trustee for
cancellation. Whenever a Global Note is exchanged in part for one or more
Initial Certificated Notes or Exchange Certificated Notes, as the case may be,
it shall be surrendered by the Holder thereof to the Trustee and the Trustee
shall make the appropriate notations thereon pursuant to Section 2.05(c) hereof.
All Initial Certificated Notes or Exchange Certificated Notes, as the case may
be, issued in exchange for a Global Note or any portion thereof shall be
registered in such names, and delivered, as the Depositary shall instruct the
Trustee. Any Initial Certificated Notes issued pursuant to this Section 2.06(c)
shall include the Private Placement Legend, except as set forth in Section
2.06(a) hereof.
(d) Any Initial Notes that are presented to the Registrar for
exchange pursuant to a Registered Exchange Offer shall be exchanged for Exchange
Notes of equal principal amount upon surrender to the Registrar of the Initial
Notes to be exchanged in accordance with the terms of the Registered Exchange
Offer; PROVIDED that the Initial Notes so surrendered for exchange are
accompanied by a letter of transmittal and duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Company, the Trustee
and the Registrar and duly executed by the Holder thereof or such Holder's
attorney who shall be duly authorized in writing to execute such document on
behalf of such Holder. Whenever any Initial Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver to the surrendering Holder thereof, Exchange Notes in the same aggregate
principal amount as the Initial Notes so surrendered.
(e) A Holder may transfer a Note only upon the surrender of
such Note for registration of transfer. No such transfer shall be effected
until, and the transferee shall succeed to the rights of a Holder only upon,
final acceptance and registration of the transfer in the Note Register by the
Registrar. When Notes are presented to the Registrar with a request to register
the transfer of, or to exchange, such Notes, the Registrar shall register the
transfer or make such exchange as requested if its requirements for such
transactions and any applicable requirements hereunder are satisfied. To permit
registrations of transfers and exchanges, the Company shall
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execute and the Trustee shall authenticate and deliver Certificated Notes at the
Registrar's request.
(f) The Company shall not be required to make and the
Registrar need not register the transfer or exchange of Certificated Notes or
portions thereof selected for redemption (except, in the case of a Certificated
Note to be redeemed in part, the portion of such Note not to be redeemed) or any
Certificated Notes for a period of 15 calendar days before a selection of Notes
to be redeemed.
(g) No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer of Notes (other than in respect of
a Registered Exchange Offer, except as provided in the Registration Rights
Agreement).
(h) All Notes issued upon any registration of transfer or
exchange pursuant to the terms of this Indenture will evidence the same debt and
will be entitled to the same benefits under this Indenture as the Notes
surrendered for such registration of transfer or exchange.
(i) Any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book-entry system maintained by such Holder (or
its agent), and that ownership of a beneficial interest in the Notes represented
thereby shall be required to be reflected in book-entry form. Transfers of a
Global Note shall be limited to transfers in whole and not in part, to the
Depositary, its successors, and their respective nominees. Interests of
beneficial owners in a Global Note shall be transferred in accordance with the
rules and procedures of the Depositary (or its successors), which shall, in the
case of the Initial Global Note, include restrictions designed to ensure that
the beneficial owners of such Initial Global Note are QIBs.
SECTION 2.07. Replacement Notes. If a mutilated Note is
surrendered to the Registrar or if the Holder of a Note claims that the Note has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note if the requirements of Section
8-405 of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Trustee to protect the Company, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Note is replaced. The Company and the Trustee may charge the Holder
for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company.
SECTION 2.08. Outstanding Notes. Notes outstanding at any time
are all Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Note does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Note.
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If a Note is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Note is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a Redemption Date or maturity date money
sufficient to pay all principal, premium, if any, and interest and Liquidated
Damages, if any, payable on that date with respect to the Notes (or portions
thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is
not prohibited from paying such money to the Noteholders on that date pursuant
to the terms of this Indenture, then on and after that date such Notes (or
portions thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Notes. Until definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
and deliver 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 shall authenticate definitive Notes and deliver them in
exchange for temporary Notes.
SECTION 2.10. Cancellation. The Company at any time may
deliver Notes to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy (subject to the record retention requirements of the Exchange
Act) all Notes surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Notes to the Company;
PROVIDED, HOWEVER, that the Trustee shall not be required to destroy any Notes.
The Company may not issue new Notes to replace Notes it has redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name such Note is
registered at the close of business on the Record Date for such interest
payment, which shall be the February 15 or August 15 (whether or not a Business
Day) immediately preceding such Interest Payment Date.
Any interest on any Note which is payable, but is not paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Record Date, and, except as hereinafter provided, such Defaulted
Interest, and any interest payable on such Defaulted Interest, may be paid by
the Company, at its election, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest, and any interest payable on such Defaulted Interest, to the Persons in
whose names the Notes are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on the Notes and the date of
the
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proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this Section 2.11(a). Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 calendar days and not less than 10
calendar days prior to the date of the proposed payment and not less than 10
calendar days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be sent, first-class mail, postage prepaid, to each Holder at such
Holder's address as it appears in the Note Register, not less than 10 calendar
days prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
the Notes are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following clause (b); or
(b) The Company may make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, on the Notes in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause (b), such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.11, each
Note delivered under this Indenture upon registration of transfer of, or in
exchange for, or in lieu of, any other Note, shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Notes
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
PROVIDED, HOWEVER, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers.
SECTION 2.13. Transfers, etc. Each Holder of a Note agrees to
indemnify the Company and the Trustee against any liability that may result from
the transfer, exchange or assignment by such Holder of such Holder's Note in
violation of any provision of this Indenture and/or applicable U.S. Federal or
state securities law.
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ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Notes pursuant to paragraph 8 of the Initial Notes or paragraph 7 of the
Exchange Notes, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Notes to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section 3.01 not less than 30 days nor more than 60 days before the
Redemption Date unless the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the conditions
herein.
SECTION 3.02. Selection of Notes To Be Redeemed. If fewer than
all the Notes are to be redeemed, the Trustee shall select the Notes to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and securities exchange requirements, if any, and that the Trustee considers
fair and appropriate and in accordance with methods generally used at the time
of selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Notes not previously called for redemption. The
Trustee may select for redemption portions of the principal of Notes that have
denominations larger than $1,000. Notes and portions of them the Trustee selects
shall be in amounts of $1,000 or a whole multiple 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 of
the Notes or portions of Notes to be redeemed.
SECTION 3.03. Notice of Redemption. At least 20 days but not
more than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first-class mail, postage prepaid, to each Holder of Notes to be
redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price;
(5) if any Global Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date, the
Global Note, with a notation on Schedule A thereof adjusting the principal
amount thereof to be equal to the unredeemed portion, will be returned to the
Holder thereof;
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(6) if any Certificated Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, a new Certificated Note or Certificated Notes in principal amount equal to
the unredeemed portion will be issued;
(7) if fewer than all the outstanding Notes are to be redeemed, the
identification and principal amounts of the particular Notes to be redeemed;
(8) that, unless the Company defaults in making such redemption payment or the
Paying Agent is prohibited from making such payment pursuant to the terms of
this Indenture, interest on Notes (or portion thereof) called for redemption
ceases to accrue on and after the Redemption Date; and
(9) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
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 and at the Redemption Price stated in the notice. Upon surrender
to the Paying Agent, such Notes shall be paid at the Redemption Price stated in
the notice, plus accrued interest to the Redemption Date. Failure to give notice
or any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to the
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company or a domestically incorporated Wholly-Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) money in immediately available funds,
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions of Notes called for
redemption which have been delivered by the Company to the Trustee for
cancellation.
So long as the Company complies with the preceding paragraph
and the other provisions of this Article 3, interest on the Notes or portions
thereof to be redeemed on the applicable Redemption Date shall cease to accrue
from and after such date and such Notes or portions thereof shall be deemed not
to be entitled to any benefit under this Indenture except to receive payment of
the Redemption Price on the Redemption Date (subject to the right of each Holder
of record on the relevant Record Date to receive interest due on the relevant
Interest Payment Date). If any Note called for redemption shall not be so paid
upon surrender for redemption, then, from the Redemption Date until such
Redemption Price is paid, interest shall be paid on the unpaid principal and
premium and, to the extent permitted by law, on any accrued but unpaid interest
thereon, in each case at the rate prescribed therefor by such Notes.
SECTION 3.06. Notes Redeemed in Part. Upon surrender of a Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder of
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the Note being surrendered (at the Company's expense) a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall promptly pay
the principal of, premium, if any, and interest and Liquidated Damages, if any,
on the Notes on the dates and in the manner provided in the Notes and in this
Indenture. Principal, premium, if any, and interest and Liquidated Damages, if
any, shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal, premium, if any, and interest and Liquidated Damages, if any, then
due and the Trustee or the Paying Agent, as the case may be, is not prohibited
from paying such money to the Noteholders on that date pursuant to the terms of
this Indenture.
To the extent lawful, the Company shall pay interest on
overdue principal, overdue premium, Defaulted Interest and Liquidated Damages
(without regard to any applicable grace period) at the interest rate borne on
the Notes. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its maturity, as a result of the
Company's obligations pursuant to Sections 3.05, Section 4.11 or Section 4.14
hereof, or otherwise.
All payments with respect to a Global Note or a Certificated
Note (including principal, premium, if any, interest and Liquidated Damages, if
any) the Holders of whom have given wire transfer instructions to the Company
will be required to be made by wire transfer of immediately available funds to
the account or (in the case of a Global Note) accounts specified by the Holders
thereof or, if no such account is specified, by sending via first-class mail,
postage prepaid, a check to each such Holders' registered address.
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 where Notes may be presented or surrendered for payment, 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 this Indenture may be
served, which office shall be initially the Corporate Trust Office. 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, and
the Company hereby appoints the Trustee its agent to receive all presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Notes may be presented or surrendered for any or all of such purposes, and may
from time to time rescind such designations; PROVIDED that no such designation
or rescission shall in any manner relieve the Company of its
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obligation to maintain an office or agency in The City of New York for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation and 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 hereof.
SECTION 4.03. Money for the Note Payments to be Held in Trust.
If the Company, any Subsidiary of the Company or any of their respective
Affiliates shall at any time act as Paying Agent with respect to the Notes, such
Paying Agent shall, on or before each due date of the principal of, premium, if
any, or interest or Liquidated Damages, if any, on any of the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto money
sufficient to pay the principal, premium, if any, or interest or Liquidated
Damages, if any, so becoming due until such money shall be paid to such Persons
or otherwise disposed of as herein provided, and shall promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with
respect to the Notes, it shall, prior to 10:00 a.m. New York City time on each
due date of the principal of, premium, if any, or interest or Liquidated
Damages, if any, on any of the Notes, deposit with a Paying Agent a sum
sufficient to pay the principal, premium, if any, or interest or Liquidated
Damages, if any, so becoming due, such sum to be held in trust for the benefit
of the Persons entitled to such principal, premium or interest or Liquidated
Damages, if any, and (unless such Paying Agent is the Trustee) the Paying Agent
shall promptly notify the Trustee of the Company's action or failure so to act.
SECTION 4.04. Corporate Existence. Subject to the provisions
of Article 5 hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect the corporate existence,
rights (charter and statutory) and franchises of the Company and each of its
Restricted Subsidiaries; PROVIDED that the Company and any such Restricted
Subsidiary shall not be required to preserve the corporate existence of any such
Subsidiary or any such right or franchise if the Board shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.05. Maintenance of Property. The Company shall cause
all Property used or useful in the conduct of its business or the business of
any of its Restricted Subsidiaries to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and shall
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 that nothing in this Section
4.05 shall prevent the Company from discontinuing the operation or maintenance
of any of such Property if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any of its
Subsidiaries and not disadvantageous in any material respect to the Holders.
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SECTION 4.06. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any of its Subsidiaries or upon the income, profits
or Property of the Company or any of its Subsidiaries and (b) all material
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the Property of the Company or any of its Subsidiaries;
provided that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP or other
appropriate provision has been made.
SECTION 4.07. SEC Reports. Notwithstanding that the Company
may not be required to remain subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Company shall file with the Commission and
provide the Trustee and Noteholders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections. In addition, the Company will make available,
upon request, to any Holder and any prospective purchaser of Notes the
information required pursuant to Rule 144A(d)(4) under the Securities Act during
any period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act. The Company also shall comply with the other provisions of TIA
Section 314(a). Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein,
including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.08. Limitation on Indebtedness. The Company shall
not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness (including without limitation, any Acquired
Indebtedness) other than Permitted Indebtedness. Notwithstanding the foregoing,
in addition to Permitted Indebtedness, the Company or any Restricted Subsidiary
may Incur Indebtedness (including, without limitation, Acquired Indebtedness) if
(i) no Default or Event of Default shall have occurred and be continuing on the
date of the proposed Incurrence thereof or would result as a consequence of such
proposed Incurrence and (ii) immediately after giving effect to such proposed
Incurrence, the Consolidated Coverage Ratio of the Company is at least 2.0 to
1.0.
SECTION 4.09. Limitation on Restricted Payments.(a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default or Event of Default shall have occurred and be
continuing (or would result therefrom);
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(2) the Company or such Restricted Subsidiary is not able to
Incur, after giving effect to such Restricted Payment, an additional $1.00 of
Indebtedness pursuant to the second sentence of Section 4.08; or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued on a
cumulative basis during the period (treated as one accounting period)
beginning on the first day of the fiscal quarter beginning immediately
following the Issue Date to the end of the most recent fiscal quarter
ending at least 45 days prior to the date of such Restricted Payment
(or, in case such Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of, or as a capital contribution in
respect of, its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Company and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the Company
or any of its Subsidiaries for the benefit of their employees);
(C) the amount by which Indebtedness of the Company
is reduced on the Company's balance sheet upon the conversion or
exchange (other than by a Subsidiary of the Company) subsequent to the
Issue Date of any Indebtedness of the Company convertible or
exchangeable for Capital Stock (other than Disqualified Stock) of the
Company (less the amount of any cash, or the fair value of any other
property, distributed by the Company upon such conversion or exchange);
(D) an amount equal to the sum of (i) the net
reduction in Investments in any Person resulting from dividends,
repayments of loans or advances or other transfers of assets, in each
case to the Company or any Restricted Subsidiary from such Person, and
(ii) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Restricted Subsidiary; PROVIDED, HOWEVER, that the
foregoing sum shall not exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made (and treated as a
Restricted Payment) by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary; and
(E) $10 million.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit:
(1) if no Default or Event of Default shall have occurred and
be continuing, any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, or capital contribution in respect of, Capital
Stock of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company); PROVIDED, HOWEVER, that (A) such
purchase
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or redemption shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale or capital contribution
shall be excluded from the calculation of amounts under clause (3) (B) of
paragraph (a) above;
(2) if no Default or Event of Default shall have occurred and
be continuing, any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be Incurred under Section
4.08; PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with this covenant; PROVIDED, HOWEVER, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or result
therefrom); PROVIDED FURTHER, that such dividend shall be included in the
calculation of the amount of Restricted Payments; and
(4) if no Default or Event of Default shall have occurred and
be continuing or would result therefrom, any purchase of any fractional share of
Capital Stock of the Company resulting from (A) any dividend or other
distribution on outstanding shares of Capital Stock that is payable in shares of
such Capital Stock (including any stock split or subdivision of the outstanding
Capital Stock of the Company), (B) any combination of all of the outstanding
shares of Capital Stock of the Company, (C) any reorganization or consolidation
of the Company in any merger of the Company with or into any other Person or (D)
the conversion of any securities of the Company into shares of Capital Stock of
the Company; PROVIDED, HOWEVER, that such purchases shall be included in the
calculation of the amount of Restricted Payments.
SECTION 4.10. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary:
(a) to pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by the
profits of the Company or such Restricted Subsidiary or pay any Indebtedness
owed to the Company,
(b) to make any loans or advances to the Company or to any
Restricted Subsidiary or
(c) to transfer any of its property or assets to the Company
or to any Restricted Subsidiary, except any encumbrance or restriction existing
under or by reason of:
(i) the Senior Credit Facility as in effect on the
Issue Date;
(ii) the Notes, this Indenture or the Note
Guarantees;
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(iii) a Receivables Program of a Receivables
Subsidiary; PROVIDED that such encumbrances and restrictions are
customarily required by the institutional sponsor or arranger at the
time of entering into such Receivables Program in similar types of
documents relating to the purchase of similar receivables in connection
with the financing thereof;
(iv) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person or the
properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired;
(v) Refinancing Indebtedness Incurred pursuant to an
agreement referred to in clause (i), (ii), (iii) or (iv); PROVIDED,
HOWEVER, that the encumbrances and restrictions contained in any such
refinancing agreement are no less favorable to the Noteholders than
encumbrances and restrictions contained in such agreements governing
the Indebtedness being refinanced;
(vi) customary nonassignment provisions in leases
governing leasehold interests to the extent such provisions restrict
the transfer of the lease or the property leased thereunder;
(vii) security agreements or mortgages securing
Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security
agreements or mortgages; and
(viii) applicable law.
SECTION 4.11. Limitation on Sales of Assets and Subsidiary
Stock.(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Sale unless:
(i) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the fair market
value (including as to the value of all non-cash consideration) of the shares
and assets subject to such Asset Sale (which fair market value shall be
determined in good faith by the Board of Directors for any transaction (or
series of transactions) involving in excess of $1,000,000) and at least 75% of
the consideration received therefor by the Company or such Restricted Subsidiary
is in the form of cash or Cash Equivalents and is received at the time of such
sale and
(ii) an amount equal to 100% of the Net Available Cash from
such Asset Sale is applied by the Company (or such Restricted Subsidiary, as the
case may be):
(A) first, to the extent the Company elects (or is
required by the terms of any Senior Indebtedness), to prepay, repay,
redeem or purchase Senior Indebtedness and, in the case of any Senior
Indebtedness under any revolving credit facility, effect a permanent
reduction in the availability under such revolving credit facility,
within 180 days from the date of such Asset Sale and
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(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), to the
extent the Company elects, and within 180 days from the date of such
Asset Sale, to:
(1) make an investment in properties or
assets that replace the properties or assets that were the
subject of such Asset Sale or in properties or assets that
will be used in a Related Business or
(2) acquire the Capital Stock of a Person
that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock; PROVIDED that such Person
is, at the time it becomes a Restricted Subsidiary, engaged in
a Related Business.
(b) Any Net Available Cash not applied within 180 days after
the consummation of an Asset Sale as provided in clauses (A) or (B) of paragraph
(a) above will be deemed to constitute "Excess Proceeds." When the aggregate
amount of Excess Proceeds exceeds $5.0 million, the Company will be required to
make an offer to all Holders (an "Asset Sale Offer"), to purchase, on a pro rata
basis the principal amount of Notes equal in amount to the Excess Proceeds (and
not just the amount thereof that exceeds $5.0 million) (the "Asset Sale Offer
Amount"), at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon to the date of purchase (subject to the right of each Holder of record
on the relevant Record Date to receive interest due on the relevant Interest
Payment Date), in accordance with the procedures set forth in this Indenture,
and in accordance with the following standards:
(i) If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee
shall select the Notes to be purchased on a pro rata basis, based on
the principal amount of Notes tendered, with such adjustments as may be
deemed appropriate by the Trustee, so that only Notes in denominations
of $1,000 or integral multiples thereof shall be purchased.
(ii) If the aggregate principal amount of Notes tendered
pursuant to such Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds following the completion
of the Asset Sale Offer for general corporate purposes (subject to the
other provisions of this Indenture).
Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds then required to be otherwise applied in accordance with this covenant
shall be reset to zero, subject to any subsequent Asset Sale.
(c) In the event of the transfer of substantially all (but not
all) of the property and assets of the Company and its Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01 below, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and its Subsidiaries not so transferred for purposes of this
covenant, and shall comply with the provisions of this covenant with respect to
such deemed sale as if it were an Asset Sale. In addition, the fair market value
of such properties and assets of the
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Company or its Subsidiaries deemed to be sold shall be deemed to be Net
Available Cash for purposes of this covenant.
(d) If at any time any non-cash consideration received by the
Company or any Subsidiary in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash, then such conversion or disposition
shall be deemed to constitute an Asset Sale hereunder and the Net Available Cash
thereof shall be applied in accordance with this covenant.
(e) Within 30 calendar days after the date the amount of
Excess Proceeds exceeds $5.0 million, the Company, or the Trustee at the request
and expense of the Company, shall send to each Holder by first-class mail,
postage prepaid, a notice prepared by the Company stating:
(i) that an Asset Sale Offer is being made pursuant
to this Section 4.11 and that all Notes that are timely tendered will
be accepted for payment, subject to proration if the amount of Excess
Proceeds is less than the aggregate principal amount of all Notes
timely tendered pursuant to the Asset Sale Offer;
(ii) the Asset Sale Offer Amount, the amount of
Excess Proceeds that are available to be applied to purchase tendered
Notes, and the date Notes are to be purchased pursuant to the Asset
Sale Offer (the "Asset Sale Purchase Date"), which date shall be a
Business Day no earlier than 30 calendar days nor later than 60
calendar days subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not tendered
or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment
of the Asset Sale Offer Amount with respect thereto, all Notes or
portions thereof accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest from and after the Asset Sale Purchase
Date;
(v) that any Holder electing to have any Notes or
portions thereof purchased pursuant to the Asset Sale Offer will be
required to surrender such Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of such Notes completed, to
the Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Asset Sale
Purchase Date;
(vi) that any Holder shall be entitled to withdraw
such election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Asset Sale Purchase
Date, a facsimile transmission or letter, setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing such Holder's election to
have such Notes or portions thereof purchased pursuant to the Asset
Sale Offer;
(vii) that any Holder electing to have Notes
purchased pursuant to the Asset Sale Offer must specify the principal
amount that is being tendered for purchase, which principal amount must
be $1,000 or an integral multiple thereof;
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(viii) if Certificated Notes have been issued hereof,
that any Holder of Certificated Notes whose Certificated Notes are
being purchased only in part will be issued new Certificated Notes
equal in principal amount to the unpurchased portion of the
Certificated Note or Notes surrendered, which unpurchased portion will
be equal in principal amount to $1,000 or an integral multiple thereof;
(ix) that the Trustee will return to the Holder of a
Global Note that is being purchased in part, such Global Note with a
notation on Schedule A thereof adjusting the principal amount thereof
to be equal to the unpurchased portion of such Global Note; and
(x) any other information necessary to enable any
Holder to tender Notes and to have such Notes purchased pursuant to
this Section 4.11.
(f) On the Asset Sale Payment Date, the Company shall (i)
accept for payment any Notes or portions thereof properly tendered and selected
for purchase pursuant to the Asset Sale Offer and Section 4.11(e) hereof; (ii)
irrevocably deposit with the Paying Agent, by 10:00 a.m., New York City time, on
such date, in immediately available funds, an amount equal to the Asset Sale
Offer Amount in respect of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee the Notes so accepted together
with an Officers' Certificate listing the Notes or portions thereof tendered to
the Company and accepted for payment. Subject to the provisions of Section 4.01,
the Paying Agent shall promptly send by first class mail, postage prepaid, to
each Holder or portions thereof so accepted for payment the Asset Sale Offer
Amount for such Notes or portions thereof. The Company shall publicly announce
the results of the Asset Sale Offer on or as soon as practicable after the Asset
Sale Purchase Date. For purposes of this Section 4.11, the Trustee shall act as
the Paying Agent.
(g) Upon surrender and cancellation of a Certificated Note
that is purchased in part, the Company shall promptly issue and the Trustee
shall authenticate and deliver to the surrendering Holder of such Certificated
Note, a new Certificated Note equal in principal amount to the unpurchased
portion of such surrendered Certificated Note; PROVIDED that each such new
Certificated Note shall be in a principal amount of $1,000 or an integral
multiple thereof.
(h) Upon surrender of a Global Note that is purchased in part,
the Paying Agent shall forward such Global Note to the Trustee who shall make a
notation on Schedule A thereof to reduce the principal amount of such Global
Note, as provided in Section 2.05(c) hereof.
(i) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section 4.11. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.11 by virtue thereof.
SECTION 4.12. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction
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(including the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service) with any Affiliate of
the Company (an "Affiliate Transaction") unless the terms thereof:
(i) are no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate;
(ii) if such Affiliate Transaction involves an amount in
excess of $1,000,000, (i) are set forth in writing and (ii) have been approved
by a majority of the disinterested members of the Board of Directors; and
(iii) if such Affiliate Transaction involves an amount in
excess of $5,000,000, have been determined by a nationally recognized investment
banking or accounting firm having experience in such matters to be fair, from a
financial point of view, to the Company and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.09;
(ii) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans or similar
employee benefit plans or arrangements approved by the Board of Directors;
(iii) the grant of stock options or similar rights to
employees and directors of the Company pursuant to plans approved by the Board
of Directors;
(iv) loans or advances to employees in the ordinary course of
business in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed $2,000,000 in the aggregate
outstanding at any one time;
(v) the payment of reasonable fees to directors of the Company
and its Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries; and
(vi) any Affiliate Transaction (x) between the Company and a
Restricted Subsidiary, (y) between Restricted Subsidiaries or (z) between the
Company or a Restricted Subsidiary and a Joint Venture; PROVIDED that, no
Affiliate of the Company other than a Restricted Subsidiary owns any Capital
Stock in or otherwise has a material financial interest in any such Restricted
Subsidiary or Joint Venture, as the case may be.
SECTION 4.13. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company shall not sell or otherwise
dispose of any shares of Capital Stock of a Restricted Subsidiary, and shall not
permit any Restricted Subsidiary, directly or indirectly, to issue or sell or
otherwise dispose of any shares of its Capital Stock except to the Company or a
Restricted Subsidiary; PROVIDED, HOWEVER, that this covenant will not prohibit
the sale of 100% of
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the shares of the Capital Stock of any Restricted Subsidiary
owned by the Company or any Restricted Subsidiary effected in accordance with
Section 4.11 and Section 5.01.
SECTION 4.14. Change of Control. (a) Upon the occurrence of
any of the following events (each a "Change of Control"), each Holder shall have
the right to require that the Company repurchase such Holder's Notes pursuant to
the offer described in Section 4.14(b) hereof (the "Change of Control Offer") at
a purchase price (the "Change of Control Purchase Price") in cash equal to 101%
of the aggregate principal amount of such Notes (or portions thereof) to be
redeemed plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the purchase date (the "Change of Control Payment Date") (subject to
the right of holders of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date):
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (i) such person shall be
deemed to have "beneficial ownership" of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 45.0% of the total
voting power of the Voting Stock of the Company; PROVIDED, HOWEVER, that the
Permitted Holders beneficially own (as defined above), directly or indirectly,
in the aggregate a lesser percentage of the total voting power of the Voting
Stock of the Company than such other person and do not have the right or ability
by voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors;
(ii) the Company merges with or into another Person or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person merges with or into
the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (x) the
outstanding Voting Stock of the Company is converted into or exchanged for (1)
Voting Stock (other than Disqualified Stock) of the surviving or transferee
corporation and/or (2) cash, securities or other property in an amount which
could be paid by the Company as a Restricted Payment under Section 4.09 and (y)
immediately after such transaction no "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) (other than the Permitted Holders)
is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of (1) 45.0% or more of the voting power of the Voting
Stock of the surviving or transferee corporation on a fully diluted basis, after
giving effect to the conversion or exercise of all outstanding warrants, options
and other securities of such surviving or transferee corporation, convertible
into or exercisable for Voting Stock of such surviving or transferee corporation
(whether or not such securities are then currently convertible or exercisable)
and (2) a greater percentage of the voting power of the Voting Stock of such
surviving or transferee corporation calculated on such fully diluted basis, than
the percentage beneficially owned by the Permitted Holders; or
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(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by a
vote of 66 2/3% of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(i) that a Change of Control has occurred and a
Change of Control Offer is being made pursuant to this Section 4.14,
and that all Notes that are timely tendered will be accepted for
payment;
(ii) the Change of Control Purchase Price, and the
Change of Control Payment Date, which date shall be a Business Day no
earlier than 30 calendar days nor later than 60 calendar days
subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not tendered
or accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment
of the Change of Control Purchase Price with respect thereto, all Notes
or portions thereof accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest from and after the Change
of Control Payment Date;
(v) that any Holder electing to have any Notes or
portions thereof purchased pursuant to a Change of Control Offer will
be required to tender such Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of such Notes completed, to
the Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of
Control Payment Date;
(vi) that any Holder shall be entitled to withdraw
such election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter, setting forth the
name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing such Holder's
election to have such Notes or portions thereof purchased pursuant to
the Change of Control Offer;
(vii) that any Holder electing to have Notes
purchased pursuant to the Change of Control Offer must specify the
principal amount that is being tendered for purchase, which principal
amount must be $1,000 or an integral multiple thereof;
(viii) if Certificated Notes have been issued, that
any Holder of Certificated Notes whose Certificated Notes are being
purchased only in part will be issued new Certificated Notes equal in
principal amount to the unpurchased portion of the
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Certificated Note or Notes surrendered, which unpurchased portion will
be equal in principal amount to $1,000 or an integral multiple thereof;
(ix) that the Trustee will return to the Holder of a
Global Note that is being purchased in part, such Global Note with a
notation on Schedule A thereof adjusting the principal amount thereof
to be equal to the unpurchased portion of such Global Note; and
(x) any other information necessary to enable any
Holder to tender Notes and to have such Notes purchased pursuant to
this Section 4.14.
(c) On the Change of Control Payment Date, the Company shall
(i) accept for payment all Notes or portions thereof properly tendered pursuant
to the Change of Control Offer, (ii) irrevocably deposit with the Paying Agent,
by 10:00 a.m., New York City time, on such date, in immediately available funds,
an amount equal to the Change of Control Purchase Price in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so tendered together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. Subject to the provisions of Section 4.01 hereof, the Paying Agent
shall promptly send by first class mail, postage prepaid, to each Holder or
portions thereof so accepted for payment the Change of Control Purchase Price
for such Notes or portions thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 4.14, the Trustee
shall act as the Paying Agent.
(d) Upon surrender and cancellation of a Certificated Note
that is purchased in part pursuant to the Change of Control Offer, the Company
shall promptly issue and the Trustee shall authenticate and deliver to the
surrendering Holder of such Certificated Note a new Certificated Note equal in
principal amount to the unpurchased portion of such surrendered Certificated
Note; PROVIDED that each such new Certificated Note shall be in a principal
amount of $1,000 or an integral multiple thereof.
Upon surrender of a Global Note that is purchased in part
pursuant to a Change of Control Offer, the Paying Agent shall forward such
Global Note to the Trustee who shall make a notation on Schedule A thereof to
reduce the principal amount of such Global Note to an amount equal to the
unpurchased portion of such Global Note, as provided in Section 2.05(c) hereof.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to this
Section 4.14. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.14, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.14 by virtue
thereof.
(f) Prior to complying with the provisions of this Section
4.14, but in any event within 30 days following a Change of Control, the Company
shall either repay all outstanding
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Senior Indebtedness or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Indebtedness to permit the repurchase of
Notes required by this Section 4.14.
SECTION 4.15. Limitation on Liens The Company shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or indirectly,
create, Incur, assume or permit to exist any Lien on or with respect to any
property or asset (including any document or instrument in respect of goods or
accounts receivable) of the Company or of any Restricted Subsidiary, whether now
owned or hereafter acquired, or assign or otherwise convey any right to receive
any income or profits therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the Uniform
Commercial Code of any State or under any similar recording or notice statute,
other than Permitted Liens, unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to the
Notes, the Notes are secured by a Lien on such property, assets or proceeds that
is senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured.
SECTION 4.16. Limitation on Layered Indebtedness The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, Incur any Indebtedness that is subordinate in right of payment to
any other Indebtedness, unless such Indebtedness is subordinate in right of
payment to, or ranks PARI PASSU with, the Notes or, in the case of Restricted
Subsidiaries that are Note Guarantors, such Indebtedness is subordinate in right
of payment to, or ranks PARI PASSU with, the Note Guarantees of such Note
Guarantors.
The Note Guarantors will not, directly or indirectly,
Guarantee any Indebtedness of the Company that is subordinate in right of
payment to any other Indebtedness of the Company unless such Guarantee is
subordinate in right of payment to, or ranks PARI PASSU with, the Note
Guarantees of such Note Guarantors.
SECTION 4.17. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.18. Waiver of Stay, Extension or Usury Laws. The
Company and each of the Note Guarantors will not at any time, to the extent that
they may lawfully not do so, insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company or the Note
Guarantors from paying all or any portion of the principal of or premium, if
any, or interest or Liquidated Damages, if any, on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and, to the extent
that they may lawfully do so, the Company and the Note Guarantors hereby
expressly waive all benefit or advantage of any such law and expressly agree
that they will
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not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.19. Investment Company Act. None of the Company or
its Subsidiaries shall become an investment company subject to registration
under the Investment Company Act of 1940, as amended.
SECTION 4.20. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
consolidate with or merge with or into any Person (other than the consolidation
or merger of a Wholly-Owned Restricted Subsidiary with another Wholly-Owned
Restricted Subsidiary or into the Company), or sell, assign, convey, transfer,
lease or otherwise dispose of (or permit any Subsidiary to sell, assign, convey,
transfer, lease or otherwise dispose of), in one transaction or a series of
transactions, all or substantially all its assets (determined on a consolidated
basis for the Company and its Subsidiaries) to, any Person, unless:
(i) the Company, in the case of a transaction
involving the Company, or such Restricted Subsidiary in the case of a
transaction involving a Restricted Subsidiary, shall be the resulting,
surviving or transferee Person or the resulting, surviving or
transferee Person (in either case, the "Successor Company") shall be a
Person organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the
Successor Company (if not the Company or such Restricted Subsidiary)
shall expressly assume, by an indenture supplemental thereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Notes and this Indenture, or
the obligation of such Restricted Subsidiary under its Note Guarantee,
as the case may be;
(ii) immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Company as a result of such transaction as having been
Incurred by such Successor Company at the time of such transaction), no
Default shall have occurred and be continuing,
(iii) immediately after giving effect to such
transaction, the Company, if the transaction involves a Restricted
Subsidiary, or the Successor Company would be able to Incur an
additional $1.00 of Indebtedness pursuant to the second sentence of
Section 4.08,
(iv) in the case of a transaction involving the
Company, immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net
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Worth in an amount that is not less than the Consolidated Net Worth of
the Company prior to such transaction;
(v) if, as a result of any such transaction, property
or assets of the Company or a Restricted Subsidiary would become
subject to a Lien securing Indebtedness not excepted from the
provisions of this Indenture described above under Section 4.15, the
Company, any such Restricted Subsidiary or the Successor Company, as
the case may be, shall have secured the Notes and the relevant Note
Guarantees, as required by such provisions; and
(vi) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indenture
(if any) comply with this Indenture.
(b) the Successor Company shall be the successor to the
Company or such Restricted Subsidiary, as the case may be, and shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
or such Restricted Subsidiary under this Indenture, but the predecessor Company
or Restricted Subsidiary in the case of a conveyance, transfer or lease 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. The term "Event of Default,"
wherever used herein with respect to the Notes, means any one of the following
events (whatever the reason for such event, and whether it shall be voluntary or
involuntary, or be effected by operation of law, pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Company defaults in any payment of interest on or
Liquidated Damages with respect to any Note when the same becomes due and
payable, whether or not such payment shall be prohibited by Article 10, and such
default continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of, or premium, if any, on any Note when the same becomes due and payable at its
Stated Maturity, upon redemption, upon declaration or otherwise, whether or not
such payment shall be prohibited by Article 10 or (ii) fails to redeem or
purchase Notes when required pursuant to this Indenture or the Notes, whether or
not such redemption or purchase shall be prohibited by Article 10;
(3) 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 Sections 4.08, 4.09, 4.11, 4.14 and 5.01;
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(4) the Company fails to comply with any of its other
agreements or covenants in or provisions of the Notes or this Indenture and such
failure continues for 30 days after the notice specified below;
(5) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total amount of
such Indebtedness unpaid or accelerated exceeds $10,000,000 or its foreign
currency equivalent at the time;
(6) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company or any Significant
Subsidiary of the Company in an involuntary case or proceeding under any
Bankruptcy Law or (ii) a decree or order (A) adjudging the Company or any
Significant Subsidiary of the Company a bankrupt or insolvent, or (B) approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of, or in respect of, the Company or any Significant Subsidiary of
the Company under any Bankruptcy Law, or (C) appointing a Custodian of the
Company or any Significant Subsidiary of the Company or of any substantial part
of the Property of the Company or any Significant Subsidiary of the Company, or
(D) ordering the winding-up or liquidation of the affairs of the Company or any
Significant Subsidiary of the Company, and in each case, the continuance of any
such decree or order for relief or any such other decree or order unstayed and
in effect for a period of 60 consecutive calendar days; or
(7) (i) the commencement by the Company or any Significant
Subsidiary of the Company of a voluntary case or proceeding under any Bankruptcy
Law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent; or (ii) the consent by the Company or any Significant Subsidiary of
the Company to the entry of a decree or order for relief in respect of the
Company or any Significant Subsidiary of the Company in an involuntary case or
proceeding under any Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company or any Significant Subsidiary
of the Company; or (iii) the filing by the Company or any Significant Subsidiary
of the Company of a petition or answer or consent seeking reorganization or
relief under any Bankruptcy Law; or (iv) the consent by the Company or any
Significant Subsidiary of the Company to the filing of such petition or to the
appointment of or taking possession by a Custodian of the Company or any
Significant Subsidiary of the Company or of any substantial part of the Property
of the Company or any Significant Subsidiary of the Company, or (v) the making
by the Company or any Significant Subsidiary of the Company of an assignment for
the benefit of creditors; or (vi) the admission by the Company or any
Significant Subsidiary of the Company in writing of its inability to pay its
debts generally as they become due; or (vii) the approval by stockholders of the
Company or any Significant Subsidiary of the Company of any plan or proposal for
the liquidation or dissolution of the Company or any Significant Subsidiary of
the Company; or (viii) the taking of corporate action by the Company or any
Significant Subsidiary of the Company in furtherance of any such action; or
(8) any judgment or decree for the payment of money in excess
of $10,000,000 or its foreign currency equivalent at the time is entered against
the Company or any Significant Subsidiary, remains outstanding for a period of
60 days following the entry of such judgment or
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decree and is not discharged, waived or the execution thereof stayed within 10
days after the notice specified below; or
(9) the Note Guarantee of any Note Guarantor ceases to be in
full force and effect (other than (x) in accordance with the terms of such Note
Guarantee or (y) with respect to any Note Guarantor that is not a Significant
Subsidiary, as a result of the occurrence of an event described in clause (6) or
clause (7) above) or any Note Guarantor denies or disaffirms its obligations
under its Note Guarantee.
A Default under clause (4) or (8) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Notes notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (3), (5) or (9) and any event which with
the giving of notice or the lapse of time would become an Event of Default under
clause (4) or (8), its status and what action the Company is taking or proposes
to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(6) or (7) with respect to the
Company) occurs and is continuing, the Trustee by written notice to the Company,
or the Holders of at least 25% in principal amount of the Notes by written
notice to the Company and the Trustee, may declare the principal of, premium, if
any, and accrued but unpaid interest and Liquidated Damages, if any, on all the
Notes to be due and payable. Upon such a declaration, such principal, premium,
if any, and interest and Liquidated Damages, if any, shall be due and payable
immediately. If an Event of Default specified in Section 6.01(6) or (7) with
respect to the Company occurs, the principal of, premium, if any, and interest
and Liquidated Damages, if any, on all the Notes shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Noteholders. The Holders of a majority in principal amount of
the Notes by notice to the Trustee and the Company may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium, if any, or interest and Liquidated Damages, if
any, that has become due solely because of such acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. The Company covenants that if an
Event of Default specified in Section 6.01(1) or 6.01(2) occurs the Company
shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders, the whole amount then due and payable on the Notes for principal,
premium, if any, and interest and Liquidated Damages, if any, and, to the extent
that payment of such interest shall be legally enforceable, interest upon the
overdue principal (and premium, if any) and upon Defaulted Interest (and
Liquidated Damages, if any) at the rate or rates prescribed therefor in the
Notes, and, in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and all other amounts due to the Trustee pursuant to
Section 7.07 hereof.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal of, premium,
if any, or interest or Liquidated Damages, if any, on the Notes or to enforce
the performance of any provision of the Notes or this Indenture. 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. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of not less
than a majority in principal amount of the Notes by notice to the Trustee may,
on behalf of the Holders of all the Notes, waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default (i)
in the payment of the principal of, premium, if any or interest or Liquidated
Damages, if any, on a Note (except a payment default resulting from an
acceleration that has been rescinded) or (ii) in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Noteholder
affected.
SECTION 6.05. Control by Majority. The Holders of not less
than a majority in principal amount of the Notes may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Noteholders or would involve the Trustee in personal
liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Noteholder may not pursue
any remedy with respect to this Indenture or the Notes unless:
(1) the Holder has previously given to the Trustee written
notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Notes have made a written request to the Trustee to pursue the remedy in respect
of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against any loss, liability or expense to be
Incurred in compliance with such request;
(4) the Trustee has not complied with the request within 60
days after receipt of the request and the offer of security or indemnity; and
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(5) the Holders of a majority in principal amount of the Notes
have not given the Trustee a direction inconsistent with the request during such
60-day period.
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
to receive payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes held by such Holder, on or after the respective
due dates expressed in the Notes, or the Redemption Dates or purchase dates
provided for therein or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing on the Notes for
principal, premium, if any, and interest and Liquidated Damages, if any, and, to
the extent that payment of such interest shall be legally enforceable, interest
upon the overdue principal (and premium, if any) and upon Defaulted Interest
(and Liquidated Damages, if any) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may 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 and the Noteholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to
the extent required by Article 10 or Article 12;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for principal of, premium, if any, and interest and Liquidated
Damages, if any, ratably, without preference or priority of
any kind, according to the amounts due and payable on the
Notes for principal and interest, respectively; and
FOURTH: to the Company.
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The Trustee may fix a Record Date and payment date for any
payment to Noteholders pursuant to this Section 6.10. At least 15 days before
such Record Date, the Company shall mail to each Noteholder and the Trustee a
notice that states the record date, the payment date and amount to be paid.
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 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 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Notes.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture, and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise 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 Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other
facts stated therein).
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section 7.01;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
6.05.
(d) 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.
(e) money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(f) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise Incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
any Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be
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full and complete authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by an Officers' Certificate and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution.
(g) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be Incurred by it in compliance with
such request or direction.
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, the Note Guarantors or their Affiliates
with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
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, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is actually known to the Trustee, the Trustee shall mail to
each Noteholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in the payment of principal of, premium, if any, or
interest or Liquidated Damages, if any, on any Note (including payments pursuant
to the mandatory redemption provisions of such Note, if any), 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.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Noteholder a brief report dated as of May 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange (if any) on
which the Notes are listed. The Company agrees to notify promptly the Trustee
whenever the Notes become listed on any stock exchange and of any delisting
thereof.
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SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time compensation for its services as the
Company and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses Incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents and counsel. The Company shall indemnify the
Trustee against any and all loss, liability or expense (including reasonable
attorneys' fees) Incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. 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 of the claim; PROVIDED that the Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel if the actual or potential defendants in, or the targets of, any
such claim include both the Trustee and the Company and the Trustee shall have
reasonably concluded that there may be legal defenses available to it which are
different from or additional to those available to the Company. The Trustee will
not, without the prior written consent of the Company, settle or compromise or
consent to the entry of any judgment with respect to any claim in respect of
which indemnification may be sought hereunder. The Company need not reimburse
any expense or indemnify against any loss, liability or expense Incurred by the
Trustee through the Trustee's own willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of, premium, if any, and interest and Liquidated Damages, if any,
on particular Notes.
The Company's payment obligations pursuant to this Section
7.07 shall survive the discharge of this Indenture. When the Trustee Incurs
expenses after the occurrence of a Default specified in Section 6.01(6) or (7)
with respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of not less than a majority
in principal amount of the Notes may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Notes and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint 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, subject to the Lien
provided for in Section 7.07.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of not less than 10% in principal amount of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee, and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of authentication of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
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securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 7.12. Trustee's Application for Instructions from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, be set forth in writing and shall
state any action proposed to be taken or omitted by the Trustee under this
Indenture and the date on and/or after which such action shall be taken or such
omission shall be effective. The Trustee shall not be liable for any action
taken by, or omission of, the Trustee in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than three Business Days after the date any Officer of the
Company actually receives such application, unless any such Officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Notes; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Notes (other than
Notes replaced pursuant to Section 2.07) for cancellation or
(ii) all outstanding Notes have become due and
payable, whether at Stated Maturity or as a result of the
mailing of a notice of redemption pursuant to Article 3 hereof
and the Company irrevocably deposits with the Trustee funds
sufficient to pay at Stated Maturity or upon redemption all
outstanding Notes, including interest accrued and unpaid
thereon to Stated Maturity or such Redemption Date (other than
Notes replaced pursuant to Section 2.07), and if in either
case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers' Certificate
and an Opinion of Counsel and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate:
(i) all its obligations under the Notes and this
Indenture ("legal defeasance option") subject to the following
which shall survive until otherwise terminated or discharged
hereunder:
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(A) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of premium, if
any, and interest and Liquidated Damages, if any, on such
Notes when payments are due from the trust referred to below,
(B) the Company's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.06, 2.07, 2.09, 4.02, 4.03
and 4.04 hereof,
(C) the Company's obligations under the Registration
Rights Agreement,
(D) the rights, powers, trusts, duties and immunities
of the Trustee under this Indenture and the Company's
obligations in connection therewith,
(E) Article III hereof, and
(F) this Article VIII; or
(ii) its obligations under Sections 4.05 through 4.16
and the operation of Section 6.01(3) (but only as it applies
to Section 5.01(a)(iii) and (iv)), 6.01(5), 6.01(6), 6.01(7)
and 6.01(8) (but, in the case of Sections 6.01(6) and (7),
with respect only to Significant Subsidiaries) or contained in
Section 5.01(a)(iii) and (iv) ("covenant defeasance option").
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment
of the Notes may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Notes may not
be accelerated because of an Event of Default specified in Sections 6.01(3),
6.01(4), and 6.01(9) or because of the failure of the Company to comply with
Section 5.01(a)(iii) and (iv). If the Company exercise its legal defeasance
option or its covenant defeasance option, each Note Guarantor shall be released
from all of its obligations under its Note Guarantee.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 8.04, 8.05 and 8.06 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of and
interest on the Notes to maturity or redemption, as the case may be;
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(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their opinion
that the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal of, premium, if any, and interest and Liquidated
Damages, if any, when due on all the Notes to Stated Maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(6) or (7) with respect to
the Company occurs which is continuing at the end of the period;
(4) the deposit does not result in a breach or violation of,
or constitute a default under any other agreement or instrument binding on the
Company or any of its Subsidiaries and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment Company Act
of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Noteholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Noteholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred;
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Notes as contemplated by this
Article 8 have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
the Note Guarantors or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company, the Note Guarantors or others;
and
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(10) such legal defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest within the meaning of the TIA
(assuming for the purpose of this clause (10) that all Notes are in default
within the meaning of such Act).
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Notes at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. 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 of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes. Money and securities so held in trust
are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time. Subject to any applicable abandoned
property law, the Trustee and the Paying Agent shall pay to the Company upon
request any money held by them for the payment of principal of, premium, if any,
or interest or Liquidated Damages, if any, that remains unclaimed for two years,
and, thereafter, Noteholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 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 this Article 8 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with this Article 8; 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.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Notes without notice to or consent of
any Noteholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
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(2) to comply with Article 5;
(3) to provide for uncertificated Notes in addition to or in
place of Certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes
are issued in registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Notes are described in Section 163(f)(2)(B)
of the Code;
(4) to make any change in Article 10 or Article 12 that would
limit or terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article 10 or Article 12;
(5) to add Guarantees with respect to the Notes or to secure
the Notes;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture under the
TIA; or
(8) to make any change that does not adversely affect the
rights of any Noteholder.
An amendment under this Section 9.01 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.01 becomes effective,
the Company shall mail to Noteholders a notice briefly describing such
amendment. The failure to give such notice to all Noteholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Notes without notice to any Noteholder
but with the written consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any past Default or compliance with any
provisions may also be waived with the consent of the Holders of not less than a
majority of the principal amount of Notes then outstanding. However, without the
consent of each Noteholder affected, an amendment may not:
(1) reduce the amount of Notes whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of
any Note;
(4) reduce the premium payable upon the redemption of any Note
or change the time at which any Note may be redeemed in accordance with Article
3;
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(5) make any Note payable in money other than that stated in
the Note;
(6) make any change in Article 10 or Article 12 that adversely
affects the rights of any Noteholder under Article 10 or Article 12;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section 9.02; or
(8) make any change in any Note Guarantee that would adversely
affect the Noteholders.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change
that adversely affects the rights under Article 10 or Article 12 of any holder
of Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.02 becomes effective,
the Company shall mail to Noteholders a notice briefly describing such
amendment. The failure to give such notice to all Noteholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Note shall bind the Holder
and every subsequent Holder of that Note or portion of the Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
or waiver is not made on the Note. However, any such Holder or subsequent Holder
may revoke the consent or waiver as to such Holder's Note or portion of the Note
if the Trustee receives the notice of revocation before the date the amendment
or waiver becomes effective. After an amendment or waiver becomes effective, it
shall bind every Noteholder. An amendment or waiver becomes effective upon the
execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a Record
Date for the purpose of determining the Noteholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a Record Date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Noteholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such Record Date. No such consent shall be valid or
effective for more than 120 days after such Record Date.
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SECTION 9.05. Notation on or Exchange of Notes. If an
amendment changes the terms of a Note, the Trustee may require the Holder of the
Note to deliver it to the Trustee. The Trustee may place an appropriate notation
on the Note regarding the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate and deliver
a new Note that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment 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 such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture and
that such amendment constitutes the legal, valid and binding obligation of the
Company and each Note Guarantor, subject to customary exceptions.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
SUBORDINATION OF THE NOTES
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Noteholder by accepting a Note agrees, that the Indebtedness evidenced
by the Notes is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. Only Indebtedness that
is Senior Indebtedness will rank senior to the Notes in accordance with the
provisions set forth herein. The Notes shall in all respects rank PARI PASSU
with, or be senior to, all other Indebtedness of the Company. All provisions of
this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Senior Indebtedness in cash or cash
equivalents before Noteholders shall be entitled to receive any payment of
principal of, premium, if any, or interest or Liquidated Damages, if any, on the
Notes; and
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(2) until such Senior Indebtedness is paid in full in cash or
cash equivalents, any distribution to which Noteholders would be entitled but
for this Article 10 shall be made to holders of such Senior Indebtedness as
their interests may appear, except that Noteholders may receive (a) securities
of a Person that are subordinated ("Subordinated Reorganization Securities") to
such Senior Indebtedness to at least the same extent as the Notes are
subordinated to (A) Senior Indebtedness of the Company and (B) any securities
issued in exchange for Senior Indebtedness, and (b) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof.
SECTION 10.03. Default on Senior Indebtedness of the Company.
The Company may not pay the principal of, premium, if any, or interest or
Liquidated Damages, if any, on the Notes or make any deposit pursuant to Section
8.01 and may not repurchase, redeem or defease any Notes (collectively, "pay the
Notes") (other than Subordinated Reorganization Securities and payments and
other distributions made from any defeasance trust created pursuant to Section
8.01 hereof) if (i) any Designated Senior Indebtedness of the Company is not
paid when due or (ii) any other default on such Designated Senior Indebtedness
occurs and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y) such Designated
Senior Indebtedness has been paid in full; PROVIDED, HOWEVER, that the Company
may pay the Notes without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of such
Designated Senior Indebtedness. During the continuance of any default (other
than a default described in clause (i) or (ii) of the preceding sentence) with
respect to any Designated Senior Indebtedness of the Company pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the Notes
for a period (a "Payment Blockage Period") commencing upon the receipt by the
Company and the Trustee of written notice (a "Blockage Notice") of such default
from the Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated (i) by written notice to
the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such Designated Senior Indebtedness or
(iii) because the Representative of the holders of such Designated Senior
Indebtedness shall have notified the Trustee that the default giving rise to
such Blockage Notice is no longer continuing). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section 10.03), unless the holders of
such Designated Senior Indebtedness or the Representative of such holders shall
have accelerated the maturity of such Designated Senior Indebtedness, the
Company may resume payments on the Notes after such Payment Blockage Period. Not
more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period. For purposes of this Section 10.03, no default
or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days,
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unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Notes. If payment of
the Notes is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or their Representative) of the acceleration.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Noteholders that because of this Article 10 should not
have been made to them, the Noteholders who receive the distribution shall hold
it in trust for holders of Senior Indebtedness of the Company and pay it over to
them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Notes are paid in full, Noteholders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to such Senior Indebtedness. A distribution
made under this Article 10 to holders of such Senior Indebtedness which
otherwise would have been made to Noteholders is not, as between the Company and
Noteholders, a payment by the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Noteholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Noteholders, the
obligation of the Company, which is absolute and unconditional, to pay principal
of, premium, if any, and interest and Liquidated Damages, if any, on the Notes
in accordance with their terms; or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a Default, subject to the rights of holders of Senior
Indebtedness of the Company to receive distributions otherwise payable to
Noteholders.
SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Notes and shall not be charged with knowledge of the existence
of facts that would prohibit the making of any such payments unless, not less
than two Business Days prior to the date of such payment, a Trust Officer of the
Trustee receives notice satisfactory to it that payments may not be made under
this Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; PROVIDED,
HOWEVER, that, if the holders of an issue of Senior Indebtedness of the Company
have a Representative, only the Representative may give the notice.
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The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness, and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the Notes
by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Noteholders or the Trustee to accelerate the
maturity of the Notes.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes shall not be subordinated to the prior payment of
any Senior Indebtedness or subject to the restrictions set forth in this Article
10, and none of the Noteholders shall be obligated to pay over any such amount
to the Company or any holder of Senior Indebtedness of the Company or any other
creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Noteholders shall
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representative for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 10, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
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SECTION 10.14. Trustee To Effectuate Subordination. Each
Noteholder by accepting a Note authorizes and directs the Trustee on such
Noteholder's behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Noteholders and the
holders of Senior Indebtedness of the Company as provided in this Article 10 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Noteholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
the Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.
ARTICLE 11
NOTE GUARANTEES; RELEASE OF NOTE GUARANTEES; ADDITIONAL NOTE GUARANTEES
SECTION 11.01. Note Guarantees. (a) Each Note Guarantor hereby
unconditionally and irrevocably Guarantees to each Holder and to the Trustee and
its successors and assigns (a) the full and punctual payment of principal of,
premium, if any, and interest and Liquidated Damages, if any, on the Notes when
due, whether at maturity, by acceleration, by redemption or otherwise, and all
other monetary obligations of the Company under this Indenture and the Notes and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Notes (all the
foregoing being hereinafter collectively called the "Obligations"). Each Note
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Note Guarantor and
that such Note Guarantor will remain bound under this Article 11 notwithstanding
any extension or renewal of any Obligation.
(b) Each Note Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpayment. Each Note Guarantor waives notice of
any default under the Notes or the Obligations. The obligations of each Note
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Notes or any
other agreement or otherwise; (b) any extension or renewal of any thereof, (c)
any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Notes or any
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other agreement; (d) the release of any security held by any Holder or the
Trustee for the Obligations or any of them; (e) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Obligations; or (f) any change in the ownership of any Note Guarantor.
(c) Each Note Guarantor further agrees that its Note Guarantee
herein constitutes a Guarantee of payment, performance and compliance when due
(and not a Guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
(d) Each Note Guarantee is, to the extent and in the manner
set forth in Article 12, subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness of such Note Guarantor and is
made subject to such provisions of this Indenture.
(e) Except as expressly set forth in Section 8.01(b), the
obligations of each Note Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Note Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Notes or any
other agreement, by any waiver or modification of any thereof, by any default,
failure or delay, willful or otherwise, in the performance of the Obligations,
or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of each Note
Guarantor or would otherwise operate as a discharge of such Note Guarantor as a
matter of law or equity.
(f) Each Note Guarantor further agrees that its Note Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal, premium, if any, or
interest or Liquidated Damages, if any, on any Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
(g) In furtherance of the foregoing and not in limitation of
any other right which any Holder or the Trustee has at law or in equity against
any Note Guarantor by virtue hereof, upon the failure of the Company to pay the
principal of, premium, if any or interest or Liquidated damages, if any, on any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any other
Obligation, each Note Guarantor hereby promises to and will, upon receipt of
written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to
the Holders or the Trustee an amount equal to the sum of (i) the unpaid amount
of such Obligations, (ii) accrued and unpaid interest on such Obligations (but
only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders and the Trustee.
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(h) Each Note Guarantor agrees that it shall not be entitled
to any right of subrogation in respect of any Obligations Guaranteed hereby
until payment in full of all Obligations and all obligations to which the
Obligations are subordinated as provided in Article 12. Each Note Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations Guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of such Note
Guarantor's Note Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
Guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6, such Obligations (whether or not due
and payable) shall forthwith become due and payable by such Note Guarantor for
the purposes of this Section 11.01.
(i) Each Note Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) Incurred by the Trustee or
any Holder in enforcing any rights under this Section 11.01.
SECTION 11.02. Successors and Assigns. This Article 11 shall
be binding upon each Note Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Notes shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.03. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 11
at law, in equity, by statute or otherwise.
SECTION 11.04. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Note Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Note Guarantor in any case shall entitle
such Note Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 11.05. Limitation of Note Guarantor's Liability. Each
Note Guarantor, and by its acceptance hereof each Holder, hereby confirms that
it is the intention of all such parties that the Note Guarantee of such Note
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, federal and state fraudulent conveyance laws or any similar
federal, state or foreign law. To effectuate the foregoing intention, the
Holders and each Note Guarantor hereby irrevocable agree that the obligations of
each Note Guarantor under this Article 11 shall be limited to the maximum amount
as will, after giving effect to all other contingent and fixed liabilities of
such Note Guarantor and after giving effect to any collections
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from or payments made by or on behalf of any other Note Guarantor in respect of
the obligations of such other Note Guarantor under this Article 11, result in
the obligations of such Note Guarantor under its Note Guarantee not constituting
a fraudulent transfer or conveyance under applicable federal, state or foreign
law.
SECTION 11.06. Release of Note Guarantees. In the event of a
sale or other disposition of all or substantially all of the assets of any Note
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the Capital Stock of any Note Guarantor, by way of merger,
consolidation or otherwise, such Note Guarantor (in the event of a sale or other
disposition of all of the Capital Stock of such Note Guarantor) will be released
and relieved of any obligations under its Note Guarantee or the Person acquiring
the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Note Guarantor) will not be required to
enter into a Note Guarantee; PROVIDED, in each case, that (i) such transaction
is carried out pursuant to and in accordance with Section 4.11 and Section 5.01
(if applicable) hereof. Upon delivery by the Company to the Trustee of an
Officers' Certificate and Opinion of Counsel, to the effect that such sale or
other disposition was made by the Company in accordance with the provisions of
this Indenture, including without limitation Section 4.11 and Section 5.01 (if
applicable) hereof, the Trustee shall execute any documents reasonably required
in order to evidence the release of any such Note Guarantor from its obligations
under its Note Guarantee.
SECTION 11.07. Additional Note Guarantees. The Company will
cause any Person that shall become a Domestic Restricted Subsidiary (an
"Additional Guarantor") to concurrently Guarantee (an "Additional Guarantee")
the Company's obligations under this Indenture and the Notes to the same extent
that the Note Guarantors have Guaranteed the Company's obligations under this
Indenture and the Notes, it being understood that such Additional Guarantee
shall be subordinated in right of payment to Senior Indebtedness of such
Additional Guarantor including Guarantees constituting Senior Indebtedness;
PROVIDED, HOWEVER, that each Additional Guarantor will be automatically and
unconditionally released and discharged from its obligations under such
Additional Guarantee only in accordance with Section 11.06 above.
ARTICLE 12
SUBORDINATION OF THE NOTE GUARANTEES
SECTION 12.01. Agreement To Subordinate. Each Note Guarantor
agrees, and each Noteholder by accepting a Note agrees, that the obligations of
such Note Guarantor are subordinated in right of payment, to the extent and in
the manner provided in this Article 12, to the prior payment of all Senior
Indebtedness of such Note Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness. Only
Senior Indebtedness of each Note Guarantor shall rank senior to the obligations
of such Note Guarantor in accordance with the provisions set forth herein. The
obligations of each Note Guarantor shall in all respects rank PARI PASSU with,
or be senior to, all other Indebtedness of such Note Guarantor.
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SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any Note Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such Note
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the such Note Guarantor or its property:
(1) holders of Senior Indebtedness of such Note Guarantor
shall be entitled to receive payment in full of such Senior Indebtedness in cash
or cash equivalents before Noteholders shall be entitled to receive any payment
pursuant to the Note Guarantee of such Note Guarantor; and
(2) until the Senior Indebtedness of such Note Guarantor is
paid in full in cash or cash equivalents, any distribution to which Noteholders
would be entitled but for this Article 12 shall be made to holders of such
Senior Indebtedness as their interests may appear, except that Noteholders may
receive Subordinated Reorganization Securities and payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof.
SECTION 12.03. Default on Senior Indebtedness of Note
Guarantors. Each Note Guarantor may not make any payment pursuant to any of its
obligations or repurchase, redeem or otherwise retire or defease any Notes or
other Obligations (collectively, "pay its Note Guarantee") (other than
Subordinated Reorganization Securities and payments and other distributions from
any defeasance trust created pursuant to Section 8.01 hereof) if (i) any
Designated Senior Indebtedness of the relevant Note Guarantor is not paid when
due or (ii) any other default on Designated Senior Indebtedness of such Note
Guarantor occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, the default has
been cured or waived and any such acceleration has been rescinded or such
Designated Senior Indebtedness has been paid in full. However, such Note
Guarantor may pay its Note Guarantee without regard to the foregoing if such
Note Guarantor and the Trustee receive written notice approving such payment
from the Representative of the Designated Senior Indebtedness of such Note
Guarantor with respect to which either of the events set forth in clause (i) or
(ii) of the immediately preceding sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the second preceding sentence) with respect to any Designated
Senior Indebtedness of such Note Guarantor pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, such Note Guarantor may not pay its Note Guarantee for
the Payment Blockage Period commencing upon the receipt by the Trustee (with a
copy to such Note Guarantor) of a Blockage Notice from the Representative of the
holders of such Designated Senior Indebtedness and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and such Note Guarantor from the Person or Persons who gave such
Blockage Notice, (ii) because a Representative of the holders of such Designated
Senior Indebtedness has notified the Trustee that the default giving rise to
such Blockage Notice is no longer continuing or (iii) because such Designated
Senior Indebtedness has been repaid in full). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the first
sentence of this paragraph), unless the holders of such Designated Senior
Indebtedness of such Note Guarantor or the Representative of such holders have
accelerated the maturity of such Designated Senior Indebtedness, such Note
Guarantor may
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resume payments on its Note Guarantee after the end of such Payment Blockage
Period. Each Note Guarantee shall not be subject to more than one Payment
Blockage Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness of a Note Guarantor
during such period. For purposes of this Section 12.03, no default or event of
default which existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default shall have been cured
or waived for a period of not less than 90 consecutive days.
SECTION 12.04. Demand for Payment. If a demand for payment is
made on any Note Guarantor pursuant to Article 11, the Trustee shall promptly
notify the holders of the Designated Senior Indebtedness (or their
Representatives) of such Note Guarantor of such demand.
SECTION 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Noteholders that because of this Article 12 should not
have been made to them, the Noteholders who receive the distribution shall hold
it in trust for holders of the relevant Senior Indebtedness of such Note
Guarantor and pay it over to them or their Representative as their interests may
appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of
each Note Guarantor is paid in full and until the Notes are paid in full,
Noteholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Noteholders is not, as between each Note
Guarantor and Noteholders, a payment by such Note Guarantor on such Senior
Indebtedness.
SECTION 12.07. Relative Rights. This Article 12 defines the
relative rights of Noteholders and holders of Senior Indebtedness of each Note
Guarantor. Nothing in this Indenture shall:
(1) impair, as between each Note Guarantor and the
Noteholders, the obligation of the such Note Guarantor, which is absolute and
unconditional, to pay its obligations to the extent set forth in Article 11; or
(2) prevent the Trustee or any Noteholder from exercising its
available remedies upon a default by any Note Guarantor under its obligations,
subject to the rights of holders of Senior Indebtedness of such Note Guarantor
to receive distributions otherwise payable to Noteholders.
SECTION 12.08. Subordination May Not Be Impaired by Note
Guarantors. No right of any holder of Senior Indebtedness of any Note Guarantor
to enforce the subordination of the obligations of such Note Guarantor shall be
impaired by any act or failure to act by such Note Guarantor or by its failure
to comply with this Indenture.
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SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments on each Note Guarantee and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article 12. The Company, each Note Guarantor, the
Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness of any Note Guarantor may give the notice; PROVIDED,
HOWEVER, that, if an issue of Senior Indebtedness of any Note Guarantor has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 12 with respect to any Senior Indebtedness of any Note Guarantor which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 12 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of any Note Guarantor, the distribution may be made and the notice
given to their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Defaults Under the
Note Guarantees or Limit Right To Demand Payment. The failure to make a payment
pursuant to any Note Guarantee by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default under such Note
Guarantee. Nothing in this Article 12 shall have any effect on the right of the
Noteholders or the Trustee to make a demand for payment on any Note Guarantor
pursuant to Article 11.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Noteholders shall
be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Noteholders or (iii) upon the Representative for the holders of Senior
Indebtedness of any Note Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other indebtedness of such Note Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 12. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of such Note
Guarantor to participate in any payment or distribution pursuant to this Article
12, the Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such Note
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article 12, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right
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of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Noteholder by accepting a Note authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Noteholders and the holders of Senior
Indebtedness of any Note Guarantor as provided in this Article 12 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Note Guarantors. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any Note Guarantor and
shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Noteholders or the Company or any other Person, money or assets to
which any holders of such Senior Indebtedness shall be entitled by virtue of
this Article 12 or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Noteholder by accepting a Note acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness of
any Note Guarantor, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Note, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any Note Guarantor:
Galey & Lord, Inc.
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, North Carolina 27409
Attention: Chief Financial Officer
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if to the Trustee:
SunTrust Bank, Atlanta
58 Edgewood Avenue, 4th Floor
Atlanta, Georgia 30302
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications. Any notice or communication mailed to a Noteholder shall be
mailed to the Noteholder at the Noteholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed. 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, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(3) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
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SECTION 13.06. When Notes Disregarded. 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 by any Affiliate of
the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be protected in relying
on any such direction, waiver or consent, only Notes which the Trustee knows are
so owned shall be so disregarded. Also, subject to the foregoing, only Notes
outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of Noteholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York or the State of North Carolina. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is not
a Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. (a) THIS INDENTURE AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(b) Each of the Company and each Note Guarantor hereby (i)
agrees that any suit, action or proceeding against it arising out of or relating
to this Indenture or the Notes, as the case may be, may be instituted in any
Federal or state court sitting in The City of New York, (ii) waives, to the
extent permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and any
claim that any suit, action or proceeding in such a court has been brought in an
inconvenient forum, (iii) irrevocably submits to the non-exclusive jurisdiction
of such courts in any suit, action or proceeding, (iv) agrees that final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon each and may be enforced in the courts of the
jurisdiction of which each is subject, respectively, by a suit upon judgment,
(v) agrees that service of process by mail to the addressed specified in Section
13.02 hereof shall constitute personal service of such process on it in any such
suit, action or proceeding.
SECTION 13.10. No Recourse Against Others. No director,
officer, employee, incorporator or stockholder of the Company or any Note
Guarantor, as such, shall have any liability for any obligations of the Company
or such Note Guarantor under the Notes, the Note Guarantees or this Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation, solely by reason of its status as a director, officer, employee,
incorporator or stockholder of the Company or such Note Guarantor. By accepting
a Note, each Holder waives and releases all such liability (but only such
liability) as part of the consideration for issuance of such Note to such
Holder.
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SECTION 13.11. Successors. All agreements of the Company and
each Note Guarantor in this Indenture and the Notes shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.12. Multiple 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. One signed copy is enough to
prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 13.14. 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 13.15. Further Instruments and Acts. Upon request of
the Trustee, the Company and each Note Guarantor will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
GALEY & LORD, INC.,
as Issuer,
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
GALEY & LORD INDUSTRIES, INC.,
as Guarantor,
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
G&L SERVICE COMPANY, NORTH AMERICA, INC.,
as Guarantor,
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Vice-President
SWIFT TEXTILES, INC.,
as Guarantor,
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
SWIFT DENIM SERVICES, INC.,
as Guarantor,
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
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<PAGE>
SUNTRUST BANK, ATLANTA,
as Trustee
By: /s/ Phillip D. DeMouey
---------------------
Name: Phillip D. DeMouey
Title: Assistant Vice-President
By: /s/ David M. Kaye
---------------------
Name: David M. Kaye
Title: Group Vice-President
87
GALEY & LORD, INC.
$300,000,000
9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
NOTE PURCHASE AGREEMENT
FEBRUARY 19, 1998
First Union Capital Markets
301 South College Street, TW-10
Charlotte, NC 28288-0606
Ladies and Gentlemen:
Galey & Lord, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell (the "Initial Placement") to First Union Capital
Markets, a division of Wheat First Securities, Inc. (the "Initial Purchaser"),
$300,000,000 principal amount of its 9 1/8% Senior Subordinated Notes Due 2008
(the "Notes"). The Notes will be unconditionally guaranteed (the "Note
Guarantees"), on an unsecured senior subordinated basis, by Galey & Lord
Industries, Inc., a Delaware corporation ("Industries"), G&L Service Company,
North America, Inc., a Delaware corporation ("Service Company"), Swift Textiles,
Inc., a Delaware corporation ("Textiles"), and Swift Denim Services, Inc., a
Delaware corporation ("Swift Denim") (collectively, the "Guarantors"). The Notes
and the Note Guarantees are to be issued under an indenture (the "Indenture") to
be dated as of the Closing Date (as defined below) among the Company, the
Guarantors and SunTrust Bank, Atlanta, as trustee (the "Trustee"). This
Agreement, the registration rights agreement, to be dated the Closing Date,
between the Initial Purchaser and the Company (the "Registration Rights
Agreement"), the Notes, the Note Guarantees and the Indenture are hereinafter
collectively referred to as the "Transaction Documents" and the transactions
contemplated therein the "Transactions."
The sale of the Notes to the Initial Purchaser will be made
without registration of the Notes under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon certain exemptions from the
registration requirements of the Securities Act. You have advised the Company
that you will offer and sell the Notes purchased by you hereunder in accordance
with Section 4 hereof as soon as you deem advisable.
In connection with the sale of the Notes, the Company and the
Guarantors have prepared a preliminary offering memorandum, dated February 2,
1998 (the "Preliminary
<PAGE>
Memorandum"), and a final offering memorandum, dated February 19, 1998 (the
"Final Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain information concerning the Company, the Guarantors and the
Transaction Documents. Each of the Company and the Guarantors hereby confirms
that it has authorized the use of the Preliminary Memorandum and the Final
Memorandum, and any amendment or supplement thereto, in connection with the
offer and sale of the Notes by the Initial Purchaser. Unless stated to the
contrary, all references herein to the Final Memorandum are to the Final
Memorandum at the Execution Time (as defined below) and are not meant to include
any amendment or supplement, or any information incorporated by reference
therein, subsequent to the Execution Time.
Capitalized terms used herein but not defined have the meaning
ascribed to them in the Indenture.
1. Representations and Warranties. The Company and the
Guarantors jointly and severally represent and warrant to the Initial Purchaser
the following:
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Final
Memorandum, at the date hereof, does not and at the Closing Date will
not (and any amendment or supplement thereto, at the date thereof and
at the Closing Date, will not), contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company and the
Guarantors make no representation or warranty as to the information
contained in or omitted from the Preliminary Memorandum or the Final
Memorandum, or any amendment or supplement thereto, with respect to the
Initial Purchaser provided by the Initial Purchaser to the Company or
the Guarantors specifically for inclusion therein.
(b) No holder of securities of the Company or the Guarantors
will be entitled to have such securities registered under any
registration statement required to be filed by the Company and the
Guarantors pursuant to the Registration Rights Agreement other than as
expressly permitted thereby.
(c) None of the Company, the Guarantors or any of their
Affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act ("Regulation D")), nor any person acting on their behalf
(other than the Initial Purchaser or any of its Affiliates, as to whom
the Company and the Guarantors make no representation or warranty) has,
directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would
require the registration of the Notes or the Note Guarantees under the
Securities Act.
(d) None of the Company, the Guarantors, or any of their
Affiliates, has directly or indirectly engaged in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes.
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<PAGE>
(e) None of the Company, the Guarantors, any of their
Affiliates or any person acting on their behalf (other than the Initial
Purchaser or any of its Affiliates, as to whom the Company makes no
representation or warranty) has, directly or indirectly, (i) taken any
action designed to cause or result in, or that has constituted or that
might reasonably be expected to constitute, stabilization or
manipulation of the price of any security of the Company or the
Guarantors to facilitate the sale or resale of the Notes; or (ii) paid
or agreed to pay to any person any compensation for soliciting another
to purchase any securities of the Company or the Guarantors (except as
contemplated by this Agreement).
(f) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(g) None of the Company, the Guarantors, any of their
Affiliates or any person acting on their behalf (other than the Initial
Purchaser or any Affiliate of the Initial Purchaser, as to which no
representation is made) has, directly or indirectly, engaged in any
directed selling efforts (as that term is defined in Regulation S under
the Securities Act ("Regulation S")) with respect to the Notes; and the
Company, the Guarantors and their Affiliates and any person acting on
their behalf (other than the Initial Purchaser or any Affiliate of the
Initial Purchaser, as to which no representation is made) have complied
with the offering restrictions requirement of Regulation S.
(h) It is not necessary in connection with the offer, sale and
delivery of the Notes in the manner contemplated by this Agreement and
the Final Memorandum to register the Notes under the Securities Act or
to qualify the Indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
(i) Each of the Company and its Subsidiaries is a corporation
duly organized and existing and in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its Subsidiaries
has the corporate power and authority to own and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted in the Final Memorandum and is duly qualified as a foreign
corporation and in good standing in all jurisdictions in which it is
doing business, except where failure to be so qualified or in good
standing, singly or in the aggregate, has not had and will not have a
Material Adverse Effect. (As used herein, "Material Adverse Effect"
means (i) a material adverse effect upon the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries, taken as a whole, whether before or
after giving effect to the Transactions or (ii) a material impairment
of the ability of the Company and its Subsidiaries, taken as a whole,
to perform, or the material impairment of the ability of the Trustee
and the holders of the Notes (the "Holders") to enforce, any
obligations under the Transaction Documents.)
(j) All of the outstanding shares of Capital Stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable. Schedule A hereto lists (i) each wholly owned
Subsidiary of the Company (including each Guarantor) along with its
jurisdiction of incorporation; and (ii) each other Subsidiary or Joint
Venture of
3
<PAGE>
the Company and, in the case of each such Subsidiary or Joint Venture,
the jurisdiction of incorporation, the title and amount of Capital
Stock outstanding and the amount of all such Capital Stock owned by the
Company expressed both in terms of the number of shares and as a
percentage of all Capital Stock in such shares' class outstanding. Each
Subsidiary of the Company does not and will not on the Closing Date
have outstanding any (i) securities convertible or exchangeable for its
Capital Stock, (ii) rights to subscribe for or to purchase any of its
Capital Stock or (iii) options providing for the purchase of,
agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its
Capital Stock. All of the Capital Stock of each wholly owned Subsidiary
and the Capital Stock owned by the Company of each non-wholly owned
Subsidiary and Joint Venture as shown on Schedule A is beneficially
owned by the Company, directly or indirectly, free and clear of all
liens other than liens granted to secure the loan contemplated by the
credit agreement dated as of December 19, 1997, among Industries, as
borrower, the Company and certain subsidiaries of the Company as
guarantors, the lenders names therein, and the First Union National
Bank of North Carolina as agent, as amended by the Amended and Restated
Senior Credit Facility dated January 29, 1998 among the Company, the
Guarantors and First Union National Bank (the "Senior Credit
Facility").
(k) Each of the Company and the Guarantors has the corporate
power and requisite authority to execute, deliver and carry out the
terms and provisions of the Transaction Documents and has taken all
necessary corporate action to authorize the execution, delivery and
performance of the Transaction Documents and the Exchange Notes.
(l) Each of the Transaction Documents and each other document
or instrument to be delivered in connection therewith has been duly
authorized; each of the Transaction Documents and each other document
or instrument to be delivered in connection therewith to be executed
and delivered on or prior to the date hereof has been duly executed and
delivered by each of the Company and the Guarantors that are a party
thereto; and each of the Transaction Documents and each other document
or instrument to be delivered in connection therewith to be executed
and delivered on or prior to the date hereof is, and each of the
Transaction Documents and each other document or instrument to be
delivered in connection therewith to be executed and delivered after
the Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company and each of the Guarantors
(to the extent a party thereto), enforceable in accordance with their
respective terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally
("Bankruptcy Law") or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) ("Equity").
(m) The issuance, offering and sale of the Notes to the
Initial Purchaser by the Company pursuant to this Agreement and the
compliance by the Company and the Guarantors with the other provisions
of this Agreement; the execution, delivery and
4
<PAGE>
performance of the Transaction Documents and each other document and
instrument to be executed, delivered or performed by the Company and
the Guarantors in connection with the Transactions; and the
consummation of each of the transactions herein or therein contemplated
and, the compliance with each of the terms and provisions hereof or
thereof, do not and will not (i) violate any statute, law, ordinance,
regulation, rule, order, judgment, writ, injunction or decree of any
state, commonwealth, nation, territory, possession, province, county,
parish, township, village, municipality or other jurisdiction (singly,
"Law," and collectively, the "Laws") applicable to any of the Company
and the Guarantors, the charter or bylaws of any of them or any
judgment, order, writ or decree of any government, any arbitration
panel, any court or any governmental department, commission, board,
bureau, agency, authority or instrumentality of any state, province,
commonwealth, nation, territory, possession, county, parish, town,
township, village or municipality, whether now or hereafter constituted
and/or existing ("Tribunal") binding on any of them, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any contractual obligation of any of the
Company and the Guarantors, (iii) result in or require the creation or
imposition of any lien upon any of the properties or assets of any of
the Company and the Guarantors (other than any liens created under the
Senior Credit Facility) or (iv) require any approval of stockholders or
any approval or consent of any person under any contractual obligation
of any of the Company and the Guarantors except for such approvals or
consents which have been obtained and disclosed in writing to the
Initial Purchaser.
(n) No consent, approval, authorization or order of any
Tribunal or other person is required in connection with the execution
and delivery by the Company or the Guarantors of the Transaction
Documents or any other document or instrument to be delivered in
connection with the Transactions or the consummation of the
transactions contemplated hereby or thereby, other than any such
consent, approval, authorization or order which has been obtained and
remains in full force and effect or which has been waived in writing by
the Initial Purchaser or such as may be required under applicable state
securities or Blue Sky laws.
(o) The audited financial statements (including the notes
thereto) of each of the Company and the Acquired Business (as that term
is defined in the Final Memorandum) included in the Final Memorandum
comply as to form in all material respects with the requirements
applicable to registration statements on Form S-1 under the Securities
Act and fairly present in all material respects the consolidated
financial position of each of the Company and the Acquired Business and
the results of operations and cash flow thereof as of the dates and
periods therein specified. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved. Since the date of
the most recent financial statements included in the Final Memorandum,
except as described therein, (i) none of the Company or any of its
Subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business
which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, have a
5
<PAGE>
Material Adverse Effect, (ii) the Company has not purchased any of its
outstanding Capital Stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its Capital Stock and (iii)
there has not been any material change in the long-term indebtedness of
the Company or any of its Subsidiaries. The unaudited pro forma
financial statements of the Company included in the Final Memorandum
comply as to form in all material respects with the requirements of the
Securities Act; the pro forma adjustments have been properly applied to
the historical amounts in the compilation of such pro forma statements;
the assumptions described in the notes to such pro forma statements
provide a reasonable basis for presenting the significant direct
effects of the transactions contemplated therein; and such pro forma
adjustments give appropriate effect to those adjustments, in each case,
in accordance with Regulation S-X under the Securities Act ("Regulation
S-X").
(p) Each of the Company and its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(q) The Company is not now, and after giving effect to the
issuance of the Notes, the execution, delivery and performance of the
Transaction Documents and the consummation of the transactions
contemplated thereby, will not be (i) insolvent, (ii) left with
unreasonably small capital with which to engage in its anticipated
businesses or (iii) incurring debts beyond its ability to pay such
debts as they become due. The Company is not in liquidation,
administration or receivership nor has any petition been presented for
the winding-up of the Company.
(r) The Company and each of its Subsidiaries has, and after
consummation of the Transactions will have, good, sufficient and legal
title to all their respective properties and assets, and all properties
held under lease by any of them, are, and immediately after the
consummation of the Transactions will be, held under valid, subsisting
and enforceable leases, and none of the Company or any of its
Subsidiaries and, to the knowledge of the Company, any other party
thereto, is in default under any lease, except in each case for such
defects or defaults that, singly or in the aggregate, would not have a
Material Adverse Effect. All such properties and assets owned or leased
are so owned or leased free and clear of liens other than liens
permitted under clauses (i) through (xii) and (xiv) of the definition
of "Permitted Liens" set forth in the Final Memorandum and liens
existing on the date hereof set forth in Schedule B hereto.
(s) None of the Company or any of its Subsidiaries is in
violation of its charter, by-laws or other organizational documents,
and no default or event that but for the giving
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of notice or the lapse of time, or both, would constitute a default on
the part of the Company or any of its Subsidiaries exists under any
contractual obligation which would have a Material Adverse Effect.
(t) There is no litigation pending or, to the best knowledge
of the Company after due investigation, threatened, by, against, or
which may relate to or affect (a) any benefit plan or any fiduciary or
administrator thereof, (b) the Transactions or (c) the Company or any
of its Subsidiaries, which singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. There are no outstanding
injunctions or restraining orders prohibiting consummation of any of
the Transactions or any other transactions contemplated in connection
therewith. Neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction or decree
of any Tribunal, and there are no unsatisfied judgments against the
Company or any of its Subsidiaries or their respective businesses or
properties. None of the Company or any of its Subsidiaries has been
advised that there is a reasonable likelihood of an adverse
determination of any litigation which adverse determination, should it
occur, would have a Material Adverse Effect.
(u) The proceeds from the issuance and sale of the Notes will
be used solely for the purposes specified in the Final Memorandum. None
of the issuance or sale of the Notes, the application of the proceeds
therefrom, or the consummation of the Transactions or any of the other
transactions contemplated thereby will violate Regulations G, T, U, or
X of the Board of Governors of the Federal Reserve System.
(v) All material tax returns, foreign and domestic, required
to be filed by the Company and each of its Subsidiaries in any
jurisdiction have been filed, and all material taxes for which they are
directly or indirectly liable or to which any of their respective
properties or assets are subject have been paid prior to the time that
such taxes could give rise to a lien thereon other than taxes being
contested in good faith and for which adequate reserves have been
established in accordance with GAAP. There is no material proposed tax
assessment against the Company or any of its Subsidiaries, and, to the
best knowledge of the Company, there is no basis for such assessment,
except for contested claims.
(w) (A) Except as set forth on Schedule C, no ERISA Events
have occurred or are reasonably expected to occur which individually or
in the aggregate resulted in or might reasonably be expected to result
in a liability of the Company or any of its Subsidiaries or any of
their respective ERISA Affiliates which would reasonably be expected to
have a Material Adverse Effect.
(B) In accordance with the most recent actuarial
valuations, the Amount of Unfunded Benefit Liabilities
individually or in the aggregate for all Pension Plans
(excluding for purposes of such computation any Pension Plans
which have a negative Amount of Unfunded Benefit Liabilities),
is not an amount which would reasonably be expected to have a
Material Adverse Effect.
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(C) Neither the Company nor any of its Subsidiaries
has incurred or is reasonably expected to incur any liability
with respect to any Foreign Plan or Foreign Plans which
individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect.
As used herein, the following terms shall have the respective
meaning ascribed to each below:
"Amount of Unfunded Benefit Liability" means, with respect to
any Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(1)(7) of the
Internal Revenue Code) or the actuarial present value of the accrued benefits
with respect to such Pension Plan over (b) the market value of the assets of
such Pension Plan.
"Employee Pension Benefit Plan" means any "employee pension
benefit plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time
within the five calendar years immediately preceding the date hereof, was at any
time, sponsored, maintained or contributed to by the Company or its Subsidiaries
or any of their respective ERISA Affiliates or (ii) with respect to which any of
the Company or its Subsidiaries retains any liability, including any potential
joint and several liability as a result of an affiliation with an ERISA
Affiliate or a party that would be an ERISA Affiliate except for the fact the
affiliation ceased more than five calendar years prior to the date hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder and any successor statute, regulations and rulings.
"ERISA Affiliate," as applied to any person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time within the five calendar years immediately
preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal
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Revenue Code with respect to any Pension Plan (whether or not waived) or the
failure to make any required contribution within 30 days of its due date with
respect to any Multiemployer Plan; (iii) the provision by the administrator of
any Pension Plan pursuant to Section 4041 (a) (2) of ERISA of a notice of intent
to terminate such plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the withdrawal by the Company or any of its Subsidiaries or any of
their respective ERISA Affiliates from any Multiple Employer Plan or the
termination of any such Multiple Employer Plan resulting in liability pursuant
to Sections 4063 or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence of any event or
condition which might reasonably be expected to constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal by the Company or any of its Subsidiaries or any of
their respective ERISA Affiliates in a complete or partial withdrawal (within
the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by the Company or any
of its Subsidiaries or any of their respective ERISA Affiliates of notice from
any Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which could reasonably be expected to give rise to the imposition on
the Company or any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 406, 409 or 502(i) or (1) of ERISA in
respect of any Employee Benefit Pension Plan; (ix) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Pension Benefit Plan intended to be qualified under Section 401(a) of
the Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan or
Employee Pension Benefit Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (x) the imposition of a lien
pursuant to Section 401(a) (29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan. Notwithstanding anything to
the contrary contained herein, the imposition of the lien arising under the
Pension Funding Agreement shall not be deemed an ERISA Event.
"Foreign Plan" means any employee benefit plan maintained
outside the U.S. by the Company, any of its Subsidiaries or any of their
respective Affiliates for employees substantially all of whom are non-resident
aliens of the U.S. and for which the Company or any of its Subsidiaries may be
directly or indirectly liable.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and any successor code or statute.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which any of the Company, its Subsidiaries or
any of their ERISA Affiliates is making or accruing an obligation to make
contributions, or has within any of the preceding five years made or accrued an
obligation to make contributions.
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"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of
the Company, its Subsidiaries or any of their ERISA Affiliates and at least one
person other than the Company, its Subsidiaries and their ERISA Affiliates or
(ii) was so maintained and in respect of which such Company, Subsidiaries or
ERISA Affiliates could have liability under Section 4064 or Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Pension Plan" means a Single Employer Plan or Multiple
Employer Plan.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Funding Agreement" means the agreement dated January
29, 1998 between the PBGC and the Company providing for additional funding by
the Company to certain pension plans and the creation of a lien in favor of the
PBGC on certain land and assets of the Company.
"Single Employer Plan" means a "single-employer plan," as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of
the Company, any of its Subsidiaries or any of their ERISA Affiliates and no
person other than the Company, any of its Subsidiaries or any of their ERISA
Affiliates or (ii) was so maintained and in respect of which such Company,
Subsidiaries or ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
(x) The Company and each of its Subsidiaries is in compliance
with all Laws, except where the failure to comply, singly or in the
aggregate, would not have a Material Adverse Effect.
(y) None of the Company or any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940 (as any of the
preceding acts have been amended) or other Law which regulates the
incurrence by the Company or any of its Subsidiaries of indebtedness,
including, but not limited to, Laws relating to common contract
carriers or the sale of electricity, gas, steam, water or other public
utility services.
(z) (A) The Company and its Subsidiaries own or are licensed
to use all patents, trademarks, tradenames, copyrights, technology,
know-how and processes used in or necessary for the conduct of the
business of the Company as currently conducted ("Intellectual
Property") except where the failure to own or license the use of such
Intellectual Property does not, singly or in the aggregate, have a
Material Adverse Effect.
(B) To the Company's knowledge, no material claim has
been asserted by any person with respect to the use of any
such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such Intellectual Property.
To the Company's knowledge, the use of such Intellectual
Property by the Company or any of its Subsidiaries does not
infringe on the rights of any
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person, subject to such claims and infringements as do not,
singly or in the aggregate, have a Material Adverse Effect.
The consummation of the Transactions will not in any material
manner or to any material extent impair the ownership of (or
the license to use, as the case may be) of such intellectual
property by the Company or any of its Subsidiaries.
(aa) Except as set forth on Schedule D, and after giving
effect to the Transactions:
(A) the operations of each of the Company and its
Subsidiaries (including, without limitation, as the term is
used throughout this Section 1(aa), all operations and
conditions at or in the Facilities) comply in all material
respects with all Environmental Laws except for any such
noncompliance which would not reasonably be expected to have a
Material Adverse Effect;
(B) each of the Company and its Subsidiaries has
obtained all Permits under Environmental Laws necessary to
their respective operations, and all such Permits are being
maintained in good standing, and each of the Company and its
Subsidiaries is in compliance with all material terms and
conditions of such Permits except for any such failure to
obtain, maintain or comply which would not reasonably be
expected to have a Material Adverse Effect;
(C) none of the Company or its Subsidiaries has
received (a) any notice or claim to the effect that it is or
may be liable to any person under any Environmental Law,
including without limitation, any relating to any Hazardous
Materials except as would not reasonably be expected to have a
Material Adverse Effect or (b) any letter or request for
information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. ss. 9604) or comparable foreign or state laws regarding
any matter which could reasonably be expected to result in a
Material Adverse Effect, and, to the best of the Company's
knowledge, none of the Company or its Subsidiaries is involved
in any investigation, response or corrective action relating
to or in connection with any Hazardous Materials at any
Facility or at any other location except for such of the
foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(D) none of the Company or its Subsidiaries is
subject to any judicial or administrative proceeding alleging
the violation of or liability under any Environmental Laws
which if adversely determined could reasonably be expected to
have a Material Adverse Effect;
(E) none of the Company or its Subsidiaries or any of
their respective Facilities or operations is subject to any
outstanding written order or agreement with any governmental
authority or private party relating to (a) any actual or
potential violation of or liability under Environmental Laws
or (b) any Environmental Claims except for such of the
foregoing which would not reasonably be expected to have a
Material Adverse Effect;
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(F) none of the Company or its Subsidiaries has any
contingent liability in connection with any Release or
threatened Release of any Hazardous Materials by any of the
Company or its Subsidiaries except for such of the foregoing
which would not reasonably be expected to have a Material
Adverse Effect;
(G) to the best of the Company's knowledge, none of
the Company or its Subsidiaries or any predecessor of any of
the Company or its Subsidiaries has filed any notice under any
Environmental Law indicating past or present treatment,
storage or disposal of hazardous waste, as defined under 40
C.F.R. Parts 260-270 or any comparable foreign or state laws;
(H) no Hazardous Materials exist on, under or about
any Facility in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse
Effect, and none of the Company or its Subsidiaries has filed
any notice or report of a Release of any Hazardous Materials
that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(I) none of the Company or its Subsidiaries or, to
the best of the Company's knowledge, any of their respective
predecessors has disposed of any Hazardous Materials in a
manner that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(J) to the best of the Company's knowledge, no
underground storage tanks or surface impoundments are on or at
any Facility; and
(K) no lien in favor of any person relating to or in
connection with any Environmental Claim has been filed or has
been attached to any Facility or other assets of the Company
or any of its Subsidiaries except for any such lien which
would not reasonably be expected to have a Material Adverse
Effect.
Notwithstanding anything in this Section 1(aa) to the
contrary, no event or condition has occurred which may interfere with present
compliance by the Company or its Subsidiaries with any Environmental Law, or
which may give rise to any liability under any Environmental Law, including,
without limitation, any matter disclosed on Schedule D which, individually or in
the aggregate, has had a Material Adverse Effect.
As used herein, the following terms shall have the respective
meaning ascribed to each below:
"Environmental Claims" means any allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any person for any
response or corrective action, any damage, including, without limitation,
personal injury (including sickness, disease or death), property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment,
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nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case arising under any
Environmental Law, including without limitation, relating to, resulting from or
in connection with Hazardous Materials and relating to the Company, any of its
Subsidiaries or any of their respective Facilities or predecessors in interest.
"Environmental Laws" means the common law and all statutes,
ordinances, orders, rules, regulations, requirements, judgments, plans, policies
or decrees relating to (i) pollution, protection, preservation, cleanup or
reclamation of the environment, natural resources, human, plant or animal health
or welfare, (ii) the Release or threatened Release of Hazardous Materials, (iii)
manufacture, processing, treatment, handling, recycling, generation, use,
storage, transportation or disposal of Hazardous Materials including, without
limitation, investigation, study, assessment, testing, monitoring, containment,
removal, remediation, or clean-up of any such Release, or (iv) occupational
safety and health and industrial hygiene, each as in effect as of the date of
determination.
"Facilities" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by the
Company, its Subsidiaries or any of their respective predecessors in interest.
"Hazardous Materials" means (i) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
waste," "restricted hazardous waste," "infectious waste," "toxic substances" or
any other formulations intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any flammable substances or
explosives; (iv) any radioactive materials; (v) asbestos in any form; (vi) urea
formaldehyde foam insulation; (vii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (viii) pesticides; and (ix) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to human health
or safety or the environment.
"Permits" has the meaning ascribed to it in Section 1(bb)
below.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
onto or out of any Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
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(bb) The Company and its Subsidiaries have, and immediately
after the consummation of the Transactions will have, such certificates,
permits, licenses, franchises, consents, approvals, authorizations and
clearances ("Permits"), and are (and will be immediately after the consummation
of the Transactions) in compliance in all material respects with all Laws as are
necessary to own, lease or operate their respective properties and to conduct
their businesses in the manner as presently conducted and to be conducted
immediately after the consummation of the Transactions except where the failure
to have such Permits or to comply with such Laws would not, singly or in the
aggregate, have a Material Adverse Effect, and all such Permits are valid and in
full force and effect and will be valid and in full force and effect immediately
upon consummation of the Transactions. The Company and its Subsidiaries are, and
immediately after the consummation of the Transactions will be, in compliance in
all material respects with their respective obligations under such Permits and
no event occurred that allows, or after notice or lapse of time would allow,
revocation or termination of such Permits except for any such revocation or
termination as would not, singly or in the aggregate, have a Material Adverse
Effect.
(cc) The Company and its Subsidiaries carry or are entitled to
the benefits of insurance (including self-insurance) in such amounts and
covering such risks as is generally maintained by companies of established
repute engaged in the same or similar businesses, and all such insurance is (and
will be immediately after the consummation of the Transactions) in full force
and effect, except where the failure to carry such insurance or be entitled to
the benefits of such insurance does not, singly or in the aggregate, have a
Material Adverse Effect.
(dd) No labor disturbance by the employees of the Company or
its Subsidiaries exists or, to the best knowledge of the Company, is threatened
and the Company is not aware of any existing or imminent labor disturbance by
the employees of the Company's or its Subsidiaries' principal suppliers,
manufacturers or customers that could, singly or in the aggregate, have a
Material Adverse Effect.
Any certificate signed by any officer of the Company or of any
of the Guarantors and delivered to the Initial Purchaser or its counsel shall be
deemed to be a representation and warranty by the Company or of the Guarantor,
as the case may be, to the Initial Purchaser as to the matters covered thereby.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to the Initial Purchaser, and the Initial Purchaser
agrees to purchase from the Company, at a purchase price equal to 97.25% of the
principal amount thereof, plus accrued interest, if any, from the Issue Date (as
defined in the Indenture) to the Closing Date, $300,000,000 in principal amount
of Notes.
3. Delivery and Payment. Delivery of and payment for the Notes
shall be made at 10:00 AM, New York City time, on February 24, 1998, which date
and time may be postponed by agreement between the Initial Purchaser and the
Company (such date and time of delivery and payment for the Notes being herein
called the "Closing Date"). Delivery of the Notes shall
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<PAGE>
be made to the Initial Purchaser against payment by the Initial Purchaser of the
purchase price thereof to or upon the order of the Company by intrabank transfer
payable in same day funds or such other manner of payment as may be agreed by
the Company and the Initial Purchaser. Delivery of the Notes shall be made at
such location as the Initial Purchaser shall reasonably designate at least one
Business Day in advance of the Closing Date and payment for the Notes shall be
made at the office of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New
York, New York 10006. Certificates for the Notes shall be registered in such
names and in such denominations as the Initial Purchaser may request not less
than two full Business Days in advance of the Closing Date.
The Company agrees to have the Notes available for inspection,
checking and packaging by the Initial Purchaser in New York, New York, not later
than 1:00 PM on the Business Day prior to the Closing Date.
4. Offering of Notes. The Initial Purchaser represents and
warrants to and agrees with the Company and the Guarantors that:
(a) It has not offered or sold, and will not offer or sell,
any Notes except (i) within the United States to those it reasonably
believes to be qualified institutional buyers (as defined in Rule 144A
under the Securities Act) ("QIBs"), (ii) to other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) who provide to it and to the Company a letter
in the form of Exhibit A hereto or (iii) outside the United States to
persons other than U.S. persons in reliance upon Regulation S under the
Securities Act. In connection with each sale pursuant to clause (i)
above, the Initial Purchaser has taken or will take reasonable steps to
ensure that the purchaser of such Notes is aware that such sale is
being made in reliance on Rule 144A.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Notes by means of any form of general
solicitation or general advertising (within the meaning of Regulation D
under the Securities Act).
(c) The Initial Purchaser is an "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act).
5. Agreements. The Company and its Subsidiaries agree with the
Initial Purchaser that:
(a) The Company will furnish to the Initial Purchaser and to
Cleary, Gottlieb, Steen & Hamilton ("Counsel for the Initial
Purchaser"), without charge, during the period referred to in paragraph
(c) below, as many copies of the Final Memorandum and any amendments
and supplements thereto as they may reasonably request. The Company
will pay the expenses of printing or other production of all documents
relating to the offering of the Notes and will reimburse the Initial
Purchaser for payment of the required PORTAL filing fee.
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(b) The Company will not amend or supplement the Final
Memorandum prior to the completion of the distribution of the Notes by
the Initial Purchaser, without the prior written consent of the Initial
Purchaser.
(c) If at any time prior to the completion of the sale of the
Notes acquired by the Initial Purchaser pursuant to this Agreement (as
determined by the Initial Purchaser), any event occurs as a result of
which the Final Memorandum, as then amended or supplemented, would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it
should be necessary to amend or supplement the Final Memorandum to
comply with applicable law, the Company will promptly notify the
Initial Purchaser of the same and, subject to the requirements of
paragraph (b) of this Section 5, will prepare and provide to the
Initial Purchaser pursuant to paragraph (a) of this Section 5 an
amendment or supplement that will correct such statement or omission or
effect such compliance.
(d) The Company will arrange for the qualification of the
Notes for sale by the Initial Purchaser under the laws of such
jurisdictions as the Initial Purchaser may designate and will maintain
such qualifications in effect so long as required for the sale of the
Notes by the Initial Purchaser; provided, however, that none of the
Company or the Guarantors will be required to qualify generally to do
business in any jurisdiction in which any of them is not then so
qualified, to file any general consent to service of process or to take
any action which would subject any of them to general service of
process or to taxation in any such jurisdiction where it is not then so
subject. The Company will promptly advise the Initial Purchaser of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose.
(e) The Company, whenever any of the Company and its
Subsidiaries publishes or makes available to the public (by filing with
any regulatory authority or securities exchange or by publishing a
press release or otherwise) any information that could reasonably be
expected to be material in the context of the issue of Notes under this
Agreement, shall promptly notify the Initial Purchaser as to the nature
of such information or event. The Company will likewise notify the
Initial Purchaser of (i) any decrease in the rating of the Notes or any
other debt securities of the Company or its Subsidiaries by any
nationally recognized statistical rating organization (as defined in
Rule 436(g)(2) under the Securities Act) or (ii) any notice given of
any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change, as soon as the Company becomes aware of any such
decrease or notice. The Company will also deliver to the Initial
Purchaser, as soon as available and without request, copies of its
latest annual report and quarterly statement and any report of its
auditors thereon.
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(f) The Company will not, and will not permit any of their
Affiliates to, resell any Notes that have been acquired by any of them,
other than pursuant to an effective registration statement under the
Securities Act.
(g) Except as contemplated in the Registration Rights
Agreement, none of the Company, its Subsidiaries or any of their
Affiliates, nor any person acting on its or their behalf (other than
the Initial Purchaser or any of its Affiliates, as to whom the Company
and its Subsidiaries express no opinion) will, directly or indirectly,
make offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration of
the Notes under the Securities Act.
(h) None of the Company, its Subsidiaries, any of their
Affiliates or any person acting on its or their behalf (other than the
Initial Purchaser or any of its Affiliates, as to whom the Company and
its Subsidiaries express no opinion) will engage in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes.
(i) So long as any of the Notes are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, if the
Company ceases to be subject to the reporting requirements of Sections
13 and 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), it will provide to each holder of the Notes and to each
prospective purchaser (as designated by such holder) of the Notes, upon
the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Securities Act.
This covenant is intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time to time of
the Notes.
(j) The Company will cooperate with the Initial Purchaser and
use their best efforts to (i) permit the Notes to be designated PORTAL
securities in accordance with the rules and regulations of the NASD
relating to trading in the Private Offerings, Resale and Trading
through Automated Linkages market ("PORTAL") and (ii) permit the Notes
that are sold to QIBs to be eligible for clearance and settlement
through The Depository Trust Company.
(k) The Company will apply the net proceeds from the sale of
the Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(l) The Company and its Subsidiaries will conduct their
operations in a manner that will not subject the Company or any of its
Subsidiaries to registration as an investment company under the
Investment Company Act.
6. Conditions to the Obligations of the Initial Purchaser. The
obligations of the Initial Purchaser to purchase the Notes shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Company and the Guarantors contained herein at the date and time
that this Agreement is executed and delivered by the parties hereto (the
"Execution Time") and the Closing Date, to the accuracy of the statements of the
Company
17
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and the Guarantors made in any certificates pursuant to the provisions hereof,
to the performance by the Company and the Guarantors of their obligations
hereunder and to the following additional conditions:
(a) The Company and the Guarantors shall have furnished to the
Initial Purchaser the opinion of Rosenman & Colin LLP ("Counsel for the
Company"), dated the Closing Date, in form and substance satisfactory
to the Initial Purchaser to the effect set forth in Exhibit B hereto.
(b) The Initial Purchaser shall have received from Counsel for
the Initial Purchaser such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Notes, the Final
Memorandum (as amended or supplemented at the Closing Date) and other
related matters as the Initial Purchaser may reasonably require, and
the Company and the Guarantors shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(c) Each of the Company and the Guarantors shall have
furnished to the Initial Purchaser a certificate dated the Closing
Date, signed on behalf of each of the Company and the Guarantors by any
two of its Chairman of the Board, Chief Executive Officer, President,
Chief Financial Officer and any Vice President to the effect that the
signer of such certificate has carefully examined the Final Memorandum,
any amendment or supplement to the Final Memorandum and this Agreement
and that:
(i) the representations and warranties of the Company
and the Guarantors, contained in this Agreement are true and
correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date, and the
Company and the Guarantors have complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to the Closing
Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum, there has been no
change or development or event involving a prospective change
constituting a Material Adverse Effect, except as set forth in
or contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(d) At the Execution Time and at the Closing Date, Ernst &
Young shall have furnished to the Initial Purchaser a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Initial
Purchaser, confirming that they are independent public accountants
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants (the "AICPA")
and stating in effect that:
(i) in their opinion, the audited financial
statements and financial statement schedules of the Company
and its Subsidiaries included or incorporated
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in the Final Memorandum and reported on by them comply in form
in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations thereunder;
(ii) on the basis of a reading of the unaudited
financial statements of the Company for the three month period
ended December 27, 1997 and December 28, 1996 made available
by the Company and its Subsidiaries; their limited review in
accordance with the standards established by the AICPA under
Statement on Auditing Standards No. 71 of the unaudited
interim financial statements; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and committees of
the board of directors of the Company and its Subsidiaries;
and inquiries of certain officials of the Company and its
Subsidiaries who have responsibility for financial and
accounting matters of the Company and its Subsidiaries as to
whether the unaudited financial statements referred to above
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations; as to transactions and events
subsequent to September 27, 1997, nothing came to their
attention that caused them to believe that:
(1) any material modifications should be made to the
unaudited financial statements of the Company described above
included in the Final Memorandum, for them to be in conformity
with generally accepted accounting principles, or
(2) the unaudited financial statements of the Company
described above included in the Final Memorandum do not comply
in form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations thereunder.
(3) with respect to the period subsequent to December
27, 1997, there were at any specified date not more than three
Business Days prior to the date of the letter, any changes in
the capital stock, increases in the long-term debt or
decreases in consolidated net current assets or stockholders'
equity of the Company and its Subsidiaries, as compared with
amounts shown on the December 27, 1997 audited balance sheet
of the Company and its Subsidiaries included in the Final
Memorandum, or for the period from December 28, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year, in net sales,
operating income, income before income taxes and extraordinary
items, income before extraordinary items and accounting change
and net earnings, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Initial Purchaser;
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<PAGE>
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its Subsidiaries) set forth in the Final
Memorandum, including without limitation the information set
forth under the captions "Offering Memorandum Summary,"
"Summary Financial Data," "Risk Factors," "Use of Proceeds,"
"Unaudited Pro Forma Combined Financial Information of the
Company," "Selected Historical Financial Information,"
"Management Discussion and Analysis of Financial Condition and
Results of Operations," "Management Discussion and Analysis of
Acquired Business" and "Business," in the Final Memorandum
agrees with the accounting records of the Company and its
Subsidiaries, excluding any questions of legal interpretation;
and
(iv) as to pro forma financial information,
(A) they have read the unaudited pro forma
financial information included in the Final Memorandum;
(B) they have inquired of certain officials
of the Company and its Subsidiaries who have responsibility
for financial and accounting matters as to the basis for their
determination of the pro forma adjustments and whether the
unaudited pro forma financial statements included in the Final
Memorandum comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X;
(C) they have compared the historical
financial information included in the unaudited pro forma
balance sheet and the unaudited pro forma income statement in
the Final Memorandum with the historical information for the
Company and the Acquired Business and found them to be in
agreement;
(D) they have proved the arithmetic accuracy
of the application of the pro forma adjustments to the
financial amounts in the unaudited pro forma financial
statements, and as a result of the procedures specified in
(A), (B), (C) and (D), nothing came to their attention that
caused them to believe that the unaudited pro forma financial
statements included in the Final Memorandum do not comply as
to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X and
that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of the unaudited
pro forma financial statements included in the Final
Memorandum; and
(E) they have performed certain other
specified procedures as a result of which they determined that
certain pro forma information of an accounting, financial, or
statistical nature set forth in the Final Memorandum,
including without limitation the information set forth under
the captions "Offering Memorandum Summary," "Unaudited Pro
Forma Combined Financial
20
<PAGE>
Information of the Company" and "Risk Factors" in the Final
Memorandum, agrees to or can be derived from the pro forma
financial statements of the Company or the analysis completed
in the preparation of such pro forma financial statements,
excluding any questions of legal interpretation.
All references in this Section 6(d) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the
date of the letter or letters.
(e) At the Execution Time and at the Closing Date, Deloitte &
Touche shall have furnished to the Initial Purchaser a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Initial
Purchaser, confirming that they are independent public accountants
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants (the "AICPA")
and stating in effect that:
(i) in their opinion, the audited financial
statements and financial statement schedules of the Acquired
Business included or incorporated in the Final Memorandum and
reported on by them comply in form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations thereunder;
(ii) on the basis of a reading of the unaudited
interim financial statements for the three and six month
periods ended December 31, 1997 and December 31, 1996 made
available by the Acquired Business, their limited review in
accordance with the standards established by the AICPA under
Statement on Auditing Standards No. 71 of the unaudited
interim financial statements; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and committees of
the board of directors of the Acquired Business; and made
inquiries of certain officials of the Acquired Business who
have responsibility for financial and accounting matters of
the Acquired Business as to whether the unaudited financial
statements referred to above comply as to form in all material
respects with the applicable accounting requirements of the
Act and the related published rules and regulations; as to
transactions and events subsequent to December 31, 1997,
nothing came to their attention that caused them to believe
that:
(1) any material modifications should be made to the
unaudited financial statements of the Acquired Business
included in the Final Memorandum, for them to be in conformity
with generally accepted accounting principles;
(2) the unaudited financial statements of the
Acquired Business included in the Final Memorandum do not
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations thereunder; or
21
<PAGE>
(3) for the period from December 31, 1997 to January
29, 1998, there were any decreases, as compared with the
corresponding period in the preceding year, in combined net
current assets, combined net sales, or in combined net income,
except in all instances for changes or decreases set forth in
such letter, in which case the letter shall be accompanied by
an explanation by the Acquired Business, as the case may be,
as to the significance thereof unless said explanation is not
deemed necessary by the Initial Purchaser.
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Acquired Business) set forth in the Final Memorandum,
including without limitation the information set forth under
the captions "Offering Memorandum Summary," "Summary Financial
Data," "Risk Factors," "Use of Proceeds," "Unaudited Pro Forma
Combined Financial Information of the Company," "Selected
Historical Financial Information," "Management Discussion and
Analysis of Financial Condition and Results of Operations,"
"Management Discussion and Analysis of Acquired Business" and
"Business" in the Final Memorandum, agrees with the accounting
records of the Acquired Business, excluding any questions of
legal interpretation.
All references in this Section 6(e) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the
date of the letter or letters.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum, there shall
not have been (i) any change or decrease specified in the letter or
letters referred to in paragraphs (d) and (e) of this Section 6, or
(ii) any change, or any development involving a prospective change, in
or affecting the business or properties of the Company and its
Subsidiaries, the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Initial Purchaser, so
material and adverse as to make it impractical or inadvisable to market
the Notes as contemplated by the Final Memorandum.
(g) Subsequent to the respective dates as of which information
is given in the Final Memorandum and giving effect to the Acquisition,
(i) the Company and its Subsidiaries shall not have incurred any
material liability or obligation, direct or contingent, or entered into
any material transaction not in the ordinary course of business; (ii)
the Company and its Subsidiaries shall not have purchased any of its
outstanding Capital Stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its Capital Stock; and (iii)
there shall not have been any material change in the Capital Stock of
the Company and its Subsidiaries or in the short-term debt or long-term
debt of the Company and its Subsidiaries, except in each case as
described in or contemplated by the Final Memorandum.
22
<PAGE>
(h) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of the Notes by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act) or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(i) Each of the Transaction Documents (including any
amendments thereto) shall have been duly authorized, executed and
delivered by each of the parties thereto, and the Initial Purchaser
shall have received copies of each such Transaction Document (including
any amendments thereto) as so executed and delivered in the form
provided to the Initial Purchaser on or before the date hereof except
for changes approved by the Initial Purchaser or changes which do not
materially affect the rights or obligations of the Company and the
Guarantors.
(j) All amounts due and payable under the Senior Subordinated
Credit Agreement dated as of December 19, 1997 among Industries as
borrower, the Company and Service Company as guarantors, First Union
Corp. as agent and the lenders named therein, as amended by Amendment
No. 1, dated January 29, 1998, among Industries, the Company, Service
Company, First Union Corp. as agent and the lenders named therein and
by Amendment No. 2, dated January 29, 1998, among the Company,
Industries, Service Company, Textiles, Swift Denim, First Union Corp.
as agent and the lenders named therein (the "Senior Subordinated Credit
Agreement") shall be paid on the Closing Date from the proceeds of the
sale of the Notes to the Initial Purchasers.
(k) The Company shall have been advised by the National
Association of Securities Dealers, Inc. (the "NASD") that the Notes
have been designated PORTAL-eligible securities in accordance with the
rules and regulations of the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages Market (the
"PORTAL Market").
(l) Prior to the Closing Date, the Company and the Guarantors
shall have furnished to the Initial Purchaser such further information,
certificates and documents as the Initial Purchaser may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchaser and Counsel for the
Initial Purchaser, this Agreement and all obligations of the Initial Purchaser
hereunder may be canceled at the Closing Date by the Initial Purchaser. Notice
of such cancellation shall be given to the Company in writing or by telephone or
by telegraph confirmed in writing.
The documents required to be delivered by this Section 6 will
be delivered at the office of Counsel for the Initial Purchaser on the Closing
Date.
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<PAGE>
7. Reimbursement of Expenses; Fees. The Company and the
Guarantors will, whether or not the sale of the Notes provided for herein is
consummated, (i) pay all expenses incident to the performance of its obligations
under the offering documents, including the fees and disbursements of its
accountants and counsel, the cost of printing or other production and delivery
of the Preliminary Memorandum, the Final Memorandum, all amendments thereof and
supplements thereto, each Transaction Document and all other documents relating
to the offering of the Notes, the cost of preparing, printing, packaging and
delivering the Notes, the fees and disbursements, including fees of counsel
incurred in compliance with Section 5(d), the fees and disbursements of the
Trustee and the fees of any agency that rates the Notes, the fees and expenses,
if any, incurred in connection with the admission of the Notes for trading in
the PORTAL Market and (ii) reimburse the Initial Purchaser as requested for all
reasonable out-of-pocket expenses (including reasonable legal fees and expenses)
incurred by the Initial Purchaser in connection with the proposed purchase and
resale of the Notes.
8. Indemnification and Contribution. (a) The Company and the
Guarantors jointly and severally agree to indemnify and hold harmless the
Initial Purchaser, the directors, officers, employees and agents of the Initial
Purchaser and each person who controls the Initial Purchaser within the meaning
of either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Memorandum, the Final Memorandum
or any information provided by the Company and the Guarantors to any Holder or
prospective purchaser of Notes pursuant to Section 5(i), or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and agree to reimburse each such
indemnified party, as incurred, for any legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Guarantors will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Memorandum or the Final Memorandum, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company or the Guarantors by or on behalf of the Initial Purchaser
specifically for inclusion therein; and, provided, further, that with respect to
any untrue statement or omission of material fact made in the Preliminary
Memorandum, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of the Initial Purchaser to the extent that any such
losses, claims, damages or liabilities asserted against the Initial Purchaser
occurs under circumstances where it shall have been determined by a court of
competent jurisdiction by final and nonappealable judgment that (x) the Company
had previously furnished copies of the Final Memorandum to the Initial Purchaser
as required by this Agreement, (y) the untrue statement or omission of a
material fact contained in the Preliminary Memorandum was corrected in the Final
Memorandum and (z) there was not sent or given to such person asserting any such
losses, claims, damages or
24
<PAGE>
liabilities, at or prior to the written confirmation of the sale of Notes to
such person, a copy of the Final Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold
harmless (i) the Company, (ii) each Guarantor, (iii) each of their respective
directors and officers and (iv) each person who controls the Company or any
Guarantor within the meaning of either the Securities Act or the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchaser, but only with reference to written information
relating to the Initial Purchaser furnished to the Company and the Guarantors by
or on behalf of the Initial Purchaser specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which the Initial Purchaser may otherwise have.
The Company and the Guarantors acknowledge that the statements set forth in the
last paragraph of the cover page and under the headings "Notice to Investors"
and "Plan of Distribution" in the Preliminary Memorandum and the Final
Memorandum constitute the only information furnished in writing by or on behalf
of the Initial Purchaser for inclusion in the Preliminary Memorandum or Final
Memorandum (or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall have authorized the indemnified party to employ
separate counsel at the expense of the indemnifying party; provided further,
that the indemnifying party shall not be responsible for the fees and expenses
of more than one
25
<PAGE>
separate counsel (together with appropriate local counsel) representing all the
indemnified parties under paragraph (a) or (b) above. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and the Guarantors, on the one
hand, and the Initial Purchaser, on the other, agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and the Guarantors, on the one
hand, and the Initial Purchaser, on the other, may be subject in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Guarantors, on the one hand, and by the Initial Purchaser, on the other,
from the offering of the Notes; provided, however, that in no case shall the
Initial Purchaser be responsible for any amount in excess of the purchase
discount or commission applicable to the Notes purchased by the Initial
Purchaser hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Guarantors, on the
one hand, and the Initial Purchaser, on the other, shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantors, on the one hand, and of
the Initial Purchaser, on the other, in connection with the statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Guarantors shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Initial Purchaser shall be deemed to be
equal to the total purchase discounts and commissions received by the Initial
Purchaser from the Company in connection with the purchase of the Notes
hereunder. Relative fault shall be determined by reference to, among other
things, whether any alleged untrue statement or omission relates to information
provided by the Company, the Guarantors or the Initial Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Guarantors and
the Initial Purchaser agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation that does not take account of the equitable considerations referred
to above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities, expenses or judgments referred to in the
immediately preceding paragraph shall be deemed to include any legal or other
expenses incurred by such indemnified person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls the
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of the Initial
Purchaser shall have
26
<PAGE>
the same rights to contribution as the Initial Purchaser, and each person who
controls the Company or any Guarantor within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee and
agent of the Company or any Guarantor shall have the same rights to contribution
as the Company and the Guarantors, subject in each case to the applicable terms
and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination
by notice given by the Initial Purchaser to the Company prior to delivery of and
payment for the Notes if, after the date hereof and prior to such time, there
shall have occurred a material adverse change in the condition of the financial,
banking or capital markets the effect of which, in the judgment of the Initial
Purchaser, makes it impractical to market the Notes or to enforce sale contracts
with respect to the Notes.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company, the Guarantors or their officers and of the Initial Purchaser set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Initial Purchaser or
the Company, the Guarantors or any of their officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Notes. The provisions of Sections 7 and 8 hereof shall survive
the termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchaser, will be
mailed, delivered or telecopied and confirmed to it at 301 South College Street,
TW-10, Charlotte, NC 28288-0606, Telecopy No.: (704) 383-5097, Attention: Steve
Taylor; or, if sent to the Company, will be mailed, delivered or telecopied and
confirmed to them at 7736 McCloud Road, One Triad Center, Suite 300, Greensboro,
NC 27409, Attention: Michael R. Harmon.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns and the officers and directors and controlling persons referred to in
Section 8 hereof, and, except as expressly set forth in Section 5(i) hereof,
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person, firm, corporation or other entity any legal
or equitable right, remedy or claim under or in respect to this Agreement or any
provisions herein contained. No purchaser of Notes from the Initial Purchaser
shall be deemed to be a successor merely by reason of such purchase.
13. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
14. Business Day. For purposes of this Agreement, "Business
Day" means any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of Charlotte, North Carolina or of New York, New York, or
is a day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
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<PAGE>
15. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
28
<PAGE>
EXHIBIT B
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
among the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
GALEY & LORD, INC.
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
GALEY & LORD INDUSTRIES, INC.
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
G&L SERVICE COMPANY,
NORTH AMERICA, INC.
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Vice-President
SWIFT TEXTILES, INC.
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
SWIFT DENIM SERVICES, INC.
By: /s/ Michael R. Harmon
---------------------
Name: Michael R. Harmon
Title: Executive Vice-President
B-29
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
FIRST UNION CAPITAL MARKETS
A DIVISION OF WHEAT FIRST SECURITIES, INC.
By: /s/ Steven J. Taylor
------------------------
Name: Steven J. Taylor
Title: Senior Director
B-30
EXHIBIT A
FORM OF INITIAL GLOBAL NOTE
FACE OF INITIAL GLOBAL NOTE
GALEY & LORD, INC.
No. __ CUSIP No. 36352KAA1
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO
THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE
PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO GALEY & LORD, INC. OR A SUCCESSOR THEREOF
OR THE REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS
HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
INTERESTS IN THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.06 OF THE
INDENTURE, DATED AS OF FEBRUARY 24, 1998 AMONG GALEY & LORD, INC., AS
ISSUER, AND GALEY & LORD INDUSTRIES, INC., G&L SERVICE COMPANY, NORTH
AMERICA, INC., SWIFT TEXTILES, INC., AND SWIFT DENIM SERVICES, INC. AS
GUARANTORS, AND SUNTRUST BANK, ATLANTA, AS TRUSTEE, PURSUANT TO WHICH
THIS NOTE WAS ISSUED.
GLOBAL NOTE
REPRESENTING 9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
Galey & Lord, Inc., a Delaware corporation, for value
received, hereby promises to pay to Cede & Co., or its registered assigns, the
principal sum indicated on Schedule A hereof, on March 1, 2008.
Interest Payment Dates: March 1 and September 1, commencing
September 1, 1998.
Record Dates: February 15 and August 15.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
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<PAGE>
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
IN WITNESS WHEREOF, Galey & Lord, Inc. has caused this Note to
be duly executed.
GALEY & LORD, INC.
By: ________________________________
Name:
Title:
Attest:______________________
Dated:______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
SUNTRUST BANK, ATLANTA,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By: _____________________________________
Authorized Signatory
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<PAGE>
REVERSE SIDE OF INITIAL GLOBAL NOTE
GALEY & LORD, INC.
GLOBAL NOTE
REPRESENTING 9 1/8% SENIOR SUBORDINATED NOTES DUE 2008
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of the Company (as defined below) designated as its "9 1/8 % Senior Subordinated
Notes Due 2008" (herein called the "Notes") limited in aggregate principal
amount to $300,000,000, issued under an indenture dated as of February 24, 1998
(as amended or supplemented from time to time, the "Indenture") among the
Company, as issuer, and Galey & Lord Industries, Inc., G&L Service Company,
North America, Inc., Swift Textiles, Inc. and Swift Denim Services, Inc. as
guarantors (collectively, the "Note Guarantors"), and SunTrust Bank, Atlanta, as
trustee (the "Trustee," which term includes any successor trustee under the
Indenture). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders of Notes are referred to the Indenture and such Act
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Note Guarantors, the Trustee and each
Holder and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The summary of the terms of this Note contained herein does not
purport to be complete and is qualified by reference to the Indenture. To the
extent permitted by applicable law, in the event of any inconsistency between
the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control. All capitalized terms used in this Note which are not
defined herein shall have the meanings assigned to them in the Indenture.
The Indenture restricts, among other things, the Company's
ability to incur additional indebtedness, pay dividends or make certain other
restricted payments, incur liens to secure pari passu or subordinated
indebtedness, sell stock of Restricted Subsidiaries, apply net proceeds from
certain asset sales, merge or consolidate with any other person, sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of the assets
of the Company, enter into certain transactions with affiliates or incur
indebtedness that is subordinate in right of payment to any Senior Indebtedness
and senior in right of payment to the Notes. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Galey & Lord, Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay the principal amount set
forth on Schedule A of this Note to the Holder hereof on March 1, 2008.
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<PAGE>
The Company shall pay interest at a rate of 9 1/8% per annum,
from the Issue Date or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, semiannually in arrears on
March 1 and September 1 of each year, commencing on September 1, 1998, in cash,
to the Holder hereof until the principal amount hereof is paid or made available
for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on February 15 or August 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment
Date will include interest accrued through the day before such Interest Payment
Date. If an Interest Payment Date falls on a day that is not a Business Day, the
interest payment to be made on such Interest Payment Date will be made on the
next succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer prior
to the Record Date for the first Interest Payment Date following such exchange,
accrued and unpaid interest, if any, on this Note, up to but not including the
date of issuance of the Exchange Note or Exchange Notes issued in exchange for
this Note, shall be paid on the first Interest Payment Date for such Exchange
Note or Exchange Notes to the Holder or Holders of such Exchange Note or
Exchange Notes on the first Record Date with respect to such Exchange Note or
Exchange Notes. If this Note is exchanged in a Registered Exchange Offer
subsequent to the Record Date for the first Interest Payment Date following such
exchange but on or prior to such Interest Payment Date, then any such accrued
and unpaid interest with respect to this Note and any accrued and unpaid
interest on the Exchange Note or Exchange Notes issued in exchange for this
Note, through the day before such Interest Payment Date, shall be paid on such
Interest Payment Date to the Holder of this Note on such Record Date.
To the extent lawful, the Company shall pay interest on
overdue principal, overdue premium, Defaulted Interest and overdue Liquidated
Damages (without regard to any applicable grace period) at the interest rate
borne on this Note. The Company's obligation pursuant to the previous sentence
shall apply whether such overdue amount is due at its maturity, as a result of
the Company's obligations pursuant to Section 3.05, Section 4.11 or Section 4.14
of the Indenture, or otherwise.
3. Registration Rights; Liquidated Damages.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated February 24, 1998, among the Company, the
Note Guarantors and the Initial
A-5
<PAGE>
Purchaser (the "Registration Rights Agreement"), which agreement is attached to
the Indenture as Exhibit J thereto. Such benefits include the right of the
Holder to receive Liquidated Damages in the event of a failure on the part of
the Company to comply with certain registration covenants, as provided in
Section 4 of the Registration Rights Agreement.
4. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal, premium, if any, and interest and Liquidated
Damages, if any, in money of the United States of America that at the time of
payment is legal tender for payment of all debts public and private. Principal,
premium, if any, and interest and Liquidated Damages, if any, shall be paid by
check mailed to the registered Holders at their registered addresses; provided
that all payments with respect to Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
5. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
Affiliates may act as Paying Agent or Registrar, provided that if the Company or
such Affiliate is acting as Paying Agent, the Company or such Affiliate shall
segregate all funds held by it as Paying Agent and hold them in trust for the
benefit of the Holders or the Trustee.
6. Note Guarantees.
This Note is initially entitled to the benefits of the Note
Guarantees made by Galey & Lord Industries, Inc., G&L Service Company, North
America, Inc., Swift Textiles, Inc. and Swift Denim Services, Inc., and may
thereafter be entitled to Note Guarantees made by other Note Guarantors for the
benefit of the Holders of Notes. Each present Note Guarantor has, and each
future Note Guarantor will, irrevocably and unconditionally, jointly and
severally, guarantee on a senior subordinated basis the punctual payment when
due, whether at Stated Maturity, by acceleration, in connection with a Change of
Control Offer, an Asset Sale Offer or redemption, or otherwise, of all
obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Liquidated Damages, if
any, on the Notes, expenses, indemnification or otherwise. A Note Guarantor
shall be released from its Note Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
7. Subordination.
This Note and the Note Guarantees are subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full of all
existing and future Senior Indebtedness. Each of the Company and the Note
Guarantors agrees, and each Holder by accepting a Note
A-6
<PAGE>
agrees, to the subordination provisions set forth in the Indenture, authorizes
the Trustee to give them effect and appoints the Trustee as attorney-in-fact for
such purpose.
8. Redemption.
Except as set forth in the following paragraph, the Notes are
not redeemable at the option of the Company prior to March 1, 2003. Thereafter,
the Notes will be subject to redemption at the option of the Company, in whole
or in part, on at least 30 calendar days' but not more than 60 calendar days'
prior notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning March 1 of the years indicated below:
Year Percentage
- ---- ----------
2003 104.563%
2004 103.042%
2005 101.521%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to March
1, 2001 the Company, at its option, may redeem in the aggregate up to 35.0% of
the original principal amount of the Notes with the Net Cash Proceeds of one or
more Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 109.125% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
9. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days
before a Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption.
If fewer than all the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed pro rata or by lot or by a
method that complies with applicable legal and securities exchange requirements,
if any, and that the Trustee considers fair and appropriate and in accordance
with methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Notes not
previously called for redemption; provided that the Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000
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<PAGE>
(Notes in denominations of $1,000 or less may be redeemed only in whole). If any
Note is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date, then
any accrued interest will be paid on such Interest Payment Date to the Holder of
the Note on such Record Date. If money in an amount sufficient to pay the
Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest on the
Notes or portions thereof to be redeemed on the applicable Redemption Date will
cease to accrue.
10. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right in accordance with the terms hereof and the Indenture to require
the Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder with a copy to the
Trustee. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
Prior to complying with the provisions of the Indenture
governing Change of Control Offers, but in any event within 30 calendar days
following a Change of Control, the Company shall either repay all outstanding
Senior Indebtedness or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Indebtedness to permit the repurchase of
Notes required by the provisions of the Indenture governing Change of Control
Offers.
11. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary
engages in any Asset Sale, as a result of which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall, within 30 calendar days of the
date the amount of Excess Proceeds exceeds $5.0 million, use the then-existing
Excess Proceeds to make an offer to purchase from all Holders of Notes, on a pro
rata basis, Notes in an aggregate principal amount equal in amount to the
then-existing Excess Proceeds, at a purchase price in cash in an amount equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon
and Liquidated Damages to the Asset Sale Purchase Date (subject to the right of
each Holder of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date). Upon completion of an Asset Sale Offer
(including payment of the Asset Sale Purchase Price for accepted Notes), any
surplus
A-8
<PAGE>
Excess Proceeds that were the subject of such offer shall cease to be Excess
Proceeds, and the Company may then use such amounts for general corporate
purposes.
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
12. The Global Note.
So long as this Global Note is registered in the name of the
Depositary or its nominee, members of, or participants in, the Depositary
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depositary or the Trustee as its
custodian, and the Depositary may be treated by the Company, the Note
Guarantors, the Trustee and any agent of the Company, the Note Guarantors or the
Trustee as the absolute owner of this Global Note for all purposes.
Notwithstanding the foregoing, nothing herein shall (i) prevent the Company, the
Note Guarantors, the Trustee or any agent of the Company, the Note Guarantors or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or (ii) impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
Whenever, as a result of optional redemption by the Company, a
Change of Control Offer, an Asset Sale Offer, a Registered Exchange Offer or an
exchange for Certificated Notes, this Global Note is redeemed, repurchased or
exchanged in part, this Global Note shall be surrendered by the Holder thereof
to the Trustee who shall cause an adjustment to be made to Schedule A hereof so
that the principal amount of this Global Note will be equal to the portion not
redeemed, repurchased or exchanged and shall thereafter return this Global Note
to such Holder; provided that this Global Note shall be in a principal amount of
$1,000 or an integral multiple of $1,000.
13. The Registered Exchange Offer.
Any Initial Notes represented by this Global Note that are
presented to the Registrar for exchange pursuant to the Registered Exchange
Offer (as defined in the Registration Rights Agreement) shall be exchanged for a
Global Note representing Exchange Notes of equal
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<PAGE>
principal amount upon surrender of this Global Note to the Registrar in
accordance with the terms of the Registered Exchange Offer and the Indenture.
14. Transfer and Exchange.
The transfer of this Note is subject to certain restrictions,
including those to which reference is made in the Private Placement Legend. A
Holder may transfer or exchange Notes as provided in the Indenture and subject
to certain limitations therein set forth. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes, fees and expenses required by law or permitted by the
Indenture.
15. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and integral multiples thereof of principal amount.
16. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of the obligations of the Company and the Note Guarantors
under the Notes, the Note Guarantees and the Indenture if the Company
irrevocably deposits in trust with the Trustee cash or U.S. Government
Obligations for the payment of principal, premium, if any, interest and
Liquidated Damages, if any, on the Notes to redemption or maturity, as the case
may be.
17. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding Notes
(which consent may, but need not, be given in connection with any tender offer
or exchange offer for the Notes) and (ii) any past Default and its consequences
or any compliance with any provisions of the Indenture may be waived with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Note Guarantor for all
purposes under the Indenture (including, without limitation, Article 12
thereof).
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<PAGE>
18. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $10.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $10.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Note Guarantee of any Note Guarantor
ceasing for any reason to be in full force and effect (other than in accordance
with the terms of the Indenture) or any Note Guarantor denying or disaffirming
its obligations under its Note Guarantee.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Notes, subject to
certain limitations, may declare all the Notes to be immediately due and
payable. Certain events of bankruptcy or insolvency shall result in the Notes
being immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Notes unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Notes may direct the Trustee in its exercise of any trust or power under the
Indenture. The Holders of a majority in principal amount of the then outstanding
Notes, by written notice to the Trustee and the Company, may rescind any
declaration of acceleration and its consequences if the rescission would not
conflict with any judgment or decree, and if all existing Events of Default have
been cured or waived, except nonpayment of principal, interest, premium or
Liquidated Damages that has become due solely because of acceleration. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
19. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee
or any Paying Agent or Registrar, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Company,
the Note Guarantors or their Affiliates with the same rights it would have if it
were not Trustee, Paying Agent or Registrar, as the case may be, under the
Indenture.
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20. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or any Note Guarantor, as such, shall have any liability for any
obligations of the Company or such Note Guarantor under the Notes, the Note
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation, solely by reason of its status as
a director, officer, employee, incorporator or stockholder of the Company or
such Note Guarantor. By accepting a Note, each Holder waives and releases all
such liability (but only such liability) as part of the consideration for
issuance of such Note to such Holder.
21. Authentication.
This Note shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Note.
22. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
24. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture. Requests may be made
to:
Galey & Lord, Inc.
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, North Carolina 27409
Attention: Chief Financial Officer
A-12
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be $____________.
The following decreases/increase in the principal amount in denominations of
$1,000 or integral multiples thereof at maturity of this Note have been made:
<TABLE>
<CAPTION>
Total Principal
Amount at Notation
Decrease in Increase in Maturity Made by
Date of Principal Principal Following such or on
Decrease/ Amount at Amount at Decrease/ Behalf of
Increase Maturity Maturity Increase Trustee
<S> <C> <C> <C> <C>
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
============ =========== =========== ============= =========
</TABLE>
A-13
<PAGE>
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- -----------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated: _______________
- ----------------------------- --------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
|_| In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
|_| the entire principal amount
|_| $________________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or __________________________ an amount in
cash equal to 101% of the principal amount indicated in the preceding
sentence plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Change of Control Payment Date.
|_| In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
|_| the entire principal amount
|_| $________________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or __________________________ an amount in
cash equal to 100% of the principal amount indicated in the preceding
sentence plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Asset Sale Purchase Date.
Dated: _______________
- ----------------------------- --------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
A-15
EXHIBIT B
FORM OF INITIAL CERTIFICATED NOTE
FACE OF INITIAL CERTIFICATED NOTE
GALEY & LORD, INC.
No. ____ CUSIP No. 36352KAB9
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO
THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE
PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION.
9 1/8% SENIOR SUBORDINATED NOTE DUE 2008
Galey & Lord, Inc., a Delaware corporation, for value
received, hereby promises to pay to __________________, or its registered
assigns, the principal amount of _______________, on March 1, 2008.
Interest Payment Dates: March 1 and September 1, commencing
September 1, 1998.
Record Dates: February 15 and August 15.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
<PAGE>
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purposes.
IN WITNESS WHEREOF, Galey & Lord, Inc. has caused this Note to
be duly executed.
GALEY & LORD, INC.
By: __________________________________________
Name:
Title:
Attest:______________________
Dated:______________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
SUNTRUST BANK, ATLANTA,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:_________________________________________
Authorized Signatory
B-2
<PAGE>
REVERSE SIDE OF INITIAL CERTIFICATED NOTE
GALEY & LORD, INC.
9 1/8% SENIOR SUBORDINATED NOTE DUE 2008
1. Indenture.
This Note is one of a duly authorized issue of debt securities
of the Company (as defined below) designated as its "9 1/8 % Senior Subordinated
Notes Due 2008" (herein called the "Notes") limited in aggregate principal
amount to $300,000,000, issued under an indenture dated as of February 24, 1998
(as amended or supplemented from time to time, the "Indenture") among the
Company, as issuer, and Galey & Lord Industries, Inc., G&L Service Company,
North America, Inc., Swift Textiles, Inc. and Swift Denim Services, Inc. as
guarantors (collectively, the "Note Guarantors"), and SunTrust Bank, Atlanta, as
trustee (the "Trustee," which term includes any successor trustee under the
Indenture). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders of Notes are referred to the Indenture and such Act
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Note Guarantors, the Trustee and each
Holder and of the terms upon which the Notes are, and are to be, authenticated
and delivered. The summary of the terms of this Note contained herein does not
purport to be complete and is qualified by reference to the Indenture. To the
extent permitted by applicable law, in the event of any inconsistency between
the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control. All capitalized terms used in this Note which are not
defined herein shall have the meanings assigned to them in the Indenture.
The Indenture restricts, among other things, the Company's
ability to incur additional indebtedness, pay dividends or make certain other
restricted payments, incur liens to secure pari passu or subordinated
indebtedness, sell stock of Restricted Subsidiaries, apply net proceeds from
certain asset sales, merge or consolidate with any other person, sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of the assets
of the Company, enter into certain transactions with affiliates or incur
indebtedness that is subordinate in right of payment to any Senior Indebtedness
and senior in right of payment to the Notes. The Indenture permits, under
certain circumstances, Restricted Subsidiaries of the Company to be deemed
Unrestricted Subsidiaries and thus not subject to the restrictions of the
Indenture.
2. Principal and Interest.
Galey & Lord, Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay the principal amount set
forth on Schedule A of this Note to the Holder hereof on March 1, 2008.
The Company shall pay interest at a rate of 9 1/8% per annum,
from the Issue Date or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly
B-3
<PAGE>
provided for, semiannually in arrears on March 1 and September 1 of each year,
commencing on September 1, 1998, in cash, to the Holder hereof until the
principal amount hereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, subject to certain exceptions provided in the Indenture, be paid to the
Person in whose name this Note (or the Note in exchange or substitution for
which this Note was issued) is registered at the close of business on the Record
Date for interest payable on such Interest Payment Date. The Record Date for any
interest payment is the close of business on February 15 or August 15 as the
case may be, whether or not a Business Day, immediately preceding the Interest
Payment Date on which such interest is payable. Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") shall forthwith
cease to be payable to the Holder on such Record Date and shall be paid as
provided in Section 2.11 of the Indenture. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
Each payment of interest in respect of an Interest Payment
Date will include interest accrued through the day before such Interest Payment
Date. If an Interest Payment Date falls on a day that is not a Business Day, the
interest payment to be made on such Interest Payment Date will be made on the
next succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer prior
to the Record Date for the first Interest Payment Date following such exchange,
accrued and unpaid interest, if any, on this Note, up to but not including the
date of issuance of the Exchange Note or Exchange Notes issued in exchange for
this Note, shall be paid on the first Interest Payment Date for such Exchange
Note or Exchange Notes to the Holder or Holders of such Exchange Note or
Exchange Notes on the first Record Date with respect to such Exchange Note or
Exchange Notes. If this Note is exchanged in a Registered Exchange Offer
subsequent to the Record Date for the first Interest Payment Date following such
exchange but on or prior to such Interest Payment Date, then any such accrued
and unpaid interest with respect to this Note and any accrued and unpaid
interest on the Exchange Note or Exchange Notes issued in exchange for this
Note, through the day before such Interest Payment Date, shall be paid on such
Interest Payment Date to the Holder of this Note on such Record Date.
To the extent lawful, the Company shall pay interest on
overdue principal, overdue premium, Defaulted Interest and overdue Liquidated
Damages (without regard to any applicable grace period) at the interest rate
borne on this Note. The Company's obligation pursuant to the previous sentence
shall apply whether such overdue amount is due at its maturity, as a result of
the Company's obligations pursuant to Section 3.05, Section 4.11 or Section 4.14
of the Indenture, or otherwise.
3. Registration Rights; Liquidated Damages.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated February 24, 1998, among the Company, the
Note Guarantors and the Initial Purchaser (the "Registration Rights Agreement"),
which agreement is attached to the Indenture as Exhibit J thereto. Such benefits
include the right of the Holder to receive Liquidated Damages in
B-4
<PAGE>
the event of a failure on the part of the Company to comply with certain
registration covenants, as provided in Section 4 of the Registration Rights
Agreement.
4. Method of Payment.
The Company, through the Paying Agent, shall pay interest on
this Note to the registered Holder of this Note, as provided above. The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal, premium, if any, and interest and Liquidated
Damages, if any, in money of the United States of America that at the time of
payment is legal tender for payment of all debts public and private. Principal,
premium, if any, and interest and Liquidated Damages, if any, shall be paid by
check mailed to the registered Holders at their registered addresses; provided
that all payments with respect to Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
5. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar
under the Indenture. The Company may, upon written notice to the Trustee,
appoint and change any Paying Agent or Registrar. The Company or any of its
Affiliates may act as Paying Agent or Registrar, provided that if the Company or
such Affiliate is acting as Paying Agent, the Company or such Affiliate shall
segregate all funds held by it as Paying Agent and hold them in trust for the
benefit of the Holders or the Trustee.
6. Note Guarantees.
This Note is initially entitled to the benefits of the Note
Guarantees made by Galey & Lord Industries, Inc., G&L Service Company, North
America, Inc., Swift Textiles, Inc. and Swift Denim Services, Inc., and may
thereafter be entitled to Note Guarantees made by other Note Guarantors for the
benefit of the Holders of Notes. Each present Note Guarantor has, and each
future Note Guarantor will, irrevocably and unconditionally, jointly and
severally, guarantee on a senior subordinated basis the punctual payment when
due, whether at Stated Maturity, by acceleration, in connection with a Change of
Control Offer, an Asset Sale Offer or redemption, or otherwise, of all
obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Liquidated Damages, if
any, on the Notes, expenses, indemnification or otherwise. A Note Guarantor
shall be released from its Note Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
7. Subordination.
This Note and the Note Guarantees are subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full of all
existing and future Senior Indebtedness. Each of the Company and the Note
Guarantors agrees, and each Holder by accepting a Note agrees, to the
subordination provisions set forth in the Indenture, authorizes the Trustee to
give them effect and appoints the Trustee as attorney-in-fact for such purpose.
B-5
<PAGE>
8. Redemption.
Except as set forth in the following paragraph, the Notes are
not redeemable at the option of the Company prior to March 1, 2003. Thereafter,
the Notes will be subject to redemption at the option of the Company, in whole
or in part, on at least 30 calendar days' but not more than 60 calendar days'
prior notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the applicable Redemption Date (subject to the
right of each Holder of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), if redeemed during the twelve-month
period beginning March 1 of the years indicated below:
Year Percentage
- ---- ----------
2003 104.563%
2004 103.042%
2005 101.521%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to March
1, 2001 the Company, at its option, may redeem in the aggregate up to 35.0% of
the original principal amount of the Notes with the Net Cash Proceeds of one or
more Public Equity Offerings following which there is a Public Market, at a
redemption price (expressed as a percentage of principal amount) of 109.125% of
the aggregate principal amount so redeemed, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date (subject to the right
of Holders of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date); provided, however, that at least 65.0% of the
original principal amount of the Notes must remain outstanding after each such
redemption; and provided, further, that each such redemption shall occur within
60 days of the date of closing of the related Public Equity Offering.
9. Notice of Redemption.
At least 20 calendar days but not more than 60 calendar days
before a Redemption Date, the Company shall deliver to the Trustee and send, by
first-class mail, postage prepaid, to Holders of Notes to be redeemed at the
addresses of such Holders as they appear in the Note Register, a notice of
redemption.
If fewer than all the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed pro rata or by lot or by a
method that complies with applicable legal and securities exchange requirements,
if any, and that the Trustee considers fair and appropriate and in accordance
with methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Notes not
previously called for redemption; provided that the Trustee may select for
redemption portions (equal to $1,000 or any integral multiple thereof) of the
principal of Notes that have denominations larger than $1,000 (Notes in
denominations of $1,000 or less may be redeemed only in whole). If any Note is
redeemed subsequent to a Record Date with respect to any Interest Payment Date
specified above and on or prior to such Interest Payment Date, then any accrued
interest will be paid on such
B-6
<PAGE>
Interest Payment Date to the Holder of the Note on such Record Date. If money in
an amount sufficient to pay the Redemption Price of all Notes (or portions
thereof) to be redeemed on the Redemption Date is deposited with the Paying
Agent on or before the applicable Redemption Date and certain other conditions
are satisfied, interest on the Notes or portions thereof to be redeemed on the
applicable Redemption Date will cease to accrue.
10. Repurchase at the Option of Holders upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right in accordance with the terms hereof and the Indenture to require
the Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Payment Date.
Within 30 calendar days following any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder with a copy to the
Trustee. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Change of Control Offer. Unless the Company defaults in the payment of the
Change of Control Purchase Price with respect thereto, all Notes or portions
thereof accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest from and after the Change of Control Payment Date.
Prior to complying with the provisions of the Indenture
governing Change of Control Offers, but in any event within 30 calendar days
following a Change of Control, the Company shall either repay all outstanding
Senior Indebtedness or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Indebtedness to permit the repurchase of
Notes required by the provisions of the Indenture governing Change of Control
Offers.
11. Repurchase at the Option of Holders upon Asset Sale.
If at any time the Company or any Restricted Subsidiary
engages in any Asset Sale, as a result of which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company shall, within 30 calendar days of the
date the amount of Excess Proceeds exceeds $5.0 million, use the then-existing
Excess Proceeds to make an offer to purchase from all Holders of Notes, on a pro
rata basis, Notes in an aggregate principal amount equal in amount to the
then-existing Excess Proceeds, at a purchase price in cash in an amount equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon
and Liquidated Damages to the Asset Sale Purchase Date (subject to the right of
each Holder of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date). Upon completion of an Asset Sale Offer
(including payment of the Asset Sale Purchase Price for accepted Notes), any
surplus Excess Proceeds that were the subject of such offer shall cease to be
Excess Proceeds, and the Company may then use such amounts for general corporate
purposes.
B-7
<PAGE>
Within 30 calendar days of the date the amount of Excess
Proceeds exceeds $5.0 million, the Company shall send, or cause to be sent, by
first-class mail, postage prepaid, a notice regarding the Asset Sale Offer to
each Holder. The Holder of this Note may elect to have this Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below and tendering this Note
pursuant to the Asset Sale Offer. Unless the Company defaults in the payment of
the Asset Sale Purchase Price with respect thereto, all Notes or portions
thereof selected for payment pursuant to the Asset Sale Offer will cease to
accrue interest from and after the Asset Sale Purchase Date.
12. The Registered Exchange Offer.
Any Initial Notes (including this Note) that are presented to
the Registrar for exchange pursuant to the Registered Exchange Offer (as defined
in the Registration Rights Agreement) shall be exchanged for Exchange Notes of
equal principal amount upon surrender of such Notes to the Registrar in
accordance with the terms of the Registered Exchange Offer and the Indenture.
13. Transfer and Exchange.
The transfer of this Note is subject to certain restrictions,
including those to which reference is made in the Private Placement Legend. A
Holder may transfer or exchange Notes as provided in the Indenture and subject
to certain limitations therein set forth. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes, fees and expenses required by law or permitted by the
Indenture. The Registrar need not register the transfer or exchange of
Certificated Notes or portions thereof selected for redemption (except, in the
case of a Certificated Note to be redeemed in part, the portion of such
Certificated Note not to be redeemed) or any Certificated Notes for a period of
15 calendar days before a selection of Notes to be redeemed.
14. Denominations.
The Notes are issuable only in registered form without coupons
in denominations of $1,000 and integral multiples thereof of principal amount;
provided that Initial Certificated Notes originally purchased by or transferred
to Institutional Accredited Investors shall be subject to a minimum denomination
of $250,000.
15. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of the obligations of the Company and the Note Guarantors
under the Notes, the Note Guarantees and the Indenture if the Company
irrevocably deposits in trust with the Trustee cash or U.S. Government
Obligations for the payment of principal, premium, if any, interest and
Liquidated Damages, if any, on the Notes to redemption or maturity, as the case
may be.
B-8
<PAGE>
16. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Notes may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding Notes
(which consent may, but need not, be given in connection with any tender offer
or exchange offer for the Notes) and (ii) any past Default and its consequences
or any compliance with any provisions of the Indenture may be waived with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Notes. Subject to certain exceptions set forth in the Indenture,
without the consent of any Holder, the Company and the Trustee may amend the
Indenture or the Notes (i) to evidence the succession of another Person to the
Company and the assumption by such successor of the covenants of the Company
under the Indenture and contained in the Notes; (ii) to add to the covenants of
the Company, for the benefit of the Holders of all of the Notes, or to surrender
any right or power conferred on the Company under the Indenture; (iii) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (iv) to secure the Notes; (v) to cure any ambiguity, omission, defect or
inconsistency in the Indenture, provided that such actions shall not adversely
affect the interests of the Holders of Notes in any material respect; (vi) to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or (vii) to evidence the agreement
or acknowledgment of a Restricted Subsidiary that it is a Note Guarantor for all
purposes under the Indenture (including, without limitation, Article 12
thereof).
17. Defaults and Remedies.
Under the Indenture, Events of Default include: (i) a default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination provisions
of the Indenture); (ii) a default in the payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure by the Company to observe or perform
certain covenants, conditions, agreements or other provisions of the Indenture
or this Note (and, in the case of certain covenants, agreements or other
provisions, such failure has continued for 30 calendar days after written notice
by the Trustee or the Holders of at least 25% in principal amount of the Notes);
(iv) a default in the payment of Indebtedness of the Company or any of its
Significant Subsidiaries within any applicable grace period after final maturity
or acceleration of such Indebtedness in an amount in excess of $10.0 million in
the aggregate; (v) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries; (vi) certain undischarged
judgments in excess of $10.0 million against the Company or any of its
Significant Subsidiaries; or (vii) the Note Guarantee of any Note Guarantor
ceasing for any reason to be in full force and effect (other than in accordance
with the terms of the Indenture) or any Note Guarantor denying or disaffirming
its obligations under its Note Guarantee.
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Notes, subject to
certain limitations, may declare all the Notes to be immediately due and
payable. Certain events of bankruptcy or insolvency shall result in the Notes
being immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
B-9
<PAGE>
Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Notes unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Notes may direct the Trustee in its exercise of any trust or power under the
Indenture. The Holders of a majority in principal amount of the then outstanding
Notes, by written notice to the Trustee and the Company, may rescind any
declaration of acceleration and its consequences if the rescission would not
conflict with any judgment or decree, and if all existing Events of Default have
been cured or waived, except nonpayment of principal, interest, premium or
Liquidated Damages that has become due solely because of acceleration. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
18. Individual Rights of Trustee.
Subject to certain limitations imposed by the TIA, the Trustee
or any Paying Agent or Registrar, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Company,
the Note Guarantors or their Affiliates with the same rights it would have if it
were not Trustee, Paying Agent or Registrar, as the case may be, under the
Indenture.
19. No Recourse Against Certain Others.
No director, officer, employee, incorporator or stockholder of
the Company or any Note Guarantor, as such, shall have any liability for any
obligations of the Company or such Note Guarantor under the Notes, the Note
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation, solely by reason of its status as
a director, officer, employee, incorporator or stockholder of the Company or
such Note Guarantor. By accepting a Note, each Holder waives and releases all
such liability (but only such liability) as part of the consideration for
issuance of such Note to such Holder.
20. Authentication.
This Note shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Note.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a
B-10
<PAGE>
convenience to Holders of Notes. No representation is made as to the accuracy of
such numbers either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
23. Governing Law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture. Requests may be made
to:
Galey & Lord, Inc.
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, North Carolina 27409
Attention: Chief Financial Officer
B-11
<PAGE>
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- -----------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
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this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Note Register, with full power of substitution.
Dated: _______________
- ----------------------------- -----------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
B-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
|_| In connection with the Change of Control Offer made pursuant to Section
4.14 of the Indenture, the undersigned hereby elects to have
|_| the entire principal amount
|_| $________________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or __________________________ an amount in
cash equal to 101% of the principal amount indicated in the preceding
sentence plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Change of Control Payment Date.
|_| In connection with the Asset Sale Offer made pursuant to Section 4.11
of the Indenture, the undersigned hereby elects to have
|_| the entire principal amount
|_| $________________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or __________________________ an amount in
cash equal to 100% of the principal amount indicated in the preceding
sentence plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the Asset Sale Purchase Date.
Dated: _______________
- ----------------------------- --------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
B-13
