<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1997
REGISTRATION NO. 333-32605
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
POLYMER GROUP, INC. CHICOPEE, INC.
PGI POLYMER, INC. PNA CORP.
FIBERTECH GROUP, INC. FNA POLYMER CORP.
FIBERGOL CORPORATION FABRENE CORP.
TECHNETICS GROUP, INC. FABRENE GROUP L.L.C.
CHICOPEE HOLDINGS, INC. FABRENE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2297131 57-1003983
DELAWARE 2297131 57-0962088
DELAWARE 2297131 57-0962089
DELAWARE 2297131 57-0962081
DELAWARE 2297131 57-0982116
DELAWARE 2297131 57-1018373
DELAWARE 2297131 57-1013629
NORTH CAROLINA 2297131 56-1887385
NORTH CAROLINA 2297131 56-1742445
DELAWARE 2297131 51-0319685
DELAWARE 2297131 57-0988766
PRINCE EDWARD ISLAND, N/A
CANADA (PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NO.)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
----------------
4838 JENKINS AVENUE
NORTH CHARLESTON, SC 29405
TELEPHONE: (803) 566-7293
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
----------------
JAMES G. BOYD
4838 JENKINS AVENUE
NORTH CHARLESTON, SC 29405
TELEPHONE: (803) 566-7293
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
H. KURT VON MOLTKE
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 861-2295
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- ---------------------------------------------- -------------------------------------------
<S> <C>
1. Forepart of Registration Statement and Outside Front Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page; Outside Back Cover
of Prospectus Page
3. Risk Factors, Ratio of Earnings to Fixed Prospectus Summary; Selected Consolidated
Charges and Other Information Financial Data; Unaudited Pro Forma
Financial Information
4. Terms of the Transaction Outside Front Cover Page; Prospectus
Summary; Description of the Exchange
Notes; The Exchange Offer; Certain Federal
Income Tax Consequences
5. Pro Forma Financial Information Unaudited Pro Forma Financial Information
6. Material Contracts with the Company Being Inapplicable
Acquired
7. Additional Information Required Inapplicable
8. Interests of Named Experts and Counsel Legal Matters; Experts
9. Disclosure of Commission Position on Inapplicable
Indemnification for Securities Act
Liabilities
10. Information with Respect to S-3 Outside Front Cover Page; Prospectus
Registrants Summary; Risk Factors; The Refinancing;
Use of Proceeds; Capitalization; Selected
Consolidated Financial Data; Unaudited Pro
Forma Financial Information; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Certain
Relationships and Related Transactions;
Security Ownership; Description of Certain
Indebtedness
11. Incorporation of Certain Information by Incorporation of Certain Documents by
Reference Reference
12. Information with Respect to S-3 or S-2 Inapplicable
Registrants
13. Incorporation of Certain Information by Inapplicable
Reference
14. Information with Respect to Registrants Inapplicable
other than S-3 or S-2 Registrants
15. Information with Respect to S-3 Inapplicable
Companies.
16. Information with Respect to S-3 or S-2 Inapplicable
Companies
17. Information with Respect to Companies Inapplicable
Other than S-3 or S-2 Companies
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
- ---------------------------------------------- -------------------------------------------
<S> <C>
18. Information if Proxies, Consents or Inapplicable
Authorizations are to be Solicited
19. Information if Proxies, Consents or Management; Security Ownership; Certain
Authorizations are not to be Solicited or Relationships and Related Transactions
in an Exchange Offer
</TABLE>
(ii)
<PAGE>
PROSPECTUS
SEPTEMBER 3, 1997
POLYMER GROUP, INC.
OFFER TO EXCHANGE ITS 9% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON OCTOBER
3, 1997, UNLESS EXTENDED.
Polymer Group, Inc., a Delaware corporation (the "Company") hereby offers
(the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its 9% Senior
Subordinated Notes due 2007, Series B (the "Exchange Notes"), registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this prospectus is a part, for each $1,000
principal amount of its outstanding 9% Senior Subordinated Notes due 2007 (the
"Old Notes"), of which $400,000,000 principal amount is outstanding. The form
and terms of the Exchange Notes are the same as the form and terms of the Old
Notes except that (i) the Exchange Notes will bear a Series B designation,
(ii) the Exchange Notes will have been registered under the Securities Act
and, therefore, will not bear legends restricting the transfer thereof and
(iii) holders of the Exchange Notes will not be entitled to certain rights of
holders of Old Notes under the Registration Rights Agreement (as defined). The
Old Notes and the Exchange Notes are referred to herein collectively as the
"Notes." The Exchange Notes will evidence the same debt as the Old Notes
(which they replace) and will be issued under and be entitled to the benefits
of the Indenture dated as of July 1, 1997 (the "Indenture") by and among the
Company, the Guarantors (as defined) and Harris Trust and Savings Bank, as
trustee, governing the Notes. See "The Exchange Offer" and "Description of the
Exchange Notes."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on October 3, 1997,
unless extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer."
The Old Notes were sold by the Company on July 3, 1997 to Chase Securities
Inc. (the "Initial Purchaser") in a transaction not registered under the
Securities Act in reliance upon an exemption under the Securities Act (the
"Initial Offering"). The Initial Purchasers subsequently placed the Old Notes
with qualified institutional buyers in reliance upon Rule 144A under the
Securities Act. Accordingly, the Old Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder in order to satisfy the obligations of the Company and the
Guarantors under the Registration Rights Agreement entered into by the
Company, the Guarantors and the Initial Purchaser in connection with the
Initial Offering (the "Registration Rights Agreement"). See "The Exchange
Offer."
Interest on the Notes will accrue from their date of original issuance and
will be payable semi-annually in arrears on January 1 and July 1 of each year,
commencing January 1, 1998, at the rate of 9% per annum. The Notes will be
redeemable, in whole or in part, at the option of the Company on or after July
1, 2002, at the redemption prices set forth herein plus accrued and unpaid
interest to the date of redemption. In addition, at any time and from time to
time prior to July 1, 2000, the Company may, at its option, redeem up to 35%
of the aggregate principal amount of the Notes with the net cash proceeds of
one or more Public Equity Offerings (as defined) by the Company, at a
redemption price equal to 109.25% of the principal amount thereof plus accrued
and unpaid interest to the date of redemption; provided, however, that after
giving effect to any such redemption, at least 65% of the aggregate principal
amount of the Notes originally issued remains outstanding. Upon a Change in
Control (as defined), the Company will be required to make an offer to
repurchase the Notes at a price equal to 101% of the principal amount thereof
plus accrued and unpaid interest to the date of
<PAGE>
repurchase. In addition, the Company will be obligated to offer to repurchase
the Notes at 100% of the principal amount thereof plus accrued and unpaid
interest to the date of repurchase in the event of certain Asset Sales (as
defined). See "Description of the Exchange Notes."
The Notes will be general unsecured senior subordinated obligations of the
Company and will be subordinated in right of payment to all existing and
future Senior Indebtedness (as defined) of the Company. The Notes will rank
pari passu in right of payment with any future senior subordinated
Indebtedness (as defined) of the Company and will rank senior to all other
Subordinated Indebtedness (as defined) of the Company. The Notes will be
guaranteed (the "Guarantees"), jointly and severally, on a senior subordinated
basis by all of the Company's direct and indirect domestic Subsidiaries (as
defined) on the issue day of the Notes (the "Issue Date") as well as by
Fabrene Group, Inc. ("Fabrene Group"), and by each direct and indirect
domestic subsidiary of the Company (excluding Unrestricted Subsidiaries (as
defined)) formed or acquired thereafter (the "Guarantors"). As of the Issue
Date, the Guarantors under the Indenture were PGI Polymer, Inc. ("PGI
Polymer"), FiberTech Group, Inc. ("FiberTech"), FiberGol Corporation
("FiberGol"), Technetics Group, Inc. ("Technetics"), Chicopee Holdings, Inc.
("Chicopee Holdings"), Chicopee, Inc. ("Chicopee"), PNA Corp. ("PNA"), FNA
Polymer Corp. ("FNA"), Fabrene Corp., Fabrene Group L.L.C. ("Fabrene L.L.C.")
and Fabrene Group. The Guarantees will be general unsecured senior
subordinated obligations of the Guarantors and will be subordinated in right
of payment to all existing and future Guarantor Senior Indebtedness (as
defined) (including Indebtedness outstanding under the Amended Credit
Facility). The Guarantees will rank pari passu with any and all future senior
subordinated Indebtedness of the Guarantors and will rank senior to all other
subordinated Indebtedness of the Guarantors. As of June 28, 1997, after giving
pro forma effect to the Refinancing, including the issuance of the Old Notes
and the application of the net proceeds therefrom, the aggregate principal
amount of the Company's outstanding Senior Indebtedness would have been
approximately $29.0 million (excluding unused commitments) and the Company
would have had no senior subordinated Indebtedness outstanding other than the
Notes. See "Description of the Exchange Notes--Ranking" and "Description of
the Exchange Notes-- Guarantees."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DESCRIPTION OF CERTAIN RISKS
TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Based upon an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such Exchange Notes
are acquired in the ordinary course of such holder's business and such holder
has no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. See "The Exchange Offer--Resale of the
Exchange Notes." Holders of Old Notes wishing to accept the Exchange Offer
must represent to the Company, as required by the Registration Rights
Agreement, that such conditions have been met. Each broker-dealer (a
"Participating Broker-Dealer") that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning
ii
<PAGE>
of the Securities Act. This Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of Exchange Notes received in exchange for Old Notes where such
Old Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter
is being used in connection with the Exchange Offer. Holders of Old Notes not
tendered and accepted in the Exchange Offer will continue to hold such Old
Notes and will be entitled to all the rights and benefits and will be subject
to the limitations applicable thereto under the Indenture and with respect to
transfer under the Securities Act. See "The Exchange Offer."
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Company does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors--Absence of a Public Market
Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SUBSIDIARY GUARANTORS. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE
MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
UNTIL DECEMBER 3, 1997 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER),
ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
THE EXCHANGE NOTES WILL BE AVAILABLE INITIALLY ONLY IN BOOK-ENTRY FORM.
EXCEPT AS DESCRIBED UNDER "BOOK-ENTRY; DELIVERY AND FORM", THE COMPANY EXPECTS
THAT THE EXCHANGE NOTES ISSUED PURSUANT TO THE EXCHANGE OFFER WILL BE
REPRESENTED BY A GLOBAL NOTE (AS DEFINED), WHICH WILL BE DEPOSITED WITH, OR ON
BEHALF OF, THE DEPOSITORY TRUST COMPANY ("DTC") AND REGISTERED IN ITS NAME OR
IN THE NAME OF CEDE & CO., ITS NOMINEE. BENEFICIAL INTERESTS IN THE GLOBAL
NOTE REPRESENTING THE EXCHANGE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF
WILL BE EFFECTED THROUGH, RECORDS MAINTAINED BY DTC AND ITS
iii
<PAGE>
PARTICIPANTS. AFTER THE INITIAL ISSUANCE OF THE GLOBAL NOTE, NOTES IN
CERTIFICATED FORM WILL BE ISSUED IN EXCHANGE FOR THE GLOBAL NOTE ONLY UNDER
LIMITED CIRCUMSTANCES AS SET FORTH IN THE INDENTURE. SEE "BOOK-ENTRY; DELIVERY
AND FORM."
PROSPECTIVE INVESTORS IN THE EXCHANGE NOTES ARE NOT TO CONSTRUE THE CONTENTS
OF THIS PROSPECTUS AS INVESTMENT, LEGAL OR TAX ADVICE. EACH INVESTOR SHOULD
CONSULT ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX,
BUSINESS, FINANCIAL AND RELATED ASPECTS OF THE EXCHANGE NOTES. NEITHER THE
COMPANY NOR ANY OF THE GUARANTORS IS MAKING ANY REPRESENTATION TO ANY
PROSPECTIVE INVESTOR IN THE EXCHANGE NOTES REGARDING THE LEGALITY OF AN
INVESTMENT THEREIN BY SUCH PERSON UNDER APPROPRIATE LEGAL INVESTMENT OR
SIMILAR LAWS.
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WAS OBTAINED THROUGH COMPANY
RESEARCH, SURVEYS OR STUDIES PURCHASED BY THE COMPANY AND CONDUCTED BY THIRD
PARTIES AND FROM INDUSTRY OR GENERAL PUBLICATIONS. THE COMPANY HAS NOT
INDEPENDENTLY VERIFIED MARKET DATA PROVIDED BY THIRD PARTIES OR INDUSTRY OR
GENERAL PUBLICATIONS. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY
THE COMPANY TO BE RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
FORWARD LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT
TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO FORMA
FINANCIAL INFORMATION," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." ALL OF THESE FORWARD
LOOKING STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT
OF THE COMPANY WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY
UNCERTAIN. THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES
AND STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES OR
STATEMENTS WILL BE REALIZED AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS. FACTORS
THAT MAY CAUSE SUCH DIFFERENCES INCLUDE: (1) INCREASED COMPETITION; (2)
INCREASED COSTS; (3) LOSS OR RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (4)
INCREASES IN THE COMPANY'S COST OF BORROWINGS OR INABILITY OR UNAVAILABILITY
OF ADDITIONAL DEBT OR EQUITY CAPITAL; (5) ADVERSE STATE OR FEDERAL LEGISLATION
OR REGULATION OR ADVERSE DETERMINATIONS BY REGULATORS; AND (6) CHANGES IN
GENERAL ECONOMIC CONDITIONS IN THE MARKETS IN WHICH THE COMPANY MAY, FROM TIME
TO TIME, COMPETE. MANY OF SUCH FACTORS WILL BE BEYOND THE CONTROL OF THE
COMPANY AND ITS MANAGEMENT. FOR FURTHER INFORMATION OR OTHER FACTORS WHICH
COULD AFFECT THE FINANCIAL RESULTS OF THE COMPANY AND SUCH FORWARD LOOKING
STATEMENTS, SEE "RISK FACTORS."
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, covering the Exchange Notes being offered
hereby. This Prospectus does not contain all the information set forth in the
Exchange Offer Registration Statement. For further information with respect to
the Company and the Exchange Offer, reference is made to the Exchange Offer
Registration Statement. Statements made in this Prospectus
iv
<PAGE>
as to the contents of any contract, agreement or other document referred to
are not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Exchange Offer Registration
Statement, reference is made to the exhibit for a more complete description of
the document or matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. In addition, the Company files
periodic reports and other information requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), with the Commission. The
Exchange Offer Registration Statement, including the exhibits thereto, and
periodic reports and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at its regional offices located at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such materials
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.com. Reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the New York Stock
Exchange, Inc., 11 Wall Street, New York, New York 10005.
In addition, the Company has agreed that, whether or not it is required to
do so by the rules and regulations of the Commission, for so long as any Notes
remain outstanding, it will furnish to the holders of the Notes and, to the
extent permitted by applicable law or regulation, file with the Commission all
quarterly and annual financial information that would be required to be filed
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act or
any successor provision thereto. In addition, for so long as any of the Notes
remain outstanding and prior to the occurrence of certain events, the Company
has agreed to make available to any record holder, in connection with any sale
thereof, the information required by Rule 144A(d)(4) under the Securities Act.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE
UPON REQUEST FROM JAMES BRYANT, DIRECTOR OF INVESTOR RELATIONS OF POLYMER
GROUP, INC., 4838 JENKINS AVENUE, NORTH CHARLESTON, SOUTH CAROLINA 29405. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE
BY SEPTEMBER 26, 1997 (FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION DATE).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 29, 1997 and June 28, 1997.
3. The Company's Current Report on Form 8-K dated June 19, 1997.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Prospectus and prior to the Expiration Date shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of the filing of
such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein (or in any other subsequently filed document which also is incorporated
or deemed to be incorporated by reference herein) modifies or supersedes such
previous statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
v
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements, and
the related notes thereto, included elsewhere in this Prospectus. As used in
this Prospectus, unless the context otherwise requires, the term "Company"
includes the Company and all of its subsidiaries and its and their respective
predecessors and subsidiaries. Unless otherwise indicated, all financial
statements used in this Prospectus have been prepared in accordance with United
States generally accepted accounting principles and all dollar references are
to U.S. dollars. Except as otherwise indicated, the pro forma financial
information for the year ended December 28, 1996 and the six months ended June
28, 1997 gives effect to the FNA Acquisition (as defined) and the Refinancing
(as defined) as if each had occurred on December 31, 1995.
THE COMPANY
Polymer Group, Inc. (the "Company") is a leading worldwide manufacturer and
marketer of a broad range of nonwoven and woven polyolefin products. The
Company's principal lines of business include medical, reusable wiping,
hygiene, and industrial and specialty products. The Company believes that it is
the fourth largest producer of nonwovens in the world and that it employs the
most extensive range of nonwoven technologies of any nonwovens producer, which
allows it to supply products tailored to customers' needs at a competitive
cost. Nonwovens are flat, flexible porous sheets produced by interlocking
fibers or filaments or by perforating films. Nonwovens provide certain
qualities similar to those of textiles at a significantly lower cost. The
Company also believes that it is the largest producer of woven polyethylene
fabrics in North America. Woven polyethylene fabrics are flat, flexible
structures produced by weaving narrow tapes of slit film and are characterized
by high strength-to-weight ratios. For the year ended December 28, 1996, the
Company had pro forma net sales of $540.4 million and pro forma EBITDA of
$105.7 million. From 1993 through 1996 on a pro forma basis, the Company's
compound annual growth rates for net sales and EBITDA were 64.5% and 87.3%,
respectively.
The Company supplies nonwovens to a number of the largest consumer products
manufacturers in the world and specifically targets market niches with high
value-added products. The Company has a global presence with an established
customer base in the three major developed markets of North America, Europe and
Japan, as well as developing markets such as Latin America. The Company's
products are sold principally to converters that manufacture a wide range of
end-use products, such as hospital surgical gowns and drapes, wound care
sponges, multiuse wiping cloths and towels, flexible industrial packaging,
filtration media, battery separators, diapers, feminine hygiene products and
automotive insulation products.
The Company is a leader in nonwoven process technology. The Company operates
thirteen manufacturing facilities located in five countries and is currently
the only nonwovens producer that utilizes all of the established nonwoven
process technologies. The Company believes that the quality of its
manufacturing operations and the breadth of its nonwovens process technologies
give it a competitive advantage in meeting the current and future needs of its
customers and in leading the development of an expanded range of applications
for nonwovens. The Company continues to make significant investments in
advanced technology in order to increase capacity, improve quality and develop
new low-cost, high-value structures. For example, the Company recently
completed what it believes to be one of the world's most advanced
spunbond/meltblown/spunbond ("SMS") lines that
1
<PAGE>
allows the Company to produce highly uniform structures with less material than
other SMS lines, and has recently initiated the implementation of a second such
line. The Company believes that its broad technological base gives it the
capability to design and manufacture products with optimal cost and
functionality. Working as a developmental partner with its major customers, the
Company utilizes its technologies to develop and manufacture new products to
meet their needs.
Management has built the Company through a series of strategic business
acquisitions that have broadened the Company's technology base and increased
its product lines. The Company's strategic acquisitions have helped it to
establish strong positions in both the nonwoven and woven polyolefin fabric
markets. Synergies realized through these acquisitions have enabled the Company
to better meet the needs of existing customers, to reach emerging geographic
markets and to exploit niche market opportunities through customer-interactive
specialty product development. For example, technological developments at the
Company's Landisville, New Jersey facility, such as improvements in the
meltblown process, continuous spreading and comprehensive process automation,
have been integral to capacity increases and the implementation of new
production lines in Europe and Mexico. Similarily, the success and underlying
technology of the Company's state-of-the-art 4.2 meter SMS line in San Luis
Potosi, Mexico has led to the implementation of a second line installation at
its Mooresville, North Carolina plant site.
----------------
The principal executive offices of the Company are located at 4838 Jenkins
Avenue, North Charleston, South Carolina 29405, and the Company's telephone
number is (803) 566-7293. The principal executive offices of each Guarantor are
c/o Polymer Group, Inc. at the same address and telephone number.
2
<PAGE>
THE REFINANCING
The Company refinanced its outstanding indebtedness under the Senior Notes
(as defined) by consummating the Initial Offering (as defined) of the Old
Notes, the Tender Offer and the related Consent Solicitation (each as defined),
and entered into the Amended Credit Facility (by amending and restating the
Company's Old Credit Facility), all of which occurred concurrently
(collectively, the "Refinancing").
In the Tender Offer and Consent Solicitation, the Company purchased all of
its outstanding Senior Notes for an amount in cash equal to $1,103.64 per
$1,000 aggregate principal amount, plus accrued interest, which was based on
the yield to the earliest redemption date for the Senior Notes, using a
specific reference security, plus a fixed spread. The Company also solicited
consents from tendering holders to amend the indenture under which the Senior
Notes were issued to eliminate substantially all of the protective covenants
contained therein, and paid a separate consent fee to holders who tendered
their notes and delivered consents prior to the expiration of the Consent
Solicitation. The Company received consents relating to, and tenders of, all of
the outstanding Senior Notes.
The Amended Credit Facility provides for secured revolving credit facilities
with an aggregate commitment of up to $325.0 million and a term of
approximately six years. All indebtedness under the Amended Credit Facility is
guaranteed on a joint and several basis by each of the Company's direct and
indirect domestic subsidiaries and by Fabrene Group, an indirect foreign
subsidiary of the Company, and is secured along with the related guarantees by
assets and pledges of stock and intercompany notes of the Company and certain
of its subsidiaries.
3
<PAGE>
THE INITIAL OFFERING
Notes....................... The Old Notes were sold by the Company on July 3,
1997 (the "Initial Offering") to Chase
Securities, Inc. (the "Initial Purchaser")
pursuant to a Purchase Agreement dated June 30,
1997 (the "Purchase Agreement"). The Initial
Purchaser subsequently resold the Old Notes to
qualified institutional buyers pursuant to Rule
144A under the Securities Act.
Registration Rights Pursuant to the Purchase Agreement, the Company,
Agreement................... the Guarantors and the Initial Purchaser entered
into a Registration Rights Agreement dated as of
July 3, 1997 (the "Registration Rights
Agreement"), which grants the holder of the Old
Notes certain exchange and registration rights.
The Exchange Offer is intended to satisfy such
exchange and registration rights which terminate
upon the consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered.......... $400,000,000 aggregate principal amount of 9%
Senior Subordinated Notes due 2007, Series B, of
the Company (the "Exchange Notes").
The Exchange Offer.......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Old
Notes. As of the date hereof, $400,000,000
aggregate principal amount of Old Notes are
outstanding. The Company will issue the Exchange
Notes to holders on or promptly after the
Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by
any holder thereof (other than any such holder
which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such Exchange Notes are
acquired in the ordinary course of such holder's
business and that such holder does not intend to
participate and has no arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of market-
making activities or other trading activities may
be a statutory underwriter. Each Participating
Broker-Dealer that receives Exchange Notes for
4
<PAGE>
its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in
connection with resales of Exchange Notes
received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-
Dealer as a result of market-making activities or
other trading activities. The Company has agreed
that, for a period of 180 days after the
Expiration Date, they will make this Prospectus
available to any Participating Broker-Dealer for
use in connection with any such resale. See "Plan
of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose
of participating, in a distribution of the
Exchange Notes could not rely on the position of
the staff of the Commission enunciated in no-
action letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any
resale transaction. Failure to comply with such
requirements in such instance may result in such
holder incurring liability under the Securities
Act for which the holder is not indemnified by
the Company.
Expiration Date.............
5:00 p.m., New York City time, on October 3, 1997
unless the Exchange Offer is extended, in which
case the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Accrued Interest on the
Exchange Notes and the Old
Notes..................
Each Exchange Note will bear interest from its
issuance date. Holders of Old Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including,
the issuance date of the Exchange Notes. Such
interest will be paid with the first interest
payment on the Exchange Notes. Interest on the
Old Notes accepted for exchange will cease to
accrue upon issuance of the Exchange Notes.
Conditions to the Exchange The Exchange Offer is subject to certain
Offer....................... customary conditions, which may be waived by the
Company. See "The Exchange Offer--Conditions."
5
<PAGE>
Procedures for Tendering
Old Notes..................
Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof (or, in the case of a book-
entry transfer, transmit an Agent's Message (as
defined) in lieu thereof), in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile (or Agent's
message), together with the Old Notes and any
other required documentation to the Exchange
Agent (as defined) at the address set forth
herein. By executing the Letter of Transmittal
(or transmitting an Agent's Message), each holder
will represent to the Company that, among other
things, the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such Exchange Notes, whether or not
such person is the holder, that neither the
holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes and that neither the holder nor any such
other person is an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company.
See "The Exchange Offer--Purpose and Effect of
the Exchange Offer" and
"--Procedures for Tendering."
Untendered Old Notes........ Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have
any further exchange or registration rights and
such Old Notes will continue to be subject to
certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes
could be adversely affected.
Consequences of Failure to
Exchange...................
The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States
to a foreign person pursuant to the requirements
of Rule 904 under the Securities Act, or (iv)
pursuant to an effective registration statement
under the Securities Act. See "The Exchange
Offer--Consequences of Failure to Exchange."
Shelf Registration If any holder of the Old Notes (other than any
Statement................... such holder which is an "affiliate" of the
Company or a Guarantor within the meaning of Rule
405 under the Securities Act) is not eligible
under applicable securities laws to participate
in the Exchange Offer, and such holder has
satisfied certain conditions relating to the
provision of information to the Company for use
therein, the Company and the Guarantors
6
<PAGE>
have agreed to register the Old Notes on a shelf
registration statement (the "Shelf Registration
Statement") and to use their best efforts to
cause it to be declared effective by the
Commission as promptly as practical on or after
the consummation of the Exchange Offer. The
Company and Guarantors have agreed to maintain
the effectiveness of the Shelf Registration
Statement for, under certain circumstances, a
maximum of two years, to cover resales of the Old
Notes held by any such holders.
Special Procedures for
Beneficial Owners..........
Any beneficial owner whose Old Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its Old
Notes, either make appropriate arrangements to
register ownership of the Old Notes in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time.
Guaranteed Delivery Holders of Old Notes who wish to tender their Old
Procedures.................. Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes
(or comply with the procedures for book-entry
transfer), the Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent (or transmit an Agent's
message in lieu thereof) prior to the Expiration
Date must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date.
Acceptance of Old Notes and
Delivery of Exchange
Notes....................... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Use of Proceeds............. There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange Offer.
Exchange Agent.............. Harris Trust and Savings Bank.
7
<PAGE>
THE EXCHANGE NOTES
General..................... The form and terms of the Exchange Notes are the
same as the form and terms of the Old Notes
(which they replace) except that (i) the Exchange
Notes bear a Series B designation, (ii) the
Exchange Notes have been registered under the
Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and
(iii) the holders of Exchange Notes will not be
entitled to certain rights under the Registration
Rights Agreement, including the provisions
providing for an increase in the interest rate on
the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights
will terminate when the Exchange Offer is
consummated. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer." The Exchange Notes
will evidence the same debt as the Old Notes and
will be entitled to the benefits of the
Indenture. See "Description of the Exchange
Notes." The Old Notes and the Exchange Notes are
referred to herein collectively as the "Notes."
Issuer...................... Polymer Group, Inc.
Securities Offered.......... $400 million aggregate principal amount of 9%
Senior Subordinated Notes due 2007, Series B.
Maturity.................... July 1, 2007.
Interest Payment Dates...... January 1 and July 1 of each year, commencing on
January 1, 1998.
Sinking Fund................ None.
Optional Redemption......... Except as described below, the Company may not
redeem the Exchange Notes prior to July 1, 2002.
On or after such date, the Company may redeem the
Exchange Notes, in whole or in part, at the
redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date
of redemption. In addition, at any time and from
time to time on or prior to July 1, 2000, the
Company may redeem up to 35% of the aggregate
principal amount of the Exchange Notes with the
net cash proceeds from one or more Public Equity
Offerings (as defined) by the Company, at a
redemption price equal to 109.25% of the
principal amount to be redeemed, together with
accrued and unpaid interest, if any, to the date
of redemption, provided that at least 65% of the
aggregate principal amount of the Exchange Notes
remains outstanding after each such redemption.
See "Description of the Exchange Notes--Optional
Redemption."
8
<PAGE>
Change of Control........... Upon a Change of Control, the Company will be
required to make an offer to repurchase the
Exchange Notes at a price equal to 101% of the
principal amount thereof, together with accrued
and unpaid interest, if any, to the date of
repurchase. See "Description of the Exchange
Notes--Change of Control."
Subsidiary Guarantees....... The Exchange Notes will be guaranteed (the
"Guarantees"), jointly and severally on a senior
subordinated basis, by all of the Company's
direct and indirect domestic Subsidiaries (as
defined) on the issue date of the Exchange Notes
(the "Issue Date") and by each direct and
indirect domestic Subsidiary of the Company
(excluding Unrestricted Subsidiaries) formed or
acquired thereafter. The Guarantees will be
general unsecured senior subordinated obligations
of the Guarantors. The Guarantors have guaranteed
all obligations of the Company under the Amended
Credit Facility, and each Guarantor has granted a
security interest in all or substantially all its
assets to secure its guarantee obligations under
the Amended Credit Facility. The obligations of
each Guarantor under its Guarantee will be
subordinated in right of payment to the prior
payment in full of all Guarantor Senior
Indebtedness (as defined) of such Guarantor to
substantially the same extent as the Exchange
Notes are subordinated to all existing and future
Senior Indebtedness of the Company. See
"Description of the Exchange Notes--Guarantees of
the Notes."
Ranking.....................
The Exchange Notes will be unsecured and will be
subordinated in right of payment to all existing
and future Senior Indebtedness (as defined) of
the Company. The Exchange Notes will rank pari
passu in right of payment with any future senior
subordinated Indebtedness (as defined) of the
Company and will rank senior to all Subordinated
Indebtedness (as defined) of the Company. As of
June 28, 1997, after giving pro forma effect to
the Refinancing, including the issuance of the
Old Notes and the application of the net proceeds
therefrom, the aggregate principal amount of the
Company's outstanding Senior Indebtedness would
have been approximately $29.0 million (excluding
unused commitments) and the Company would have
had no senior subordinated Indebtedness
outstanding other than the Notes. See
"Description of the Exchange Notes--Ranking" and
"--Subordination of the Exchange Notes."
Restrictive Covenants....... The indenture under which the Exchange Notes will
be issued (the "Indenture") limits, among other
things, (i) the incurrence of additional
indebtedness by the Company and its Restricted
Subsidiaries, (ii) the payment of dividends on,
and redemption of, capital stock of the Company
and its Restricted
9
<PAGE>
Subsidiaries and the redemption of certain
subordinated obligations of the Company and its
Restricted Subsidiaries, (iii) investments, (iv)
sales of assets and Restricted Subsidiary stock,
(v) transactions with affiliates, and (vi)
consolidations, mergers and transfers of all or
substantially all of the Company's assets. The
Indenture also prohibits certain restrictions on
distributions from Restricted Subsidiaries.
However, all of these limitations and
prohibitions are subject to a number of important
qualifications and exceptions. See "Description
of the Exchange Notes--Certain Covenants."
For additional information regarding the Exchange
Notes, see "Description of the Exchange Notes".
Use of Proceeds............. The Company used the net proceeds from the
Initial Offering to effect the Refinancing and to
pay the related fees and expenses. See "Use of
Proceeds."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered before tendering Old Notes in exchange for Exchange Notes. These
risk factors are generally applicable to the Old Notes as well as the Exchange
Notes.
10
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA FOR THE COMPANY
The Company was organized on June 16, 1994 and, effective June 24, 1994,
acquired PGI Polymer in a transaction considered to be between entities under
common control and accounted for at historical cost in a manner similar to a
pooling of interests. The following table sets forth certain historical
financial information of the Company and PGI Polymer. The statement of
operations data for each of the three years in the period ended December 28,
1996 and the balance sheet data as of December 31, 1994, December 30, 1995 and
December 28, 1996, have been derived from audited financial statements. The
Company's statement of operations data for the year ended December 30, 1995
include the results of Chicopee Holdings and its subsidiaries for the period
March 16, 1995 to December 30, 1995. The statement of operations data for the
year ended December 28, 1996 include results of FNA for the period August 14,
1996 to December 28, 1996. The data as of and for the six months ended June 29,
1996 and June 28, 1997 are derived from the consolidated unaudited interim
financial statements and include, in the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary to fairly present
the data for such periods.
The pro forma financial information for the Company set forth below has been
derived from the unaudited pro forma financial information included elsewhere
in this Prospectus and gives effect to the Company's acquisition (the "FNA
Acquisition") in August 1996 of FNA (formerly known as Fitesa North America
Corp.) and its parent, PNA, and to the Refinancing as described under "Use of
Proceeds" and "Unaudited Pro Forma Financial Information." The unaudited pro
forma combined statements of operations for the year ended December 28, 1996,
and the six months ended June 28, 1997, give effect to the FNA Acquisition and
the Refinancing as if each had occurred on December 31, 1995. The unaudited pro
forma condensed balance sheet as of June 28, 1997 was prepared as if the
Refinancing had occurred on that date. The pro forma financial information does
not purport to represent what the Company's results of operations would have
been if the FNA Acquisition and the Refinancing had actually been completed as
of the date indicated and are not intended to project the Company's results of
operations for any future period.
The table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the financial
statements of the Company and related notes thereto, the unaudited pro forma
financial information for the Company and related notes thereto and other
financial information included elsewhere in this Prospectus.
11
<PAGE>
<TABLE>
<CAPTION>
PRO
FORMA
PRO FORMA SIX MONTHS
YEAR ENDED YEAR ENDED SIX MONTHS ENDED ENDED
-------------------------------------- ------------ ------------------ ----------
DECEMBER 31, DECEMBER 30, DECEMBER 28, DECEMBER 28, JUNE 29, JUNE 28, JUNE 28,
1994 1995 1996 1996 1996 1997 1997
------------ ------------ ------------ ------------ -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales............... $165,333 $437,638 $521,368 $540,395 $251,308 $260,455 $260,455
Cost of goods sold...... 129,071 333,606 389,013 402,477 189,648 193,154 193,154
-------- -------- -------- -------- -------- -------- --------
Gross profit........... 36,262 104,032 132,355 137,918 61,660 67,301 67,301
Selling, general and
administrative
expenses............... 20,699 61,744 70,207 72,125 34,591 37,693 38,346
-------- -------- -------- -------- -------- -------- --------
Operating income....... 15,563 42,288 62,148 65,793 27,069 29,608 28,955
Other (income) expense:
Interest expense, net
(a)................... 13,216 37,868 33,641 35,118 19,605 13,532 17,474
Foreign currency
transaction (gains)
losses, net........... 17,332 22,811 2,955 222 3,573 (325) (325)
Income taxes (benefit). 3,353 5,216 10,730 10,080 1,776 5,427 3,908
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary item.... (18,338) (23,607) 14,822 $ 20,373 2,115 10,974 $ 7,898
======== ========
Extraordinary item,
(loss) from
extinguishment of debt. (4,372) -- (13,932) (13,932) --
-------- -------- -------- -------- --------
Net income (loss)....... (22,710) (23,607) 890 (11,817) 10,974
Redeemable preferred
stock dividends and
accretion.............. (1,209) (4,839) (3,020) (3,020) --
-------- -------- -------- -------- --------
Net income (loss)
applicable to common
stock.................. $(23,919) $(28,446) $ (2,130) $(14,837) $ 10,974
======== ======== ======== ======== ========
Income (loss) before
extraordinary item per
common share........... $ (0.95) $ (1.39) $ 0.43 $ 0.64 $ (0.04) $ 0.34 $ 0.25
======== ======== ======== ======== ======== ======== ========
Average common shares
outstanding............ 20,500 20,500 27,688 32,000 23,375 32,000 32,000
======== ======== ======== ======== ======== ======== ========
OPERATING AND OTHER
DATA:
Cash provided by
operating activities... $ 17,386 $ 11,556 $ 36,097 $ -- $ 16,205 $ 16,274 $ --
Cash (used in) investing
activities ............ (61,375) (333,208) (86,422) -- (18,374) (28,535) --
Cash provided by
financing activities... 58,482 327,636 64,391 -- 3,907 12,200 --
EBITDA (b).............. 23,864 72,122 98,915 105,727 45,335 49,616 49,616
Ratio of earnings to
fixed charges (c)...... -- -- 1.6x 1.7x 1.1x 1.9x 1.5x
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and cash
equivalents............ $ 13,828 $ 18,088 $ 37,587 -- $ 19,343 $ 31,855 $ 34,981
Working capital......... 31,060 61,558 93,154 -- 79,203 124,885 134,161
Total assets............ 241,429 637,981 708,115 -- 615,413 718,494 735,709
Total debt.............. 190,814 450,878 382,242 -- 322,873 390,199 424,457
Redeemable preferred
stock, dividends and
accretion.............. -- 44,339 -- -- -- -- --
Shareholders' equity.... 2,220 13,752 195,918 -- 186,607 199,571 188,678
</TABLE>
- -------
(a) Represents interest expense, net of interest income and capitalized
interest.
(b) EBITDA is defined as operating income plus depreciation, amortization and
Mexican statutory employee profit sharing and is presented because it is
generally accepted as providing useful information regarding a company's
ability to service and/or incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from operating
activities and other consolidated income or cash flow statement data
prepared in accordance with generally accepted accounting principles or as
a measure of profitability or liquidity. Mexican employee profit sharing
laws require any corporation organized under the laws of Mexico to
distribute 10% of income before taxes to employees. Amounts distributed to
employees pursuant to such laws for the periods set forth herein were not
material.
(c) For purposes of calculating earnings to fixed charges, earnings represent
earnings before income taxes plus fixed charges. Earnings include foreign
currency transaction losses and gains. Fixed charges consist of interest
expense, net, including amortization of discount and financing costs. Fixed
charges exceeded earnings for the year ended December 31, 1994 and the year
ended December 30, 1995 by approximately $15,000 and $20,000, respectively.
However, the Company met all required interest payments and debt
obligations during this time period.
12
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully before tendering Old Notes in
exchange for Exchange Notes. The risk factors set forth below are generally
applicable to the Old Notes as well as the Exchange Notes.
LEVERAGE; RESTRICTIVE COVENANTS
The Company has significant debt service obligations. As of June 28, 1997,
after giving effect to the Refinancing, including the Initial Offering of the
Old Notes and the application of the proceeds therefrom, the Company would
have had outstanding long-term indebtedness of approximately $424.4 million
and shareholders' equity of approximately $188.7 million. See "The
Refinancing," "Use of Proceeds" and "Capitalization." As of June 28, 1997, the
Company's ratio of earnings to fixed charges, on a pro forma basis, would have
been 1.5x.
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including: (i) the Company's ability
to obtain additional financing for working capital, capital expenditures or
acquisitions in the future may be limited; (ii) a substantial portion of the
Company's cash flow from operations will be dedicated to the payment of the
principal of and interest on its indebtedness, thereby reducing funds
available for future operations; (iii) certain of the Company's borrowings,
including all borrowings under the Amended Credit Facility, are and will
continue to be at variable rates of interest, which exposes the Company to the
risk of increased interest rates; and (iv) the Company may be more vulnerable
to economic downturns and be limited in its ability to withstand competitive
pressures. Certain of the Company's competitors may currently operate on a
less leveraged basis and therefore could have significantly greater operating
and financing flexibility than the Company. The Company's ability to make
scheduled payments of the principal of or interest on, or to refinance, its
indebtedness will depend on its future operating performance and cash flow,
which are subject to prevailing economic conditions, prevailing interest rate
levels, and financial, competitive, business and other factors, many of which
are beyond its control.
The Company believes that, based upon current levels of operations, it
should be able to meet its debt service obligations, including principal and
interest payments on the Exchange Notes when due. However, if the Company
cannot generate sufficient cash flow from operations to meet its debt service
obligations, then the Company might be required to refinance its indebtedness
and may be forced to adopt an alternative strategy that may include actions
such as reducing or delaying capital expenditures, selling assets,
restructuring or refinancing its indebtedness, or seeking additional equity
capital. There is no assurance that refinancings would be permitted by the
terms of the Amended Credit Facility or the Indenture or, along with the
alternative strategies, could be effected on satisfactory terms. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The Amended Credit Facility and the Indenture contain numerous restrictive
covenants that limit the discretion of the Company's management with respect
to certain business matters. These covenants place significant restrictions
on, among other things, the ability of the Company to incur additional
indebtedness, to create liens or other encumbrances, to pay dividends or make
certain other payments, investments, loans and guarantees and to sell or
otherwise dispose of assets and merge or consolidate with another entity. The
Amended Credit Facility also contains a number of financial covenants that
require the Company to meet certain financial ratios and financial condition
tests. See "Description of Certain Indebtedness--Amended Credit Facility" and
"Description of the Exchange Notes--Certain Covenants." The Company's ability
to meet these financial ratios and financial condition tests can be affected
by events beyond its control, and there can be no assurance that the Company
will meet such ratios or such tests. A failure to comply with the obligations
in the Amended Credit Facility or the Indenture could result in an event of
default under the Amended Credit Facility or
13
<PAGE>
an Event of Default (as defined) under the Indenture which, if not cured or
waived, could permit acceleration of the relevant indebtedness and
acceleration of indebtedness under other instruments that may contain cross-
acceleration or cross-default provisions. In the event of an event of default
under the Amended Credit Facility or an Event of Default under the Indenture,
the lenders thereunder could elect to declare all amounts outstanding
thereunder, together with accrued and unpaid interest, to be immediately due
and payable. If the indebtedness under the Amended Credit Facility were to be
accelerated, there can be no assurance that the assets of the Company would be
sufficient to repay in full that indebtedness and the other indebtedness of
the Company, including the Exchange Notes. Other indebtedness of the Company
and its subsidiaries that may be incurred in the future may contain financial
or other covenants more restrictive than those applicable to the Exchange
Notes.
SUBORDINATION; HOLDING COMPANY STRUCTURE
The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the Exchange Notes will be subordinated to the
prior payment in full of all existing and future Senior Indebtedness of the
Company (including, without limitation, indebtedness incurred under the
Amended Credit Facility). In the event of the bankruptcy, liquidation,
dissolution, reorganization or other winding-up of the Company, the assets of
the Company will be available to pay obligations on the Exchange Notes only
after all Senior Indebtedness (including amounts incurred under the Amended
Credit Facility) has been so paid in full; accordingly, there may not be
sufficient assets remaining to pay amounts due on any or all of the Exchange
Notes then outstanding. In addition, under certain circumstances, the Company
may not pay principal of, premium, if any, or interest on, or pay other
amounts owing in respect of the Exchange Notes, or purchase, redeem or
otherwise retire the Exchange Notes, in the event of certain defaults with
respect to certain classes of Senior Indebtedness, including Senior
Indebtedness incurred under the Amended Credit Facility. As of June 28, 1997,
after giving pro forma effect to the Refinancing, including the Initial
Offering and the application of the net proceeds therefrom, there would have
been approximately $29.0 million of Senior Indebtedness outstanding (excluding
unused commitments). Additional Senior Indebtedness may be incurred by the
Company from time to time, subject to certain restrictions. See "Description
of Certain Indebtedness--The Amended Credit Facility" and "Description of the
Exchange Notes--Certain Covenants--Limitation on Indebtedness."
The Exchange Notes will be general unsecured obligations of the Company and
will be subordinated in right of payment to all existing and future secured
Indebtedness of the Company, including the Company's obligations under the
Amended Credit Facility. In addition, the Guarantees will be subordinated in
right of payment to all existing and future secured Indebtedness of the
related Guarantor. The Amended Credit Facility is secured by substantially all
of the assets of the Company and its direct and indirect domestic subsidiaries
and, therefore, claims of holders of the Exchange Notes will be subordinated
to the extent of the value of the assets securing the Amended Credit Facility.
Polymer Group, Inc. is a holding company which has no significant assets
other than its direct and indirect investments in its operating subsidiaries.
Accordingly, the Company must rely on its subsidiaries to generate the funds
necessary to meet its obligations, including the payment of principal and
interest on the Exchange Notes. The ability of the subsidiaries of the Company
to pay dividends or make other payments or advances to the Company will depend
upon their operating results and will be subject to applicable laws and
contractual restrictions contained in the instruments governing any
indebtedness of such subsidiaries (including the Amended Credit Facility).
Although the Indenture limits the ability of Restricted Subsidiaries to enter
into consensual restrictions on their ability to pay dividends and make other
payments, such limitations are subject to a number of significant
qualifications and do not apply to Unrestricted Subsidiaries. See "Description
of the Exchange Notes--Certain Covenants--Limitation on Dividends and Other
Payment Restrictions Affecting Restricted Subsidiaries."
14
<PAGE>
The Exchange Notes will be guaranteed, jointly and severally, by each of the
Company's direct and indirect domestic Subsidiaries in existence on the Issue
Date and by Fabrene Group, an indirect foreign subsidiary. The Exchange Notes
will not, however, be guaranteed by the Company's direct and indirect foreign
Subsidiaries (except Fabrene Group). As a result, holders of the Exchange
Notes will not have a direct claim on the assets of such foreign Subsidiaries.
In 1996, approximately 40% of the Company's net sales (or $209.4 million) were
derived from operations conducted outside the United States.
FLUCTUATIONS IN RAW MATERIAL PRICES
The primary raw materials used in the manufacture of most of the Company's
products are polypropylene and polyester fiber, polyethylene and polypropylene
resin, and, to a lesser extent, rayon fiber and tissue paper. In 1996,
polypropylene fiber accounted for approximately 23% of the Company's cost of
sales. The price of polypropylene and polyethylene is a function of, among
other things, manufacturing capacity, demand and the price of crude oil and
natural gas liquids. Historically, the market prices of polypropylene and
polyethylene have fluctuated, such as in late 1994 and early 1995 when resin
prices increased by approximately 60%. In 1996, polypropylene fiber prices
remained stable while resin prices, on average, trended lower. Polyethylene
resin prices were lower in the first half of 1996, but rose in the second half
of the year. Polyester fiber and resin prices experienced substantial declines
worldwide during 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Introduction." There has generally been a
lag time before such increases and decreases could be passed on to the
Company's customers. There can be no assurance that the price of the Company's
raw materials will not increase in the future or that the Company will be able
to pass on such increases to its customers. A significant increase in the
price of raw materials that cannot be passed on to customers could have a
material adverse effect on the Company's results of operations and financial
condition.
RELIANCE ON MAJOR CUSTOMERS
Two of the Company's customers, Johnson & Johnson and Procter & Gamble, each
accounted for over 10% of the Company's net sales during 1996. Net sales to
Johnson & Johnson accounted for approximately 29% of the Company's net sales
in 1996. Net sales to Procter & Gamble, primarily of light weight nonwoven
fabric for diapers, accounted for approximately 14% of the Company's net sales
in 1996. A loss of either of these customers could have a material adverse
effect on the Company. See "Business--Products."
COMPETITION IN THE COMPANY'S MARKETS
Competition in the Company's markets is intense, and some of the Company's
competitors have economic resources greater than those of the Company and are
well established as suppliers to the markets that the Company serves. Quality,
performance, service and cost are generally the principal competitive factors.
Price continues to be a significant competitive factor in Europe and the
United States in thermal bond products due to continued competition with
spunbound products.
A number of the Company's niche product applications are sold into selected
specialized markets. There can be no assurance, however, that these
specialized markets will not attract additional competitors that could have
greater financial, technological, manufacturing and marketing resources than
the Company, particularly as niche product applications become standardized
over time. See "Business--Competition."
IMPORTANCE OF CONTINUED DEVELOPMENT OF INNOVATIVE PRODUCTS
The Company's continued success is dependent in part upon its ability to
maintain a superior technological capability and to continue to identify,
develop and commercialize innovative, high value-added products for niche
applications. There can be no assurance that the Company will be able to
15
<PAGE>
accomplish this or that technological developments by the Company's
competitors will not place certain of the Company's products at a competitive
disadvantage in the future. In addition, certain of the new products that the
Company has under development will be offered in markets in which the Company
does not currently compete, and there can be no assurance that the Company
will be able to compete successfully in those new markets.
DEPENDENCE ON KEY SUPPLIERS
The Company's major suppliers of polypropylene fiber are Hercules Fibres
Corp. ("Hercules") and Danaklon a/s ("Danaklon"), while its major supplier of
polyethylene is Novacor Chemicals Inc. ("Novacor"). The Company's major
suppliers of rayon are Lenzing Fibers Corp. ("Lenzing Fibers") and Courtaulds
Fibers, Inc. ("Courtaulds Fibers"), while its major suppliers of polyester are
Wellman, Inc. ("Wellman") and E.I. Du Pont de Nemours & Co. ("Du Pont"). The
Company purchases its polypropylene resin from Indelpro, S.A. de C.V.
("Indelpro") and Montell North America Inc. ("Montell"), and purchases its
tissue paper from Crown Vantage Inc. ("Crown Vantage").
The loss of the Company's suppliers could, in the short term, adversely
affect the Company's business until alternative supply arrangements were
secured. In addition, there is no assurance that any new supply agreement
entered into by the Company will have terms as favorable as those contained in
current supply arrangements. See "Business--Raw Materials."
RISKS OF ACQUISITIONS AND THE FAILURE TO INTEGRATE ACQUIRED BUSINESSES
As part of its long-term strategy, the Company seeks to acquire
complementary businesses. There can be no assurance that the Company will find
attractive acquisition candidates or succeed at effectively managing the
integration of acquired businesses into the Company's existing businesses. If
the expected synergies from such transactions do not materialize or the
Company fails to successfully integrate new businesses into its existing
businesses, the Company's results of operations could be adversely affected.
POTENTIAL RISK OF SIGNIFICANT OPERATIONS IN FOREIGN COUNTRIES
The Company manufactures certain of its products in Germany, Canada, Mexico
and the Netherlands. In 1996, approximately 40% of the Company's net sales (or
$209.4 million) were derived from operations conducted outside the United
States. Foreign operations are subject to certain risks that can materially
affect the sales, profits, cash flows and financial position of the Company,
such as currency exchange rate fluctuations, inflation, exchange controls and
variable political conditions. In particular, currency exchange rate
fluctuations may impact the revenues and gross margins of the Company's
foreign operations. In addition, a highly inflationary economy may also give
rise to increased production costs without correspondingly increased prices,
especially if products are exported to countries with low inflation rates.
Fabrene Group is a corporation incorporated under the laws of Prince Edward
Island, Canada, with 100% of its stock held by its parent, PGI Polymer (a
domestic subsidiary of the Company). In addition, certain of Fabrene Group's
directors are residents of Canada, additional directors or officers who are
foreign individuals may be appointed, and all or a substantial portion of the
assets of Fabrene Group and such person or persons are or may be located
outside the United States. As a result, it may be more difficult for investors
to effect service of process upon such parties, to enforce judgments against
such parties in the United States, or to enforce the Federal Securities laws
or obtain judgments thereunder against such parties outside of the United
States.
16
<PAGE>
HISTORICAL LOSSES
The Company experienced substantial net losses, which were primarily non-
cash losses, in 1994 and 1995, principally as a result of foreign currency
transaction losses and interest charges incurred in connection with the
acquisitions of Chicopee Holdings and its subsidiaries (the "Chicopee
Acquisition"), Fabrene Inc. ("Fabrene") and Bonlam, S.A. de C.V. ("Bonlam").
These net losses were $22.7 million and $23.6 million for the years ended
December 31, 1994 and December 30, 1995, respectively. The Company had net
income of $0.9 million for the year ended December 28, 1996.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success will largely depend on the efforts and
abilities of its executive officers and certain other key employees. The
Company's operations could be adversely affected if, for any reason, such
officers or key employees did not remain with the Company. See "Management."
RISK OF INCREASED COSTS FOR ENVIRONMENTAL COMPLIANCE
Actions by federal, state and local governments in the United States and
abroad concerning environmental matters could result in laws or regulations
that could increase the cost of producing the products manufactured by the
Company or otherwise adversely affect demand for its products. For example,
certain local governments have adopted ordinances prohibiting or restricting
the use of disposal of certain polyolefin products that are among the types of
products produced by the Company. If such prohibitions or restrictions were
widely adopted, such regulatory and environmental measures could adversely
affect demand for the Company's products and thereby have a material adverse
effect upon the Company. It is also possible that future developments in
environmental regulation could lead to material environmental compliance or
cleanup costs. See "Business--Environmental."
RISK OF CONSUMER ENVIRONMENTAL AWARENESS
A decline in consumer preference for polyolefin products due to
environmental considerations could have a material adverse effect upon the
Company.
CONTROL BY PRINCIPAL STOCKHOLDERS
Certain of the Company's principal stockholders have entered into an
agreement regarding the election of the Company's Board of Directors (the
"Board"). The agreement enables such stockholders, through the Board, to
significantly influence the affairs of the Company, and to render more
difficult or tend to discourage mergers, acquisitions, tender offers, proxy
contests or assumptions of control and changes of incumbent management. See
"Certain Relationships and Related Transactions."
OTHER BUSINESS OPPORTUNITIES AND POTENTIAL CONFLICT OF INTEREST OF MANAGEMENT
Messrs. Zucker and Boyd, the senior executive officers of the Company, also
devote time to the affairs of, and may be deemed to control, a number of other
investment and operating entities, including The InterTech Group, Inc.
("InterTech"). Messrs. Zucker and Boyd may pursue other business opportunities
presented to them and are currently in discussions regarding certain other
business opportunities. The time spent on such other opportunities may be
substantial. Messrs. Zucker and Boyd have entered into an agreement granting
the Company a right of first refusal to acquire potential acquisition
candidates that engage in, or plan to engage in, the manufacture and marketing
of nonwoven and woven polyolefin fabrics for industrial and consumer
applications or any other business then engaged in by the Company. In the
event that the Company were not able to take advantage of an opportunity
presented by Messrs. Zucker and Boyd, or chose not to pursue it, Messrs.
17
<PAGE>
Zucker and Boyd could pursue such opportunity, thereby resulting in their
devoting less time to the affairs of the Company. As of the date hereof, no
investments or operating entities controlled by Mr. Zucker or Mr. Boyd compete
in any markets in which the Company sells its products. See "Certain
Relationships and Related Transactions."
In addition, because the Indenture and the Amended Credit Facility place
restrictions on the ability of the Company to make acquisitions, it may be
possible that the Company is presented with a business opportunity that it
desires to exploit but is prohibited from taking.
LIMITATIONS ON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer for cash to repurchase the Exchange Notes at a price equal to
101% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. If a Change of Control were to
occur, there can be no assurance that the Company would have sufficient funds
to pay the purchase price for all of the Exchange Notes that the Company might
be required to purchase. Certain events involving a Change of Control may
result in an event of default under the Amended Credit Facility or other
indebtedness of the Company that may be incurred in the future. In the event a
Change of Control occurs at a time when the Company is prohibited from
purchasing the Exchange Notes, the Company could seek the consent of its
lenders to purchase the Exchange Notes or could attempt to refinance the
borrowings that contain such prohibition. If the Company does not obtain such
consent or repay such borrowings, the Company would remain prohibited from
purchasing the Exchange Notes. In such case, the Company's failure to purchase
tendered Exchange Notes would constitute an Event of Default under the
Indenture. If, as a result thereof, a default occurs with respect to any
Indebtedness, the Exchange Notes would require payment in full of the Amended
Credit Facility before repurchase of the Exchange Notes. See "Description of
Certain Indebtedness," "Description of the Exchange Notes--Subordination" and
"--Change of Control."
FRAUDULENT CONVEYANCE CONSIDERATIONS
A substantial portion of the proceeds of the Initial Offering were used to
refinance existing indebtedness and to pay the purchase price in connection
with the Tender Offer for the Senior Notes. See "The Refinancing."
Accordingly, the obligations of the Company under the Exchange Notes may be
subject to review under relevant federal and state fraudulent conveyance
statutes ("fraudulent conveyance statutes") in a bankruptcy, reorganization or
rehabilitation case or similar proceeding or a lawsuit by or on behalf of
unpaid creditors of the Company. If a court were to find under relevant
fraudulent conveyance statutes that, at the time the Old Notes or the Exchange
Notes were issued, (a) the Company issued the Notes with the intent of
hindering, delaying or defrauding current or future creditors or (b)(i) the
Company received less than reasonably equivalent value or fair consideration
for issuing the Notes (including, to the extent the proceeds from the Initial
Offering were used to refinance any indebtedness of the Company or any of its
subsidiaries, by virtue of an invalidation as a fraudulent conveyance of the
incurrence of such indebtedness) and (ii)(A) was insolvent or was rendered
insolvent by reason of such issuance and/or such related transactions, (B) was
engaged, or about to engage, in a business or transaction for which its assets
constituted unreasonably small capital, (C) intended to incur, or believed
that it would incur, obligations beyond its ability to pay as such obligations
matured (as all of the foregoing terms are defined in or interpreted under
such fraudulent conveyance statutes) or (D) was a defendant in an action for
money damages, or had a judgment for money damages docketed against it (if, in
either case, after final judgment, the judgment was unsatisfied), such court
could subordinate the Exchange Notes to presently existing and future
indebtedness of the Company and take other action detrimental to the holders
of the Exchange Notes, including, under certain circumstances, invalidating
the Exchange Notes.
18
<PAGE>
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or state law that is being applied in any such
proceeding. Generally, however, the Company would be considered insolvent if,
at the time it incurs the obligations constituting the Notes, either (i) the
fair market value (or fair saleable value) of its assets is less than the
amount required to pay the probable liability on its total existing
indebtedness and liabilities (including contingent liabilities) as they become
absolute and mature or (ii) it is incurring obligations beyond its ability to
pay as such obligations mature.
In addition, the Guarantees may be subject to review under fraudulent
conveyance statutes in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or a lawsuit on behalf of other creditors of any of the
Guarantors. In such a case, the analysis set forth above would generally
apply, except that the Guarantees could also be subject to the claim that,
since the Guarantees were incurred for the benefit of the Company (and only
indirectly for the benefit of the Guarantors), they were incurred for less
than reasonably equivalent value or fair consideration. A court could
therefore subordinate the Guarantees to the other obligations of the
Guarantors, or take other action detrimental to holders of the Exchange Notes,
including, under certain circumstances, invalidating the Guarantees.
The Boards of Directors and management of the Company and the Guarantors
believe that at the time of issuance of the Notes and the Guarantees,
respectively, the Company and the Guarantors (i) will be (a) neither insolvent
nor rendered insolvent thereby, (b) in possession of sufficient capital to
meet their obligations as the same mature or become due and to operate their
businesses effectively and (c) incurring obligations within their ability to
pay as the same mature or become due and (ii) will have sufficient assets to
satisfy any probable money judgment against them in any pending action. In
reaching the foregoing conclusions, such Boards of Directors and management
have relied upon their analysis of internal cash flow projections and
estimated values of assets and liabilities of the Company and the Guarantors.
There can be no assurance, however, that such analyses will prove to be
correct or that a court passing on such questions would reach the same
conclusions.
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange
Offer, there has not been any public market for the Old Notes. The Old Notes
have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
Exchange Notes by holders who are entitled to participate in this Exchange
Offer. The market for Old Notes not tendered for exchange in the Exchange
Offer is likely to be more limited than the existing market for such notes.
The holders of Old Notes (other than any such holder that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) who are
not eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Company is required to file a Shelf Registration
Statement with respect to such Old Notes. The Exchange Notes will constitute a
new issue of securities with no established trading market. The Company does
not intend to list the Exchange Notes on any national securities exchange or
seek the admission thereof to trading in the National Association of
Securities Dealers Automated Quotation System. The Initial Purchaser has
advised the Company that it currently intends to make a market in the Exchange
Notes, but it is not obligated to do so and may discontinue such market making
at any time. In addition, such market making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer and the pendency of the Shelf Registration
Statement. Accordingly, no assurance can be given that an active public or
other market will develop for the Exchange Notes or as to the liquidity of the
trading market for the Exchange Notes. If a trading market does not develop or
is not maintained, holders of the Exchange Notes may experience difficulty in
reselling the Exchange Notes or may be unable to sell them at all. If a market
for the Exchange Notes develops, any such market may be discontinued at any
time.
19
<PAGE>
If a public trading market develops for the Exchange Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Exchange Notes may trade at a discount from
their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Notes in exchange for the Old Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Company of such
Old Notes, a properly completed and duly executed Letter of Transmittal (or
Agent's Message) and all other required documents. Therefore, holders of the
Old Notes desiring to tender such Old Notes in exchange for Exchange Notes
should allow sufficient time to ensure timely delivery. The Company is under
no duty to give notification of defects or irregularities with respect to the
tenders of Old Notes for exchange. Old Notes that are not tendered or are
tendered but not accepted will, following the consummation of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer
thereof and, upon consummation of the Exchange Offer, certain registration
rights under the Registration Rights Agreement will terminate. In addition,
any holder of Old Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities, and if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. See "Plan
of Distribution." To the extent that Old Notes are tendered and accepted in
the Exchange Offer, the trading market for untendered and tendered but
unaccepted Old Notes could be adversely affected. See "The Exchange Offer."
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including those regarding the Company's financial position,
business strategy, projected costs, and plans and objectives of management for
future operations, are forward-looking statements. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, there can be no assurance that such expectations will prove to
have been correct. Important factors that could cause actual results to differ
materially from the Company's expectations ("Cautionary Statements") are
disclosed herein under "Risk Factors" and elsewhere in this Prospectus
including, without limitation, in conjunction with the forward-looking
statements included in this Prospectus. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
behalf of the Company are expressly qualified in their entirety by the
Cautionary Statements.
20
<PAGE>
THE REFINANCING
In the Refinancing, the Company (i) refinanced its outstanding indebtedness
under its 12 1/4% Senior Notes due 2002 (the "Senior Notes") by consummating
the Initial Offering, the Tender Offer and the related Consent Solicitation
and (ii) entered into the Amended Credit Facility.
The closing of each of the transactions that constitute the Refinancing
occurred concurrently with the closing of the sale of the Old Notes in the
Initial Offering. Each of such transactions was conditioned upon the prior or
concurrent consummation of each of the other such transactions.
Tender Offer and Consent Solicitation
Pursuant to a separate Offer to Purchase and Consent Solicitation Statement
dated June 5, 1997, the Company offered to repurchase all, but not less than a
majority, of its outstanding Senior Notes (the "Tender Offer") at a price
equal to $1,103.64 per $1,000 aggregate principal amount of each Senior Note,
which was calculated based on (i) the present value on the payment date of
$1,061.25 per $1,000 principal amount of each Senior Note (the amount payable
on July 15, 1998, which was the first date on which the Senior Notes were
redeemable) plus interest payable through July 15, 1998, based on a discount
factor equal to the sum of (x) 5.77% (the yield on the 8 1/4% U.S. Treasury
Note due July 15, 1998 as of 2:00 p.m., New York City Time, on June 18, 1997,
the tenth business day immediately preceding the expiration date of the Tender
Offer), plus (y) 75 basis points, minus (ii) $10.00 per $1,000 principal of
Senior Notes. Each tendering Holder also received accrued and unpaid interest
up to, but not including, the expiration date of the Tender Offer. In
connection with the Tender Offer, the Company also solicited consents (the
"Consent Solicitation") from the tendering holders of Senior Notes to certain
proposed amendments (the "Indenture Amendments") to the indenture under which
the Senior Notes were issued (the "Senior Notes Indenture"), which amendments,
among other things, eliminated substantially all of the protective covenants
contained in the Senior Notes Indenture. Holders of Existing Notes who timely
consented to such amendments also received a consent payment equal to 1% of
the principal amount of the related Senior Notes ($10 per $1,000 principal
amount). In connection with the Tender Offer and Consent Solicitation, the
Company received tenders of, and consents relating to, all of the outstanding
Senior Notes.
Amended Credit Facility
As part of the Refinancing, the Company and its subsidiaries entered into
revolving credit facilities (the "Amended Credit Facility") with a group of
lenders and with The Chase Manhattan Bank ("Chase"), as administrative agent
(the "Agent"), by amending and restating the Old Credit Facility. The Amended
Credit Facility provides for aggregate borrowings of up to $325.0 million,
with approximately $29.0 million borrowed by the Company at the closing of the
Refinancing (assuming the Refinancing was consummated on June 28, 1997).
Interest is based on the Agent's base rate or LIBOR, plus a specified margin.
All indebtedness under the Amended Credit Facility is guaranteed on a joint
and several basis by each of the Company's direct and indirect domestic
subsidiaries and by Fabrene Group. The Amended Credit Facility and the related
guarantees are secured by (i) a lien on substantially all of the assets of the
Company and its domestic subsidiaries, (ii) a pledge of all or a portion of
the stock of the direct and indirect subsidiaries of the Company, (iii) a lien
on substantially all of the assets of direct foreign borrowers (to secure
direct borrowings by such borrowers), and (iv) a pledge of certain secured
intercompany notes issued to the Company by non-domestic subsidiaries. The
Amended Credit Facility has a term of approximately six years. See
"Description of Certain Indebtedness--Amended Credit Facility."
21
<PAGE>
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights
Agreement. The Company will not receive any cash proceeds from the issuance of
the Exchange Notes offered hereby. In consideration for issuing the Exchange
Notes contemplated in this Prospectus, the Company will receive Old Notes in
like principal amount, the form and terms of which are the same as the forms
and terms of the Exchange Notes (which replace the Old Notes), except as
otherwise described herein. The Old Notes surrendered in exchange for Exchange
Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase or decrease in
the indebtedness of the Company. As such, no effect has been given to the
Exchange Offer in the pro forma statements or capitalization tables.
The net proceeds to the Company from the sale of the Old Notes in the
Initial Offering (after deducting discounts and estimated fees and expenses)
were utilized by the Company to consummate the transactions involved in the
Refinancing. See "The Refinancing."
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 28, 1997, and as adjusted to give effect to the Refinancing
and the application of the net proceeds of the Initial Offering as described
under "Use of Proceeds." This table should be read in conjunction with the
unaudited pro forma financial data and the combined consolidated financial
statements of the Company and notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 28, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash and cash equivalents.............................. $ 31,855 $ 34,981
======== ========
Long-term debt, including current portion
Existing Notes....................................... $100,000 $ --
Existing Credit Facility............................. 288,325 --
Amended Credit Facility (a).......................... -- 29,019
Notes offered hereby................................. -- 393,564
Other................................................ 1,874 1,874
-------- --------
Total Debt......................................... $390,199 $424,457
-------- --------
Shareholders' equity
Common Stock......................................... 320 320
Additional paid-in capital........................... 243,662 243,662
Deficit.............................................. (43,809) (54,702)(b)
Cumulative translation adjustment.................... (1,238) (1,238)
Unrealized holding gain on marketable securities..... 636 636
-------- --------
Total shareholders' equity......................... $199,571 $188,678
-------- --------
Total capitalization............................... $589,770 $613,135
======== ========
</TABLE>
- --------
(a) The Amended Credit Facility provides for aggregate borrowings of up to
$325,000. Initial borrowing as of June 28, 1997 is assumed to be $29,019,
with a remaining availability of $295,981.
(b) Gives effect to the reduction in equity resulting from the premium paid to
holders of Senior Notes in the Tender Offer and the costs associated with
the Refinancing.
22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain historical financial information of
the Company, PGI Polymer, and its predecessor, the Nonwoven Products Division
of Scott Paper Company (the "Predecessor"). The statement of operations data
for each of the four years in the period ended December 28, 1996, the ten-week
period ended January 2, 1993 and the balance sheet data as December 28, 1996,
December 30, 1995, December 31, 1994, January 1, 1994 and January 2, 1993 have
been derived from audited financial statements. The data as of and for the six
months ended June 29, 1996 and June 28, 1997 are derived from the consolidated
unaudited interim financial statements of the Company and include, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary to fairly present the data for such periods. The
statement of operations data for the forty-two week period ended October 22,
1992 were derived from the audited statement of revenues and expenses before
corporate interest and income taxes of the Predecessor. The table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the financial statements of the Company
and related notes thereto and other information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY COMBINED COMPANY
----------- ---------- ---------- --------------------------------------------------------------------
FORTY-TWO TEN-WEEK
WEEK PERIOD PERIOD YEAR ENDED SIX MONTHS ENDED
ENDED ENDED ------------------------------------------------- ------------------
OCTOBER 22, JANUARY 2, JANUARY 2, JANUARY 1, DECEMBER 31, DECEMBER 30, DECEMBER 28, JUNE 29, JUNE 28,
1992(A) 1993 1993(A) 1994 1994 1995 1996 1996 1997
----------- ---------- ---------- ---------- ------------ ------------ ------------ -------- --------
(DOLLARS IN THOUSANDS)
STATEMENT OF
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....... $99,119 $22,081 $121,200 $121,473 $165,333 $ 437,638 $521,368 $251,308 $260,455
Cost of goods
sold........... 84,393 18,587 102,980 97,291 129,071 333,606 389,013 189,648 193,154
------- ------- -------- -------- -------- --------- -------- -------- --------
Gross profit... 14,726 3,494 18,220 24,182 36,262 104,032 132,355 61,660 67,301
Selling, general
and
administrative
expenses....... 5,753 2,291 8,044 13,022 20,699 61,744 70,207 34,591 37,693
------- ------- -------- -------- -------- --------- -------- -------- --------
Operating
income........ 8,973 1,203 10,176 11,160 15,563 42,288 62,148 27,069 29,608
Other (income)
expense:
Interest
expense, net
(b)........... -- 915 -- 4,387 13,216 37,868 33,641 19,605 13,532
Foreign currency
transaction
(gains)
losses, net... -- 903 -- 1,363 17,332 22,811 2,955 3,573 (325)
Income taxes
(benefit)..... -- 11 -- 1,970 3,353 5,216 10,730 1,776 5,427
------- ------- -------- -------- -------- --------- -------- -------- --------
Income (loss)
before
extraordinary
item.......... -- (626) -- 3,440 (18,338) (23,607) 14,822 2,115 10,974
Extraordinary
item, (loss)
from
extinguishment
of debt........ -- -- -- -- (4,372) -- (13,932) (13,932) --
------- ------- -------- -------- -------- --------- -------- -------- --------
Net income
(loss)......... -- (626) -- 3,440 (22,710) (23,607) 890 (11,817) 10,974
Redeemable
preferred stock
dividends and
accretion...... -- -- -- (2,480) (1,209) (4,839) (3,020) (3,020) --
------- ------- -------- -------- -------- --------- -------- -------- --------
Net income
(loss)
applicable to
common stock... $ -- $ (626) $ -- $ 960 $(23,919) $ (28,446) $ (2,130) $(14,837) $ 10,974
======= ======= ======== ======== ======== ========= ======== ======== ========
Income (loss)
before
extraordinary
item per common
share.......... $ -- $ -- $ -- $ 0.05 $ (0.95) $ (1.39) $ 0.43 $ (0.04) $ 0.34
======= ======= ======== ======== ======== ========= ======== ======== ========
Average common
shares
outstanding.... -- -- -- 20,500 20,500 20,500 27,688 23,375 32,000
======= ======= ======== ======== ======== ========= ======== ======== ========
OPERATING AND
OTHER DATA:
Cash provided by
(used in)
operating
activities..... $ -- $(5,561) $ -- $ 6,888 $ 17,386 $ 11,556 $ 36,097 $ 16,205 $ 16,274
Cash (used in)
investing
activities..... -- (72,699) -- (6,958) (61,375) (333,208) (86,422) (18,374) (28,535)
Cash provided by
(used in)
financing
activities..... -- 83,602 -- (1,038) 58,482 327,636 64,391 3,907 12,200
EBITDA (c)...... 12,973 2,087 15,060 16,115 23,864 72,122 98,915 45,335 49,616
Ratio of
earnings to
fixed charges
(d)............ -- -- -- 2.1x -- -- 1.6x 1.1x 1.9x
BALANCE SHEET
DATA (AT END OF
PERIOD):
Cash and cash
equivalents.... -- $ 3,922 $ 3,922 $ 2,694 $ 13,828 $ 18,088 $ 37,587 $ 19,343 $ 31,855
Working capital
(deficit)...... -- 1,774 1,774 (5,786) 31,060 61,558 93,154 79,203 124,885
Total assets.... -- 99,258 99,258 103,187 241,942 637,981 708,115 615,413 718,494
Total debt...... -- 58,600 58,600 57,562 190,814 450,878 382,242 322,873 390,199
Redeemable
preferred
stock,
dividends and
accretion...... -- 29,123 29,123 31,603 -- 44,339 -- -- --
Shareholders'
equity
(deficit)...... -- (1,267) (1,267) (592) 2,220 13,752 195,918 186,607 199,571
</TABLE>
See Notes to Selected Consolidated Financial Data.
23
<PAGE>
NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA
(a) Audited operating data of the Predecessor for the forty-two week period
ended October 22, 1992 have been combined for presentation purposes with
the audited data of the Company for the ten-week period ended January 2,
1993.
(b) Represents interest expense, net of interest income and capitalized
interest.
(c) EBITDA is defined as operating income plus depreciation, amortization and
Mexican statutory employee profit sharing and is presented because it is
generally accepted as providing useful information regarding a company's
ability to service and/or incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from
operating activities and other consolidated income or cash flow statement
data prepared in accordance with generally accepted accounting principles
or as a measure of profitability or liquidity. Mexican employee profit
sharing laws require any corporation organized under the laws of Mexico to
distribute 10% of income before taxes to employees. Amounts distributed to
employees pursuant to such laws for the periods set forth herein were not
material.
(d) For purposes of calculating earnings to fixed charges, earnings represent
earnings before income taxes plus fixed charges. Earnings include foreign
currency transaction losses and gains. Fixed charges consist of interest
expense, net, including amortization of discount and financing costs.
Fixed charges exceeded earnings for the ten-week period ended January 2,
1993, the year ended December 31, 1994 and the year ended December 30,
1995 by approximately $700, $15,000 and $20,000, respectively. However,
the Company met all required interest payments and debt obligations during
this time period.
24
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
INTRODUCTION
The unaudited pro forma financial information presents the pro forma
combined statement of operations data of the Company for the year ended
December 28, 1996 and the six months ended June 28, 1997 as if the FNA
Acquisition and the Refinancing had occurred on December 31, 1995. In
addition, the pro forma combined statement of operations data for the year
ended December 28, 1996 have been prepared by combining the consolidated
statement of operations of the Company for its fiscal year ended December 28,
1996 (which included FNA from August 14, 1996 through December 28, 1996) with
the historical financial information of FNA for the period from January 1,
1996 to August 14, 1996. The unaudited pro forma balance sheet data as of June
28, 1997 give effect to the Refinancing, including the Initial Offering and
the application of proceeds therefrom, as of June 28, 1997, as described under
"Use of Proceeds."
The unaudited pro forma financial information has been prepared on the basis
of assumptions described in the notes thereto. The consideration paid for FNA
has been allocated to the assets and liabilities of FNA.
The unaudited pro forma financial information does not purport to represent
what the Company's financial position and results of operations would have
been if the FNA Acquisition and the Refinancing had actually been completed as
of the date indicated and are not intended to project the Company's financial
position or results of operations for any future period.
The unaudited pro forma financial information should be read in conjunction
with the respective historical financial statements of the Company and FNA and
the related notes thereto included elsewhere in this Prospectus.
PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28,
1996
The pro forma combined statement of operations data for the year ended
December 28, 1996 have been prepared by combining the consolidated statement
of operations of the Company for its fiscal year ended December 28, 1996
(which includes FNA from August 14, 1996 through December 28, 1996) with the
historical statement of operations of FNA for the period January 1, 1996 to
August 14, 1996 and give effect to the pro forma adjustments as described in
the notes hereto.
<TABLE>
<CAPTION>
HISTORICAL
----------------------------
COMPANY YEAR FNA PERIOD FROM
ENDED JANUARY 1, 1996
DECEMBER 28, THROUGH
1996 AUGUST 14, 1996 ADJUSTMENTS PRO FORMA
------------ --------------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales............... $521,368 $19,027 $ -- $540,395
Cost of goods sold...... 389,013 12,811 653 (b),(c) 402,477
-------- ------- ------ --------
Gross profit............ 132,355 6,216 (653) 137,918
Selling, general and ad-
ministrative expenses.. 70,207 2,036 (118)(b),(d),(f) 72,125
-------- ------- ------ --------
Operating income....... 62,148 4,180 (535) 65,793
Other (income) expense:
Interest expense, net.. 33,641 1,303 174 (g) 35,118
Foreign currency
transaction (gains)
losses, net........... 2,955 -- (2,733)(e) 222
Income taxes........... 10,730 392 (1,042)(h) 10,080
-------- ------- ------ --------
Income before extraordi-
nary item.............. $ 14,822 $ 2,485 $3,066 $ 20,373
Redeemable preferred
stock dividends and ac-
cretion................ (3,020) -- 3,020 --
-------- ------- ------ --------
Income before extraordi-
nary item applicable to
common stock........... $ 11,802 $ 2,485 $6,086 $ 20,373
======== ======= ====== ========
Income before extraordi-
nary item per common
share.................. $ .43 -- -- $ .64
======== ======= ====== ========
Average common shares
outstanding............ 27,688 -- -- 32,000
======== ======= ====== ========
OPERATING AND OTHER DA-
TA:
Cash provided by operat-
ing activities......... $ 36,097 $ -- $ -- $ --
Cash (used in) investing
activities............. (86,422) -- -- --
Cash provided by financ-
ing activities......... 64,391 -- -- --
EBITDA (a).............. 98,915 5,724 1,088 105,727
Ratio of earnings to
fixed charges (n)...... 1.6x -- -- 1.7x
</TABLE>
See Notes to Unaudited Pro Forma Financial Information.
25
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 28,
1997
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 28, 1997
----------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Net sales.................................. $260,455 $ -- $260,455
Cost of goods sold......................... 193,154 -- 193,154
-------- ------- --------
Gross profit............................... 67,301 -- 67,301
Selling, general and administrative ex-
penses.................................... 37,693 653 (i) 38,346
-------- ------- --------
Operating income.......................... 29,608 (653) 28,955
Other (income) expense:
Interest expense, net..................... 13,532 3,942 (j) 17,474
Foreign currency transaction (gains), net. (325) -- (325)
Income taxes.............................. 5,427 (1,519)(k) 3,908
-------- ------- --------
Income (loss) before extraordinary item.... $ 10,974 $(3,075) $ 7,898
======== ======= ========
Income before extraordinary item per common
share..................................... $ .34 -- $ .25
======== ======= ========
Average common shares outstanding.......... 32,000 -- 32,000
======== ======= ========
OPERATING AND OTHER DATA:
Cash provided by operating activities...... $ 16,274 $ -- $ --
Cash (used in) investing activities........ (28,535) -- --
Cash provided by financing activities...... 12,200 -- --
EBITDA (a)................................. 49,616 -- 49,616
Ratio of earnings to fixed charges (n)..... 1.9x -- 1.5x
</TABLE>
PRO FORMA CONDENSED BALANCE SHEET AS OF JUNE 28, 1997
<TABLE>
<CAPTION>
AS OF JUNE 28, 1997
--------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
Current assets:
Cash and equivalents................... $ 31,855 $ 3,126 (l) $ 34,981
Marketable securities.................. 12,677 -- 12,677
Accounts receivable, net............... 75,331 -- 75,331
Inventories............................ 61,322 -- 61,322
Deferred income taxes and other........ 17,906 -- 17,906
-------- -------- --------
Total current assets................. 199,091 3,126 202,217
Property, plant and equipment.......... 406,646 -- 406,646
Intangibles, loan acquisition and
organization costs, net............... 92,457 7,413 (l)(m) 99,870
Deferred income taxes and other........ 20,300 6,676 (m) 26,976
-------- -------- --------
Total assets......................... $718,494 $ 17,215 $735,709
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued
liabilities........................... $ 74,120 $ (6,150)(l) $ 67,970
Current portion of long-term debt...... 86 -- 86
-------- -------- --------
Total current liabilities............ 74,206 (6,150) 68,056
Long-term debt, less current portion... 390,113 34,258 (l) 424,371
Deferred income taxes and other
liabilities........................... 54,604 -- 54,604
Shareholders' equity
Capital stock......................... 320 -- 320
Additional paid in capital............ 243,662 -- 243,662
(Deficit)............................. (43,809) (10,893)(l)(m) (54,702)
Other shareholders' equity............ (602) -- (602)
-------- -------- --------
199,571 (10,893) 188,678
-------- -------- --------
Total liabilities and shareholders'
equity.............................. $718,494 $ 17,215 $735,709
======== ======== ========
</TABLE>
See Notes to Unaudited Pro Forma Financial Information.
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
<TABLE>
<S> <C>
(a) EBITDA is defined as operating income plus depreciation,
amortization and Mexican statutory employee profit sharing and
is presented because it is generally accepted as providing
useful information regarding a company's ability to service
and/or incur debt. EBITDA should not be considered in isolation
from or as a substitute for net income, cash flows from
operating activities and other consolidated income or cash flow
statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or
liquidity. Mexican employee profit sharing laws require any
corporation organized under the laws of Mexico to distribute 10%
of income before taxes to employees. Amounts distributed to
employees pursuant to such laws for the periods set forth herein
were not material.
(b) Prior to the FNA Acquisition, FNA had intercompany royalty and
guarantee agreements with its former parent with respect to
intercompany transactions. These prior contractual obligations
were not part of the FNA Acquisition; therefore, the following
pro forma adjustments give effect to the elimination of royalty
and guarantee expense from FNA's historical financial results:
Elimination of historical royalty expense as a result of the
acquisition................................................... $ (1,019)
========
Elimination of historical guarantee expense as a result of the
acquisition................................................... $ (69)
========
(c) Represents increase in depreciation expense on assignment of
purchase price of FNA to fair value of property, plant and
equipment....................................................... $ 722
========
(d) Represents increase in amortization expense on assignment of
purchase price of FNA to intangible assets...................... $ 524
========
(e) In accordance with FAS 52 (as defined), the Company records
foreign currency gains and losses upon remeasurement of
obligations which are denominated in a currency other than the
functional currency of the Company's foreign subsidiaries.
Concurrently with the Initial Public Offering, the Company
restructured approximately $56 million of United States dollar
intercompany indebtedness at its Mexican subsidiary by
effectively converting such debt into equity. In addition, the
Company also restructured a portion its United States dollar
acquisition intercompany debt in Canada and Europe. These
obligations, with an aggregate principal amount of $154 million,
either became third party debt denominated in the functional
currency of these entities or were deemed to be a hedge of the
Company's net investment in the foreign subsidiaries. Therefore,
in accordance with FAS 52, the following pro forma adjustment
gives effect to elimination of transaction gains and losses
related to foreign currency as a result of the recapitalization
consummated in connection with the Initial Public Offering...... $ (2,733)
========
(f) Represents net increase in amortization expense related to
additional costs incurred pursuant to the Refinancing........... $ 377
========
(g) Represents estimated net increase in interest expense as a
result of the Refinancing....................................... $ 174
========
(h) Represents estimated income tax effect of (b), (c), (d), (e),
(f) and (g)..................................................... $ (1,042)
========
(i) Represents net increase in amortization expense related to
additional costs incurred pursuant to the Refinancing........... $ 653
========
(j) Represents estimated net increase in interest expense as a
result of the Refinancing....................................... $ 3,942
========
(k) Represents estimated income tax effect of (i) and (j)........... $ (1,519)
========
(l)Reflects the Refinancing:
Proceeds from Notes offered hereby............................. $393,564
Amended Credit Facility........................................ 29,019
--------
422,583
Repayment of Existing Credit Facility.......................... (288,958)
Tender Offer and Consent Solicitation for Existing Notes
including repayment of accrued interest....................... (116,881)
Estimated fees and expenses.................................... (13,618)
--------
Cash.......................................................... $ 3,126
========
(m) Represents estimated write-off of historical loan acquisition
costs as a result of the Refinancing and estimated tax benefit
from extinguishment of debt..................................... $ 471
========
(n) For purposes of calculating earnings to fixed charges, earnings
represent earnings before income taxes plus fixed charges.
Earnings include foreign currency transaction losses and gains.
Fixed charges consist of interest expense, net, including
amortization of discount and financing costs.
</TABLE>
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
INTRODUCTION
The Company's net sales in recent years have been affected by a variety of
factors, including increased sales volume as a result of growing demand for
the Company's products, fluctuations in average prices for the Company's
products due to fluctuations in raw material prices, and increased competition
for many of the Company's mature product lines. Since 1991, the Company's
sales volume has increased primarily as a result of acquisitions and growth in
sales of consumer disposable products that incorporate the Company's products.
Prior to the second quarter of 1994, the Company's primary raw material,
polypropylene fiber, had reached its lowest price level in the past seven
years, which had been a major factor in the reduction of average selling
prices for the Company's products. During the next two quarters of 1994, the
cost of the Company's key raw materials increased sharply. The Company was
able to pass on the majority of this increase to its customers by the end of
the second quarter of 1995. The sharp increase was primarily due to short-term
interruptions in production capacity and increased demand as a result of an
expanding economy. By mid-1995 and continuing through 1996, raw material
supplies had increased, thereby reducing the Company's key raw material
prices.
In addition, increased competition in several of the Company's markets has
resulted in competitive allowances by the Company to maintain its existing
market shares, effectively reducing average selling prices and correspondingly
decreasing net sales. Despite the decline in average prices over the last
several years, the Company has increased its gross margins primarily due to
decreases in operating expenses and raw material costs and improvements in
manufacturing efficiencies and material utilization. The Company has reduced
operating expenses primarily by increasing the efficiency of its workforce and
by process engineering developments, in turn allowing the Company to increase
its production line speeds.
The Company manufactures certain of its products in Germany, Canada, Mexico
and the Netherlands. The Company accounts for and reports translation of
foreign currency transactions and foreign currency financial statements in
accordance with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation" ("FAS 52"). If foreign currency denominated revenues are
greater than costs, the translation of foreign currency denominated costs and
revenues into U.S. dollars will improve profitability when the foreign
currency strengthens against the U.S. dollar and will reduce profitability
when the foreign currency weakens. The non-cash adjustment resulting from
translation of financial statements is recorded in a separate component of
shareholder's equity. Prior to the translation of financial statements, the
foreign entities adjust assets and liabilities which are to be settled in a
currency other than the functional currency to the functional currency using
period-end exchange rates. The resulting adjustment for the remeasurement of
assets and liabilities that are to be settled in a currency other than the
functional currency is included in the determination of net income. In
connection with the Initial Public Offering (as defined) and establishment of
the Old Credit Facility (as defined), the intercompany loans to Bonlam and
other foreign facilities were eliminated, substantially reducing the Company's
exposure to currency transaction losses.
The Company's substantial foreign operations expose it to the risk of
exchange rate fluctuations. In addition, the restatement of foreign currency
denominated assets and liabilities into U.S. dollars gives rise to unrealized
foreign exchange gains or losses which are recorded in the statement of
operations. However, the Initial Public Offering and related debt refinancing
eliminated the majority of the Company's U.S. dollar denominated intercompany
debt, effectively reducing the Company's exposure to foreign currency
fluctuations. In addition, effective December 29, 1996, the Company
28
<PAGE>
changed the functional currency for its Mexican subsidiary from the nuevo peso
to the U.S. dollar. See "Liquidity and Capital Resources--Foreign Currency."
The Company does not currently participate in hedging transactions related to
foreign currency.
The financial data for the year ended December 30, 1995 include the results
of Chicopee Holdings and its subsidiaries for the period March 16, 1995 to
December 30, 1995. The financial data for the year ended December 28, 1996
includes the results of PNA and FNA for the period August 14, 1996 to December
28, 1996.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships to net sales of
certain income statement items.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED SIX MONTHS ENDED
-------------------------------------- ------------------ ------------------
DECEMBER 31, DECEMBER 30, DECEMBER 28, JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1994 1995 1996 1997 1996 1997 1996
------------ ------------ ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales:
Hygiene................. 80.8 % 45.1 % 44.4 % 42.5 % 45.7 % 42.3 % 44.4 %
Medical................. -- 16.7 17.6 17.7 18.5 17.2 18.9
Wiping.................. -- 16.7 17.4 19.2 16.9 19.2 17.4
Industrial and special-
ty..................... 19.2 21.5 20.6 20.6 18.9 21.3 19.3
----- ----- ----- ----- ----- ----- -----
100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold:
Raw material costs.... 52.3 48.8 46.1 43.4 45.3 43.2 46.0
Labor costs........... 7.5 7.5 7.6 7.9 7.4 7.9 7.4
Overhead costs........ 18.3 19.9 20.9 22.3 22.2 23.1 22.1
----- ----- ----- ----- ----- ----- -----
Total costs of goods
sold................... 78.1 76.2 74.6 73.6 74.9 74.2 75.5
Gross profit.......... 21.9 23.8 25.4 26.4 25.1 25.8 24.5
Selling, general and ad-
ministrative expenses.. 12.5 14.1 13.4 14.5 12.8 14.5 13.8
----- ----- ----- ----- ----- ----- -----
Operating income........ 9.4 9.7 11.9 11.9 12.3 11.3 10.7
Other (income) expense:
Interest expense, net. 8.0 8.7 6.5 5.1 7.0 5.1 7.8
Foreign currency
transaction (gains)
losses, net.......... 10.5 5.2 0.5 -- 1.8 (0.1) 1.4
----- ----- ----- ----- ----- ----- -----
Income (loss) before
income taxes (benefit)
and extraordinary item. (9.1) (4.2) 4.9 6.8 3.5 6.3 1.5
Income taxes (benefit).. 2.0 1.2 2.1 2.3 1.5 2.1 0.7
----- ----- ----- ----- ----- ----- -----
Income (loss) before
extraordinary item..... (11.1) (5.4) 2.8 4.5 2.0 4.2 0.8
Extraordinary item, net
of income tax benefit.. 2.6 -- 2.6 -- (10.8) -- (5.5)
----- ----- ----- ----- ----- ----- -----
Net income (loss)....... (13.7)% (5.4)% 0.2 % 4.5 % (8.8)% 4.2 % (4.7)%
===== ===== ===== ===== ===== ===== =====
</TABLE>
29
<PAGE>
COMPARISON OF THREE MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
Net Sales
Consolidated net sales increased $2.9 million, or 2.3%, from $128.6 million
for the three months ended June 29, 1996 to $131.5 million for the three
months ended June 28, 1997. Net sales increased $7.8 million as a result of
the FNA Acquisition, which was completed during the third quarter of 1996,
offset by a mix-shift toward lower cost spunbond and SMS technology which
replaced thermal bond fabric sales in certain applications. In addition, sales
growth in Europe was unfavorably impacted by weaker foreign currency
translation rates during the second quarter of 1997 relative to 1996. Hygiene
product sales decreased 4.7%, or approximately $2.8 million, from $58.7
million in 1996 to $56.0 million in 1997. Hygiene sales for adult incontinence
products grew as a result of the FNA Acquisition. However, in response to
increased competitive pressure, the Company has utilized lower cost product
designs incorporating spunbond and SMS technology, which results in a pass
through of a portion of the cost savings to the customer in lower average
selling prices. Medical sales were $23.3 million for the second quarter of
1997 as compared with $23.7 million for the second quarter of 1996. Lower raw
material costs, including rayon fiber and polyester fiber, were also passed
through to customers, resulting in lower revenues compared to the previous
year. Wiping product sales increased 15.8%, or approximately $3.4 million,
from $21.7 million in 1996 to $25.2 million in 1997. Improved sales within
this product category were driven by higher volumes of food service and
consumer wiping product sales and geographic and product line extensions.
Sales in the industrial and specialty product category increased during the
second quarter approximately 11.0%, or $2.7 million, from $24.4 million in
1996 to $27.1 million in 1997, primarily as a result of strong unit growth for
industrial fabrics and the FNA Acquisition.
Gross Profit
Gross profit increased to $34.7 million, or 26.4% of consolidated net sales,
for the second quarter of 1997 versus $32.3 million, or 25.1% of net sales,
for the comparable period in 1996. The approximate $2.5 million increase in
gross profit over the second quarter of 1996 primarily reflected the benefit
from the FNA Acquisition, combined with volume growth in the wiping and
industrial and specialty product categories. Second quarter 1997 raw material
costs were 43.4% of net sales, compared to 45.3% for the comparable period
last year, reflecting the downward trend in raw material prices which began in
1996. Direct labor costs as a percent of net sales were 7.9%, up slightly from
7.4% during the second quarter of 1996. Overhead expenses were approximately
22.3% of net sales in the second quarter of 1997 compared to 22.2% of net
sales in the second quarter of 1996.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were 14.5% of consolidated net
sales during the first and second quarter of 1997 compared to 12.8% in the
second quarter of 1996. Consolidated selling, general and administrative
expenses for the second quarter of 1997 were $19.0 million, up approximately
$2.6 million versus $16.5 million for the second quarter of 1996, primarily
because of the additional costs associated with FNA, higher research and
development costs related to product enhancements and other general and
administrative costs.
Other
Interest expense decreased $2.3 million, from $9.0 million in the second
quarter of 1996 to $6.7 million in the second quarter of 1997. Interest
expense as a percentage of net sales decreased from 7.0% in the second quarter
of 1996 to 5.1% in the second quarter of 1997. The decrease in interest
expense is principally due to a lower average amount of indebtedness
outstanding in the second quarter of 1997 resulting from the Initial Public
Offering and the Recapitalization (each as defined) consummated concurrently
therewith.
30
<PAGE>
Net foreign currency transaction gains were not significant in the second
quarter of 1997. Net foreign currency transaction losses of $2.2 million were
recorded in the second quarter of 1996. During the second quarter of 1996, the
Company's Mexico operation incurred net foreign currency transaction gains of
$1.3 million, offset by its European operations which recorded foreign
transaction losses of $3.5 million. These gains and losses incurred by the
Company during the second quarter of 1996 principally had no cash impact and
occurred upon the remeasurement of United States dollar intercompany
indebtedness applicable to the Company's foreign operations. As a result of
the Initial Public Offering and Recapitalization, the majority of the
Company's United States dollar intercompany indebtedness at its Mexican,
Canadian and German operations was effectively converted to equity, thus
mitigating the Company's net foreign currency exposure. In addition, the
Company determined that its United States dollar intercompany indebtedness as
its Netherlands operation is of a long-term investment nature in which
settlement is not planned in the foreseeable future. Therefore, in accordance
with FAS 52, gains and losses are excluded from the determination of net
income and are reported in the same manner as translation adjustments.
The Company provided for income taxes of approximately $3.0 million during
the second quarter of 1997, representing an effective tax rate of 33.1%. The
provision for income taxes at the Company's effective rate differed from the
provision for income taxes at the statutory rate due primarily to the
utilization of net operating loss carryforwards and to tax strategies
initiated at the time of the Initial Public Offering. The Company provided for
income taxes of $1.9 million during the second quarter of 1996, representing
an effective tax rate of 42.5%.
As a result of the Initial Public Offering and Recapitalization, the Company
recorded an extraordinary item of $13.9 million, net of the income tax benefit
of $7.5 million, related to the write-off of previously capitalized debt issue
costs and premiums paid in connection with the repurchase of a portion of the
Senior Notes during the second quarter of 1996.
Net Income
Net income was approximately $6.0 million, or $.19 per share, in the second
quarter of 1997 as compared to a net loss of $(11.3) million, or $(.47) per
share, in the second quarter of 1996. Net income was favorably impacted during
the second quarter of 1997 by: (i) the FNA Acquisition; (ii) lower interest
costs attributable to the recapitalization of indebtedness in connection with
the Initial Public Offering; (iii) mitigation of foreign currency exposure
attributable to the Recapitalization; and (iv) a lower effective income tax
rate.
COMPARISON OF SIX MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996
Net Sales
Consolidated net sales increased approximately $9.1 million, or 3.6%, from
$251.3 million for the six months ended June 29, 1996 to $260.5 million for
the six months ended June 28, 1997. Net sales increased $16.8 million as a
result of the FNA Acquisition, offset by lower average selling prices in the
hygiene and medical product categories resulting from declining raw material
costs and a movement toward lower cost spunbond and SMS technology that
replaced thermal bond fabric sales in certain applications. In addition, sales
growth in Europe was unfavorably impacted by weaker foreign currency
translation rates during 1997 relative to 1996. Hygiene product sales
decreased 1.2%, or approximately $1.3 million, from $111.5 million in 1996 to
$110.1 million in 1997. Hygiene sales for adult incontinence products grew as
a result of the FNA Acquisition. However, in response to increased competitive
pressure, the Company has utilized lower cost product designs incorporating
spunbond and SMS technology, resulting in a pass through of a portion of the
cost savings to the customer in lower average selling prices. Year-to-date
medical sales in 1997 were $44.7 million, as compared with $47.5 million in
1996. Lower raw material costs were passed through to customers,
31
<PAGE>
resulting in lower revenues compared to last year for medical products. Wiping
product sales increased 14.2%, or $6.2 million, from $43.8 million in 1996 to
$50.0 million in 1997. Improved sales within this product category were driven
by higher volumes of food service and specialty wiping product sales and
geographic and product line extensions. Sales in the industrial and specialty
product category increased during the first six months of 1997 approximately
14.3%, or approximately $7.0 million, from $48.6 million in 1996 to $55.5
million in 1997, primarily as a result of strong unit growth for industrial
fabrics and the FNA Acquisition.
Gross Profit
Year to date gross profit in 1997 increased to $67.3 million, or 25.8% of
consolidated net sales, versus $61.7 million, or 24.5% of net sales, for the
comparable period in 1996. The approximate $5.6 million increase in gross
profit over 1996 primarily reflected the benefit from the FNA Acquisition,
combined with volume growth in the wiping and industrial and specialty product
categories. Raw material costs during the first six months of 1997 were 43.2%
of net sales compared to 46.0% for the comparable period last year, reflecting
the downward trend in raw material prices which began in 1996. Direct labor
costs, as a percent of net sales, were 7.9% on a year to date basis in 1997,
up from 7.4% during the first six months of 1996. Overhead expenses increased
approximately $4.3 million, from 22.1% of net sales in 1996 to 23.1% of net
sales in 1997, due primarily to incremental overhead costs associated with the
FNA Acquisition and higher depreciation on completed capital expenditures.
Selling, General and Administrative Expenses
Selling, general and administrative expenses on a year to date basis in 1997
were 14.5% of consolidated net sales, up from 13.8% in 1996. Year-to-date
selling, general and administrative expenses in 1997 were $37.7 million, up
approximately $3.1 million versus $34.6 million for 1996, primarily because of
the additional costs associated with FNA, higher research and development
costs related to product enhancements and other general and administrative
costs.
Other
Year-to-date interest expense decreased $6.1 million from $19.6 million in
1996 to $13.5 million in 1997. Interest expense as a percentage of net sales
decreased from 7.8% in 1996 to 5.1% in 1997. The decrease in interest expense
is principally due to a lower average amount of indebtedness outstanding in
1997 resulting from the Initial Public Offering and Recapitalization.
Year-to-date net foreign currency transaction gains were $0.3 million in
1997 as compared with net foreign currency transaction losses of $3.6 million
in 1996. These gains and losses incurred by the Company during 1996
principally had no cash impact and occurred upon the remeasurement of United
States dollar intercompany indebtedness applicable to the Company's foreign
operations. As a result of the Initial Public Offering and Recapitalization,
the majority of the Company's United States dollar intercompany indebtedness
at its Mexican, Canadian and German operations was effectively converted to
equity, thus mitigating the Company's net foreign currency exposure. In
addition, the Company determined that its United States dollar intercompany
indebtedness at its Netherlands operation is of a long-term investment nature
in which settlement is not planned in the foreseeable future. Therefore, in
accordance with FAS 52, gains and losses are excluded from the determination
of net income and are reported in the same manner as translation adjustments.
The Company provided for income taxes of approximately $5.4 million during
the first six months of 1997, representing an effective tax rate of 33.1%. The
provision for income taxes at the Company's effective rate differed from the
provision for income taxes at the statutory rate due primarily to the
utilization of net operating loss carryforwards and to tax strategies
initiated at the time of the Initial Public Offering. The Company provided for
income taxes of $1.8 million on a year to date basis in 1996, representing an
effective tax rate of 45.6%.
32
<PAGE>
As a result of the Initial Public Offering and Recapitalization, the Company
recorded an extraordinary item of $13.9 million, net of the income tax benefit
of $7.5 million, related to the write-off of previously capitalized debt issue
costs and premiums paid in connection with the repurchase of a portion of the
Senior Notes during the second quarter of 1996.
Net Income
Net income was approximately $11.0 million, or $.34 per share, for the six
months ended June 28, 1997 as compared to a net loss of $(11.8) million, or
$(.64) per share, in the comparable period of 1996. Net income was favorably
impacted during 1997 by: (i) the FNA Acquisition; (ii) lower interest costs
attributable to the recapitalization of indebtedness in connection with the
Initial Public Offering; (iii) mitigation of foreign currency exposure
attributable to the Recapitalization; and (iv) a lower effective income tax
rate.
COMPARISON OF YEAR ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995
Net Sales. The Company experienced a high level of demand for several of its
advanced technologies in 1996. Net sales for 1996 were $521.4 million, an
$83.7 million, or 19.1%, increase over net sales of $437.6 million in 1995.
The Company achieved growth through both strategic acquisitions and capacity
expansions of existing assets. Net sales increased by $62.9 million as a
result of the inclusion of a full twelve months of operations of Chicopee
Holdings and its subsidiaries in 1996 as compared to only nine and one half
months in 1995. Market demand was up in all major product categories, with
hygiene and medical products representing the strongest unit growth.
Hygiene product sales increased $33.6 million to $231.2 million (44.4% of
consolidated net sales) in 1996, from $197.6 million (45.1% of consolidated
net sales) in 1995. Sales of hygiene products made with spunbond and SMS,
adhesive bond and apertured film technologies increased by $28.5 million in
1996. Driving the internal growth of hygiene products was the Mexican SMS
expansion and rising demand for apertured film facings, partially offset by
declining thermal bond volume and the discontinuation of purchased spunbond
from a former joint venture partner. SMS fabric has been the fastest-growing
technology within the nonwovens industry, experiencing demand growth in excess
of 10% globally in 1996. The growth in net sales reflects the Company's
continued investment in SMS capacity to support the rising demand for high
performance nonwoven fabrics in hygiene and medical applications. The
Company's spunbond and SMS revenues increased 137% in 1996 as a result of the
successful SMS line start-up in San Luis Potosi, Mexico, and the acquisition
of FNA and PNA in October of 1996. Anticipating continued strong growth for
spunbond polypropylene products, the Company recently announced its commitment
to install a high volume multi-polymer line at its Mooresville, North Carolina
facility in late 1997. Higher volumes of adhesive bond sublayer fabrics for
hygiene applications also contributed to the increase in revenues from 1995 to
1996.
Sales of traditional carded nonwoven fabric for the hygiene market declined
somewhat in 1996 due to a shift in market demand towards spunbond/SMS
technology. While this trend is expected to continue as new spunbond/SMS
capacity is added to the industry globally, the Company believes demand for
its traditional carded nonwoven fabric will continue due to the unique
attributes of this technology, competitive pricing, and the development of new
end uses. Additionally, the adoption of the clothlike backsheet feature by
major diaper producers remains a potential opportunity for greater demand of
light weight nonwoven fabric that would further utilize the Company's
traditional carded nonwoven fabric.
Medical product sales increased $18.7 million to $91.7 million in 1996, from
$73.0 million in 1995. The Company's medical business benefited from a high
level of unit volume growth during the year, offset by a decrease in average
unit selling prices as a result of the pass through of lower raw material
costs. The net increase in total medical sales between 1996 and 1995
attributable to volume growth was $7.5 million, or 10.2%, offset by price
reductions of $5.9 million related to lower material cost. Growth in medical
sales attributable to the acquisition of FNA, PNA and Chicopee Holdings and
its subsidiaries were $17.2 million.
33
<PAGE>
Wiping product sales were $90.6 million in 1996, compared to $73.0 million
in 1995, reflecting an increase of $17.6 million. Revenue growth in the wipes
category was principally due to inclusion of a full year of operations of
Chicopee Holdings and its subsidiaries.
Sales of industrial and specialty products were $107.8 million in 1996,
compared to $94.1 million in 1995, up 14.6% due primarily to the acquisitions
of FNA and PNA and Chicopee Holdings and its subsidiaries. In addition,
industrial and specialty product revenue grew in 1996 as a result of: (i) new
product introductions such as decal backings, apparel interlinings, window
coverings and landscape fabrics; and (ii) growth in established product lines
such as microporous separators, crop covers, home furnishings, clean room
rollgoods and industrial protective coverings.
Gross Profit. Gross profit was $132.4 million, or 25.4% of net sales,
compared to $104.0 million, or 23.8% of net sales in 1995. The improvement in
gross profit as a percentage of sales was largely due to lower raw material
costs. After a rapid rise in the cost of key raw materials in 1995, the costs
of the Company's primary raw materials decreased by late 1995 and continued to
decline into 1996. As a result, material costs decreased 2.7% as a percent of
net sales from the previous year. Woodpulp, rayon fiber, polyester fiber and
polypropylene resin declined most significantly in 1996 relative to 1995.
Polyethylene resin was initially lower in the first half of 1996 but price
increases since mid year were only partially passed through to the market.
Polypropylene fibers, which represent a major share of the Company's
purchases, experienced a stable price environment in 1996. During 1996 the
Company successfully completed a strategic cost reduction project with the
installation of polypropylene fiber spinning equipment at the Neunkirchen,
Germany facility for its internal fiber requirements. The Company expects to
complete qualifications of the new fiber product and to begin to realize cost
savings in fiscal 1997. Additionally, the Company has increased its gross
margins as a result of improvements in manufacturing efficiencies and material
utilization and a mix shift to greater value added products. The Company has
improved material utilization primarily by reducing waste, controlling weight
variation and designing lower basis weight products. Overhead expenses
increased from 19.9% of net sales in 1995 to 20.9% of net sales in 1996 as a
result of higher depreciation on completed capital expenditures and
transitional overhead associated with the integration of value-added
production in the hygiene product category.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $70.2 million in 1996, compared with $61.7
million in 1995, an increase of $8.5 million primarily due to the acquisition
of FNA and PNA in August 1996 and a full year of expenses related to the
operations of Chicopee Holdings and its subsidiaries compared with nine and
one half months in 1995. As a percentage of net sales, selling, general and
administrative expenses decreased to 13.5% in 1996 from 14.1% in 1995. The
decrease reflects lower selling and administrative expenses due to
efficiencies resulting from increased sales volume. The Company continued to
aggressively develop its key technologies in 1996, spending approximately $6.9
million on designated research and development activities. Company engineers
developed over 49 new fabric styles utilizing the APEX(R) technology,
commercialized a proprietary new hygiene fabric for improved wetness
acquisition, commercialized a heavyweight shop towel as a line extension in
wipes, and enhanced manufacturing quality and efficiency.
As nonwoven fabrics become more specialized, the Company's challenge is to
develop greater value and functionality in its products and to get new and
improved products to the marketplace sooner. In a move to meet this challenge,
the Company's product development lines currently located at its research and
development facility in Dayton, New Jersey, will be relocated among the
Company's manufacturing facilities in 1997. Management believes this will
reduce the cycle time for the introduction of new products and processes by
allowing manufacturing personnel to be more involved in the development
process.
34
<PAGE>
Other. Interest expense decreased $4.3 million from $37.9 million in 1995 to
$33.6 million in 1996. Interest expense as a percentage of net sales decreased
to 6.5% in 1996 from 8.7% in 1995. These decreases are principally due to a
lower average amount of indebtedness outstanding in 1996. Net foreign currency
transaction losses were approximately $3.0 million (0.5% of net sales) in 1996
versus $22.8 million (5.2% of net sales) in 1995. In 1996, the Company's
European operations incurred net foreign currency transaction losses of $6.2
million which were offset by net foreign currency transaction gains of $3.3
million within the Company's Mexican operation. The Initial Public Offering
and the Recapitalization eliminated the majority of the Company's United
States dollar intercompany debt, effectively reducing the Company's exposure
to foreign currency fluctuations as discussed more fully in "Liquidity and
Capital Resources."
Net Income (Loss). Income before nonrecurring charges was $14.8 million in
1996 versus a loss before nonrecurring charges of $(23.6) million in 1995.
Income before nonrecurring charges was favorably impacted during 1996 by
increased profitability attributable primarily to volume increases within the
hygiene and industrial and specialty product categories. Offsetting the
effects of improved gross profit were foreign currency transaction losses of
approximately $3.0 million in 1996. The Company provided for income taxes of
$10.7 million during 1996, representing an effective tax rate of approximately
42%. Unfavorably impacting net income in the prior year was a higher effective
tax rate resulting from foreign losses which did not give rise to a
corresponding tax benefit.
In accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," a valuation allowance of $14.1 million has been
recognized at December 28, 1996 to offset deferred tax assets due to the
uncertainty of realizing the benefit of foreign net operating and capital loss
carryforwards of approximately $16.9 million. The Company has operating loss
carryforwards of approximately $28.7 million for federal income tax purposes
expiring in the years 2007-2011; capital loss carryforwards of $6.0 million
related to its Canadian operations; and operating loss carryforwards of $15.6
million which begin to expire in 2002 related to its Mexican operation. No
accounting recognition has been given to the potential income tax benefit
related to the Canadian and Mexican operating loss carryforwards. The Company
has not provided U.S. income taxes for undistributed earnings of foreign
subsidiaries which are considered to be retained indefinitely for
reinvestment. The distribution of these earnings would result in additional
foreign withholding taxes and additional U.S. federal income taxes to the
extent they are not offset by foreign tax credits, but it is not practicable
to estimate the total liability that would be incurred upon such a
distribution. However, in 1996, the Company provided approximately $3.5
million for income taxes related to the distribution of earnings from certain
of its foreign operations which are not considered to be retained indefinitely
for reinvestment.
As a result of the Recapitalization effected concurrently with the Initial
Public Offering, the Company recorded nonrecurring charges of approximately
$13.9 million (net of the related income tax benefit of approximately $7.5
million), or $.51 per common share, related to the write-off of previously
capitalized debt issue costs and prepayment penalties paid in connection with
the repurchase of $50.0 million in principal of the Senior Notes.
COMPARISON OF YEAR ENDED DECEMBER 30, 1995 AND DECEMBER 31, 1994
Net Sales. Consolidated net sales increased $272.3 million, to $437.6
million in 1995 from $165.3 million in 1994, primarily as a result of the
inclusion of Chicopee Holdings and its subsidiaries for the period from March
16, 1995 to December 30, 1995 and, to a lesser extent, from the inclusion of a
full year of Fabrene and Bonlam net sales in 1995. For the period from March
16, 1995 to December 30, 1995, Chicopee's net sales were $225.6 million. Net
sales for Fabrene and Bonlam increased $38.1 million, to $77.9 million in 1995
from $39.8 million in 1994. Of this increase, $30.6 million was attributable
to the inclusion of a full year of net sales. The remaining $7.5 million
increase in sales for Fabrene and Bonlam represented organic volume growth of
10.6% during fiscal 1995. This volume
35
<PAGE>
growth was made possible by the 1995 SMS capacity expansions at the Company's
Mexican facility and the woven capacity additions in North Bay, Ontario.
Organic growth in the rest of the Company's businesses was $8.6 million, or
6.8% over 1994, and was principally due to price increases for the Company's
hygiene products, reflecting higher raw material costs and the addition of
higher value end-use products.
Gross Profit. Gross profit as a percentage of net sales increased to 23.8%
in 1995 from 21.9% in 1994, primarily as a result of favorable diversification
in the product mix from the acquired businesses and, to a lesser extent, cost
reduction programs and decreases in raw material prices. In particular, the
addition of the wipes product category to the Company's business produced a
favorable impact on gross margins. Gross profit increased $67.7 million, to
$104.0 million in 1995 from $36.3 million in 1994, primarily due to the
Chicopee Acquisition and the effect of a full year of Fabrene and Bonlam. Raw
material costs decreased to 48.8% of net sales in 1995 from 52.3% of net sales
in 1994, reflecting a mix of less expensive raw materials associated with
Chicopee. Labor expenses remained constant at 7.5%. Overhead expenses
increased from 18.3% of net sales in 1994 to 19.9% of net sales in 1995 as a
result of higher depreciation on completed capital expenditures and the
additional overhead expenses of Chicopee. The Company's gross profit not
attributable to the inclusion of Chicopee Holdings and its subsidiaries and a
full year of Fabrene and Bonlam was relatively flat between 1995 and 1994 as a
result of the following factors: (i) highly competitive pricing by diaper
producers, (ii) excess supply and soft pricing of spunbond products, and (iii)
capacity limitations at the North Bay, Ontario wovens facility, which
prevented incremental volume growth until capacity was added.
Selling, General and Administrative. Selling, general and administrative
expenses increased $41.0 million to $61.7 million in 1995 from $20.7 million
in 1994, due to the acquisition of Chicopee and the inclusion of a full year
of operating expenses of Fabrene and Bonlam. Selling, general and
administrative expenses as a percentage of net sales increased to 14.1% in
1995 from 12.5% in 1994, primarily as a result of the acquisition of a branded
wipes business as part of the Chicopee Acquisition, which business requires
greater selling and distribution expenses than the Company's other businesses.
General and administrative expenses increased $18.2 million between 1995 and
1994 as a result of the Chicopee Acquisition, although general and
administrative expenses as a percentage of net sales remained constant at
6.6%.
Other. Interest expense increased $24.7 million to $37.9 million in 1995
from $13.2 million in 1994. Interest expense as a percentage of net sales
increased to 8.7% in 1995 from 8.0% in 1994. These increases are principally
due to a higher average amount of indebtedness outstanding in 1995 associated
with the Chicopee Acquisition. Net foreign currency transaction losses were
$22.8 million (5.2% of net sales) in 1995 and $17.1 million (10.3% of net
sales) in 1994. In 1995, the Company's Canadian and European operations
collectively incurred net foreign currency transaction gains of $1.6 million,
which were offset by net foreign currency transaction losses of $24.4 million
within the Company's Mexican operation. During the fourth quarter of 1994, the
Mexican government discontinued monetary support for the nuevo peso, allowing
it to float to market rates, which resulted in a devaluation of the nuevo peso
of approximately 124% between December 20, 1994 and December 30, 1995.
Approximately 97% ($23.5 million) of the Company's Mexican related net foreign
currency transaction losses during 1995 resulted from its U.S. dollar
denominated intercompany indebtedness. As previously discussed, the
Recapitalization eliminated the majority of the Company's United States dollar
intercompany debt, effectively reducing the Company's exposure to foreign
currency fluctuations.
Net Income (Loss). Net loss increased $0.9 million, to $(23.6) million in
1995 from $(22.7) million in 1994, primarily as a result of a increase in net
foreign currency transaction losses of $5.8 million related mainly to the
continued devaluation of the Mexican nuevo peso during 1995 and to an increase
in interest expense of $24.7 million due to a higher average amount of
indebtedness outstanding in
36
<PAGE>
1995 associated with the Chicopee Acquisition. Increasing the Company's net
loss in 1995 was a high effective tax rate resulting from foreign losses,
which did not give rise to a corresponding tax benefit. Net loss was reduced
during 1995 as a result of increased net sales of $272.3 million and increased
gross profit of $67.7 million, each attributable primarily to the Chicopee
Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. At December 28, 1996, the Company had $36.1 million of
cash, compared to $11.6 million during 1995, an increase of $24.5 million.
This increase arose principally from a higher level of operating income in
1996 and lower interest costs due to a lower average amount of indebtedness
outstanding in 1996. The Company's working capital increased $31.6 million, or
51.3%, from $61.6 million in 1995 to $93.2 million in 1996, primarily as a
result of increases in accounts receivable and inventories offset by increased
accounts payable and accrued expenses. Cash and equivalents and marketable
securities were $48.5 million at December 28, 1996 as compared to $22.9
million at December 30, 1995, a net increase of $25.6 million.
During the six months ended June 28, 1997, the Company's operations
generated $16.3 million of cash. The Company's working capital (excluding
current portion of long-term debt) increased $12.3 million from $112.7 million
at December 28, 1996 to approximately $125.0 million at June 28, 1997. Cash
and equivalents and marketable securities were $44.5 million at June 28, 1997
as compared to $48.5 million at December 28, 1996, a net decrease of
approximately $4.0 million.
Investing and Financing Activities. On May 15, 1996, the Company completed
the Initial Public Offering, in which it offered and sold 11.5 million shares
of common stock at an offering price of $18.00 per share. Net proceeds to the
Company after underwriting fees and related costs were $190.8 million. As part
of the Initial Public Offering, the Company (i) effectively repaid all
outstanding indebtedness under the existing credit facilities and terminated
the facilities, (ii) redeemed $50.0 million principal amount of the Senior
Notes at a premium of 112.25%, (iii) redeemed the preferred stock of Chicopee
at a price equal to $1,000 per share plus accrued but unpaid dividends for
$46.9 million, (iv) redeemed the preferred stock of the Company at a price
equal to $1,000 per share plus accrued but unpaid dividends for $10.5 million,
and (v) entered into the Old Credit Facility, which consisted of a $200.0
million term loan and a $125.0 million revolving credit facility. In order to
enter into the Old Credit Facility, the Company was required to obtain the
consents of holders of a majority of the outstanding principal amount of the
Senior Notes. Pursuant to a consent solicitation statement dated March 14,
1996, the Company solicited and received the required consents, and,
accordingly, the Company and the trustee executed a Third Supplemental
Indenture dated as of April 9, 1996 that became effective concurrently with
the Initial Public Offering. The Third Supplemental Indenture allowed the
Company to enter into the Old Credit Facility.
Unused commitments under the revolving portion of the Old Credit Facility
approximated $23.8 million at June 28, 1997. The ratio of debt to total
capital was 66.2% at June 28, 1997, compared to 66.1% at year-end 1996. As a
result of the consummation of the Refinancing, the Company now has commitments
of up to $325.0 million under the Amended Credit Facility, which may be drawn
from time to time on a revolving basis. The Company would have had
approximately $29.0 million borrowed under the Amended Credit Facility,
assuming the Refinancing was completed on June 28, 1997. The Company's annual
requirements relating to interest and rental expense are approximately $38.0
million and $2.0 million, respectively.
On August 14, 1996, a wholly-owned subsidiary of the Company completed the
acquisition of the business of FNA and its parent, PNA, for $48.0 million in a
transaction accounted for under the purchase method. FNA produces
polypropylene fabrics for the nonwovens industry utilizing spunbond and
spunbond/ meltblown/spunblown technologies. FNA competes primarily in three
markets: hygienic
37
<PAGE>
markets, including adult incontinence products and feminine hygiene products;
disposable products, including landscape and agricultural applications; and
durable products, including products for home furnishings.
The Company maintains a comprehensive capital expenditure program and
continuously evaluates strategic acquisition opportunities to expand its
existing production capacity or enhance production technologies. Capital
programs which are currently in process as well as those which were completed
in 1996 are consistent with the Company's criteria for capital expenditures
which include projects to debottleneck or expand the highest growth
technologies such as spunbond, spunlace and apertured films. Capital spending
in 1996 approximated $26.7 million. Capital expenditures for the first six
months of 1997 totaled $27.5 million, an increase of approximately $16.5
million over the comparable period of 1996, due primarily to expansion of
adhesive bond and Reticulon(R) capacity, and a new 4.2 meter wide SMS line at
the Company's Mooresville, North Carolina plant site. Total capital outlays
for the new SMS line are expected to approximate $25.0 million, with
commercial start-up expected to begin in the fourth quarter of 1997. The new
line will have the capabilities of producing polyester nonwoven fabric as well
as polypropylene and other polymer-based fabric. Other anticipated uses
include industrial and specialty applications made possible by the multi-
polymer capability of the new lines. The Company anticipates that aggregate
capital expenditures for the year ending
January 3, 1998 will approximate $63.3 million. Approximately $23.0 million of
the Company's 1997 capital budget is allocated to sustaining capital
expenditures.
The Company believes that based on current levels of operations and
anticipated growth, its cash from operations, together with other available
sources of liquidity, including but not limited to, borrowings under the
Amended Credit Facility, will be adequate over the next several years to make
required debt payments, including interest thereon, permit anticipated capital
expenditures and fund the Company's working capital requirements.
In connection with the Chicopee Acquisition, management of the Company
adopted a plan to relocate manufacturing equipment, corporate offices and
certain equipment used in Chicopee's North American research and development
activities to other sites within the United States. Accordingly, the Company
provided for accrued restructuring costs of approximately $17.9 million in
connection with the allocation of the purchase price to the fair value of
assets acquired and liabilities assumed. During 1996 and 1995, the Company
charged approximately $3.5 million and $2.4 million, respectively, against the
accrued restructuring reserve. In 1996, the charges against the restructuring
reserve related primarily to: (i) the relocation of assets, including
equipment used in production and research and development related activities
($2.5 million); (ii) the relocation of the acquiree's corporate headquarters
($0.8 million); and (iii) other miscellaneous costs within the provisions of
the restructuring plan ($0.2 million). At December 28, 1996, the Company's
total accrued restructuring costs associated with the plan approximated $12.0
million. Management currently estimates that approximately $10.0 million of
the total accrued restructuring costs will be incurred during 1997; therefore,
this portion of the total accrual has been recognized as a current liability
in the consolidated balance sheet at December 28, 1996.
Effect of Inflation. Inflation generally affects the Company by increasing
the cost of labor, equipment and new materials. The Company does not believe
that inflation has had any material effect on the Company's results of
operations. See "Foreign Currency" below.
Foreign Currency. The Company manufactures certain of its products in
Germany, Canada, Mexico and the Netherlands. The Company accounts for and
reports translation of foreign currency transactions and foreign currency
financial statements in accordance with FAS 52. For all periods through
December 28, 1996, the foreign entities have used the local currency as the
functional currency and translated assets and liabilities at period-end
exchange rates and income and expense accounts at the average exchange rates
prevailing during the period. The non-cash adjustment
38
<PAGE>
resulting from translation of financial statements is recorded in a separate
component of shareholders' equity. Prior to the translation of financial
statements, the foreign entities adjust assets and liabilities which are to be
settled in a currency other than the functional currency to the functional
currency using period-end exchange rates.
Since the Company's substantial foreign operations expose it to the risk of
exchange rate fluctuations, if foreign currency denominated revenues are
greater than costs, the translation of foreign currency denominated costs and
revenues into dollars will improve profitability when the foreign currency
strengthens against the dollar and will reduce profitability when the foreign
currency weakens. In addition, the remeasurements of foreign currency
denominated assets and liabilities into dollars gives rise to foreign exchange
gains and losses which are included in the determination of net income. The
company does not currently participate in hedging transactions related to
foreign currency; however, the Initial Public Offering and related debt
refinancing eliminated the majority of the Company's U.S. dollar denominated
intercompany debt, effectively reducing the Company's exposure to foreign
currency fluctuations.
Effective December 29, 1996, the Company changed the functional currency for
its Mexican subsidiary from the nuevo peso to the U.S. dollar due to economic
facts and circumstances including: (i) the cumulative inflation index in
Mexico has been approximately 100% over a three year period ending December
28, 1996; (ii) an increase in the volume of transactions denominated in
dollars, including dollar-indexed transactions; and (iii) the cash flows of
the Company's Mexican subsidiary are directly affected since a substantial
portion of transactions are dollar denominated or dollar-indexed. Over 50% of
product shipments from the Company's Mexican subsidiary during 1996 were
either dollar denominated or dollar-indexed transactions. Since a significant
portion of transactions are dollar related, inflationary increases has not had
a material effect on the Company's results of operations, as indicated in
"Effect of Inflation" above.
The U.S. dollar translated amounts of nonmonetary assets, primarily
property, plant and equipment and goodwill, at December 28, 1996 was the
accounting basis for those assets at December 29, 1996 and for subsequent
periods. Additionally, the Mexican-related cumulative translation adjustment
at December 28, 1996 accumulated in shareholders' equity prior to this change
in functional currency remains a separate component of shareholders' equity.
Derivatives. The Company does not use derivative financial instruments for
trading purposes. Such products are used only to manage well-defined interest
rate risks. Premiums paid for purchased interest rate cap agreements are
charged to interest expense over the rate cap period. On May 16, 1996 and in
connection with the Initial Public Offering and Recapitalization, the Company
entered into a London Interbank Offered Rate ("LIBOR")-based interest rate cap
agreement. The agreement period extends through March 30, 1999, subject to
adjustment, and provides for a notional amount of $100.0 million which
declines ratably over the rate cap term. If the rate cap exceeds 9% on each
quarterly reset date, as defined in the agreement, the Company shall be due an
amount by which the rate cap exceeds 9%. Over the term of the agreement in
1996, the rate cap did not exceed 9%.
New Accounting Standards. On December 30, 1995, the Company adopted the
provisions of Financial Accounting Standards Board ("FASB") Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("FAS 121"), which requires impairment losses to be
recorded on long-lived assets used in operations when indicators are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. The effect of adoption did not have a
material impact on the Company's results of operations during 1996. In
connection with the Initial Public Offering, the Company adopted the
provisions of FASB Statement No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 establishes financial accounting and
reporting standards for stock-based compensation plans. In February 1997,
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("FAS 128"), was issued. FAS 128 is designed to improve the earnings per share
information provided
39
<PAGE>
in financial statements by simplifying the existing computational guidelines,
revising the disclosure requirements, and increasing the comparability of
earnings per share data on an international basis. FAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods. Earlier application is not permitted. The Company
will adopt FAS 128 on its effective date. The Company does not currently
anticipate that the effect of adoption will have a material impact upon its
current earnings per share computation.
Environmental. The Company is subject to a broad range of federal, foreign,
state and local laws and regulations relating to the pollution and protection
of the environment. Among the many environmental requirements applicable to
the Company are laws relating to air emission, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
environmental requirements. The Company is also subject to laws, such as the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), that may impose liability retroactively and without fault
for releases of hazardous substances at on-site or off-site locations. The
Company is not aware of any releases for which it may be liable under CERCLA
or any analogous provision. As a result, the Company does not currently
anticipate any material adverse effect on its operations, financial condition
or competitive position as a result of its efforts to comply with
environmental requirements. Some risk of environmental liability is inherent,
however, in the nature of the Company's business, and there can be no
assurance that material environmental liabilities will not arise.
40
<PAGE>
BUSINESS
GENERAL
The Company is a leading worldwide manufacturer and marketer of a broad
range of nonwoven and woven polyolefin products. The Company's principal lines
of business include medical, reusable wiping, hygiene, and industrial and
specialty products. The Company believes that it is the fourth largest
producer of nonwovens in the world and that it employs the most extensive
range of nonwoven technologies of any nonwovens producer, which allows it to
supply products tailored to customers' needs at a competitive cost. Nonwovens
are flat, flexible porous sheets produced by interlocking fibers or filaments
or by perforating films. Nonwovens provide certain qualities similar to those
of textiles at a significantly lower cost. The Company also believes that it
is the largest producer of woven polyethylene fabrics in North America. Woven
polyethylene fabrics are flat, flexible structures produced by weaving narrow
tapes of slit film and are characterized by high strength-to-weight ratios.
For the year ended December 28, 1996, the Company had pro forma net sales of
$540.4 million and pro forma EBITDA of $105.7 million. From 1993 through 1996
on a pro forma basis, the Company's compound annual growth rates for net sales
and EBITDA were 64.5% and 87.3%, respectively.
The Company supplies nonwovens to a number of the largest consumer products
manufacturers in the world and specifically targets market niches with high
value-added products. The Company has a global presence with an established
customer base in the three major developed markets of North America, Europe
and Japan, as well as developing markets such as Latin America. The Company's
products are sold principally to converters that manufacture a wide range of
end-use products, such as hospital surgical gowns and drapes, wound care
sponges, multi-use wiping cloths and towels, flexible industrial packaging,
filtration media, battery separators, diapers, feminine hygiene products and
automotive insulation products. The Company supplies nonwovens to customers
such as Johnson & Johnson for healthcare products, including operating room
gowns, Procter & Gamble for Pampers(R) and Luvs(R) diapers and Confab, Inc.
for private label diapers.
The Company is a leader in nonwoven process technology. The Company operates
thirteen manufacturing facilities located in five countries and is currently
the only nonwovens producer that utilizes all of the established nonwoven
process technologies. The Company recently successfully introduced the new,
proprietary APEX(R) technology, which is a surface-forming technology capable
of producing nonwoven fabrics with intricate, three-dimensional patterns and
the potential to replace traditional woven textiles at a lower cost. The
Company believes that the quality of its manufacturing operations and the
breadth of its nonwovens process technologies give it a competitive advantage
in meeting the current and future needs of its customers and in leading the
development of an expanded range of applications for nonwovens. The Company
continues to make significant investments in advanced technology in order to
increase capacity, improve quality and develop new low-cost, high-value
structures. For example, the Company recently invested in a SMS line that the
Company believes is one of the most advanced in the world, which allows the
Company to produce highly uniform structures with less material than other SMS
lines. The Company believes that this technological advantage gives it the
capability to design and manufacture products with optimal cost and
functionality. Working as a developmental partner with its major customers,
the Company utilizes its technologies to develop and manufacture new products
to meet their needs.
Management has built the Company through a series of strategic business
acquisitions that have broadened the Company's technology base and increased
its product lines. The Company's strategic acquisitions have helped it to
establish strong positions in both the nonwoven and woven polyolefin fabric
markets. Synergies realized through these acquisitions have enabled the
Company to better meet the needs of existing customers, to reach emerging
geographic markets and to exploit niche
41
<PAGE>
market opportunities through customer-interactive specialty product
development. For example, technological developments at the Company's
Landisville, New Jersey facility, such as improvements in the meltblown
process, continuous spreading and comprehensive process automation, have been
integral to capacity increases and the implementation of new production lines
in Europe and Mexico. Similarly, the success and underlying technology of the
Company's state-of-the-art 4.2 meter SMS line in San Luis Potosi, Mexico has
led to the implementation of a second line installation at its Mooresville,
North Carolina plant site.
The Company's objectives are to continue to expand its core business while
building new capabilities to capitalize on both a broad range of new, high
value-added niche product opportunities and expanded geographic markets. In
addition to growth in its core businesses, the Company expects growth to come
from the application of several new technologies, including (i) the APEX(R)
nonwovens process technology, and (ii) Metal-Set(R), a new polymer technology
developed in conjunction with the Los Alamos National Scientific Research
Laboratories ("LANL") and designed to recover heavy metals, which can then be
recycled and sold, from contaminated solutions such as hazardous waste sites.
The Company expects to accomplish these objectives by relying on its principal
strengths, which include technological leadership, state-of-the-art
manufacturing capabilities, significant market share in its primary markets,
an experienced and committed management team and key customer relationships.
The Company seeks to utilize these strengths by following a strategy based on
(i) strategic acquisitions, (ii) continuous improvement aimed at increasing
product value and reducing costs, (iii) development of high value-added niche
products, (iv) entrance into new markets with existing products and (v)
expansion of capacity through capital projects.
INDUSTRY OVERVIEW
The Company competes primarily in the worldwide market for nonwovens, which
is approximately a $6.6 billion market, according to industry sources. The
nonwovens industry began in the 1950s when paper, textile and chemical
technologies were combined to produce new fabrics and products with the
attributes of textiles but at a significantly lower cost. Today, nonwovens are
used in a wide variety of consumer, industrial and healthcare products as a
result of their superior functionality and relatively low cost.
The nonwovens industry has benefitted from substantial improvements in
technology over the past several years, which have increased the number of new
applications for nonwovens, and therefore increased demand. The Company
believes, based on industry sources, that demand in the developed markets will
increase 4-5% in each of the next five years, while the emerging markets are
forecasted to grow at a rate of 10-13% per annum. In the developed markets,
growth will be driven primarily by new applications for nonwovens, while
growth in the emerging markets will be volume driven as these countries see
the emergence of a middle class of consumers. According to industry sources,
worldwide consumption of nonwovens increased an average of 9% per annum from
1988 through 1994. The Company also believes that future growth will depend
upon the continuation of improvements in raw materials and technology, which
should result in the development of high-performance nonwovens, leading to new
uses and markets at a lower cost than alternative materials.
Nonwovens are categorized as either disposable (85% of worldwide industry
sales of 1995 yardage according to industry sources), which is the category in
which the Company primarily competes, or durable (15% of worldwide industry
sales in 1995 yardage according to industry sources). The largest end uses for
disposable nonwovens are for hygiene applications, including diapers, feminine
sanitary protection, baby wipes and adult incontinence products, and
healthcare applications, including surgical gowns and drapes and woundcare
sponges and dressings. Other disposable end uses include reusable wipes,
filtration media, protective apparel and fabric softener sheets. Durable end
uses include apparel interlinings, furniture and bedding construction
sheeting, automotive components, geotextiles, roofing membranes, carpet
backing, agricultural fabrics, durable papers and coated and laminated
structures for wallcoverings, upholstery, shoes and luggage.
42
<PAGE>
The Company also competes in the North American market for coated woven
polyolefin products. Woven polyolefin fabrics are flat, flexible structures
produced by weaving narrow tapes of slit film and are characterized by high
strength-to-weight ratios. While the broad uncoated woven polyolefin market is
primarily focused on carpet backing fabric and, to a lesser extent,
geotextiles and bags, the markets in which the Company primarily competes are
made up of a large number of specialized products manufactured for niche
applications. These markets include demanding industrial packaging
applications such as lumberwrap, steel wrap and fiberglass packaging, as well
as high-strength protective coverings and specialized components that are
integrated into a variety of industrial and consumer products.
COMPETITIVE STRENGTHS
The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:
Technological Leadership. The Company believes it is a technological
leader in developing and manufacturing nonwoven and woven polyolefin
products. The Company is currently the only nonwovens producer that
utilizes all of the established nonwoven process technologies and has
recently introduced the new, proprietary APEX(R) technology. The expertise
of the Company's research and development staff have enabled the Company to
develop innovative products, frequently in response to specific customer
needs. The Company's research and development efforts have been focused on
increasing its production capacity and improving its production processes,
developing products based on the Company's existing technologies for new
markets, and developing new process technologies to enhance existing
business and allow entry into new markets.
State-of-the-Art Manufacturing Capabilities. The Company believes that it
has state-of-the-art manufacturing capability in both its nonwoven and
woven product lines. As a result, the Company is one of the lowest cost
producers in the markets in which it participates. In recent years, the
Company has invested or committed to invest in excess of $70.0 million
(approximately $60.6 million of which had been spent as of June 28, 1997)
in capital improvements to increase capacity and has improved quality and
uniformity through the implementation of automated process technology. The
Company recently completed an expansion in Mexico with the installation of
a new 4.2 meter SMS line with unique and proprietary capabilities. The
Company is currently adding Reticulon(R) film and adhesive bond capacity to
meet demand in both the United States and Europe, and a new 4.2 meter SMS
line at its Mooresville, North Carolina facility. The Company has also
developed a proprietary method to produce an exceptionally lightweight
thermal bond fabric of superior uniformity, which allows the Company to
offer more cost-effective product performance.
Significant Market Share in Primary Markets. The Company has developed
significant market shares in its primary markets. For example, the Company
believes that it has a significant share of the noncaptive hygiene market
and the wipes market and that it is the leading North American manufacturer
of lumberwrap and woven uncoated fabric used for lamination to paper for
the steel wrap market. The Company also believes that it is the leading
North American supplier in both the manufactured housing bottom board and
fiberglass packaging markets. The Company believes it has been able to
obtain these market shares as a result of its commitment to, and reputation
for, innovation and quality.
Experienced and Committed Management Team. The Company's senior
management team has significant experience in the manufacturing and
marketing of polyolefin products, with an average of 12 years of experience
in this industry. Management's experience includes acquiring and employing
assets at a low cost and increasing the utilization of assets. Management
also has a successful track record of acquiring and improving complementary
businesses while integrating them into the Company's existing businesses.
Senior management currently owns approximately 18.3% of the common equity
of the Company.
43
<PAGE>
Key Customer Relationships. The Company has successfully cultivated long-
term relationships with key customers, such as Johnson & Johnson and its
affiliates ("Johnson & Johnson") and The Procter & Gamble Company ("Procter
& Gamble"), who are market leaders in their industries. The Company
currently works closely as a developmental partner of Procter & Gamble,
focusing resources and working together to develop advanced components for
next generation diapers. The Company has also negotiated a favorable, long-
term supply agreement with Johnson & Johnson, under which it is the
exclusive provider of nonwoven fabric requirements for Johnson & Johnson.
Similarly, the Company enjoys an exclusive, long-term supply contract with
Bulldog Bag Ltd. for its woven fabrics product line. The Company's success
in developing and strengthening its relationships with these and other key
customers is attributable to its commitment to product quality, dedication
to customer technical service and ability to develop innovative
applications for existing products.
By focusing on the Company's competitive strengths, the Company's management
team has positioned the Company to address the current and future needs of the
nonwovens and wovens markets by providing high value, low cost products to
converters and end-use customers in specialty niche application markets on a
global basis.
BUSINESS STRATEGY
The Company's goals are to continue to grow its core businesses while
developing new technologies to capitalize on a broad range of new high-margin
niche product opportunities and expanded geographic markets. The Company
intends to be the leading supplier in its chosen markets by delivering high-
quality products and service at competitive prices. To achieve these goals,
the Company's primary strategy focuses on:
Strategic Acquisitions. The Company continuously evaluates opportunities
to make acquisitions which complement and expand its core businesses or
which have the potential to increase market share and distribution
capability in high-margin complementary products. The Company may seek to
vertically integrate operations where such expansion is economical and
supports the Company's core business without adversely impacting its
existing relationships. An example of this strategy is the Company's
acquisition in August 1996 of FNA, a significant producer of polypropylene
fabrics for the nonwovens industry. The acquisition of FNA's modern plant
facility, built in 1992 and expanded in 1994, strengthened the Company's
strategic position in the hygiene materials market and broadened its
offering of medical and agricultural products.
Continuous Improvement Aimed at Increasing Product Value and Reducing
Costs. The Company is committed to continuous improvements throughout its
business to increase product value and lower costs. The Company's product
design teams continuously seek to incorporate new materials and operating
capabilities that enhance or maintain performance specifications while
lowering the cost of raw materials used in the products. State-of-the-art
equipment, much of which has been developed internally and is proprietary
to the Company, has been designed and installed to continuously measure
process parameters and maintain very narrow tolerances, resulting in less
product variation. As a result, the Company's manufacturing processes
utilize less material and produce a higher quality fabric. In addition, the
Company maintains a human resource program aimed at capturing productivity
gains through team building, formal training and employee empowerment.
Development of High Value-Added Niche Products. The Company is committed
to investment in the development of products for high value-added niche
markets. One new offering is its Reticulon(R) brand apertured film, which
is used as a facing film on feminine hygiene products. The Company also
expects to commercialize in the near term additional medical gown and drape
technologies as well as new, high-margin wiping applications. Other new
developments include the proprietary APEX(R) technology, which is a
surface-forming technology capable of producing nonwoven fabrics with
intricate, three-dimensional patterns with the potential to replace woven
and
44
<PAGE>
knit textiles at a lower cost. This next-generation technology is currently
in commercial production for Johnson & Johnson for medical applications
such as woven-like gauze and surgical lap-pads, and could be utilized in
the future in a variety of other applications, including automotive
headliners, home furnishings and filtration products.
Entrance into New Markets with Existing Products. The Company believes
that it has significant additional market opportunities for its existing
products. The Company is actively expanding its capabilities to take
advantage of the penetration and growth of its core products
internationally, particularly in developing countries. For example, the
Company has increased sales to Latin America, the Caribbean, New Zealand
and Australia. Over the past four years, the Company's sales from
manufacturing facilities outside the United States and export sales from
domestic manufacturing facilities have increased from approximately $28
million in 1993 to approximately $253 million in 1996. In addition, the
Company has expanded its technical marketing staff to pursue novel
applications of its current products with new segments of end users. For
example, the Company has developed a multimillion square meter market in
Europe for a new hygiene application by introducing a product and
technology primarily used as a wipe in North America.
Expansion of Capacity through Capital Projects. The Company continuously
evaluates opportunities to expand its existing production capacity or
enhance production technologies. The Company has invested or committed to
invest approximately $70.0 million in capital improvements (approximately
$60.6 million of which had been spent as of June 28, 1997) since 1992 to
either debottleneck existing assets or to add new capabilities and
capacity. The largest of these projects are the state-of-the-art SMS lines
at the San Luis Potosi, Mexico and Mooresville, North Carolina facilities.
The San Luis Potosi facility line began commercial production in the third
quarter of 1995, and now runs at full capacity. Total capital outlay for
the Mooresville facility line is expected to be approximately $25.0
million, with commercial startup expected to begin in the fourth quarter of
1997. Other significant projects include FASE II(TM) uniformity technology,
which has increased line speed and improved product fiber distribution on
thermal bond lines, and capacity expansions in the Company's Reticulon(R)
film and adhesive bond process technologies for hygiene, both of which are
scheduled for commercial start-up by the end of the third quarter of 1997.
The Company's woven polyolefin business has completed a series of
expansions and debottlenecking projects since 1990, which have cumulatively
increased capacity by 61%. The expansions include facilities in Portland,
Oregon and Vancouver, British Columbia, which primarily supply the
Northwest lumber industry with coated and printed lumberwrap.
Through the implementation of its business strategy, management has
achieved an increase in gross margins from 21.9% in 1994 to 25.5% in 1996, and
an increase in EBITDA from $23.9 million in 1994 to $105.7 million in 1996, in
each case on a pro forma basis. At the same time, the Company has continued to
develop new, proprietary product technologies and to expand its state-of-the-
art manufacturing facilities in the United States and Mexico.
PRODUCTS
The Company develops, manufactures and sells a broad array of nonwovens,
woven polyolefin products, conulated/apertured (perforated) films, laminated
composite structures, converted wipes and sorbent products. Sales are focused
in four general product categories that provide opportunities to leverage the
Company's advanced technology and substantial capacity. These product
categories include medical, reusable wiping, hygiene, and industrial and
specialty products.
Marketing and research and development teams are committed to constant
product innovation in conjunction with, or at the request of, the Company's
customers. Close long-term relationships with end-use customers have been a
significant factor in the Company's success by enabling the Company
45
<PAGE>
to better understand its customers' needs. In addition, the research and
development teams seek to develop high value-added specialty products using
existing assets in order to leverage the Company's capabilities to produce
high-margin products.
Industrial and Specialty Products
The industrial and specialty products category represented approximately
21%, 22% and 19%, or $112.4 million, $94.1 million and $31.8 million, of the
Company's 1996 pro forma net sales, 1995 net sales and 1994 net sales,
respectively. Demand for this product category is distributed among hundreds
of end-use applications. Some typical end uses include filtration media, home
furnishings, apparel interlinings, automotive insulation and interior fabrics,
agricultural fabrics, battery separators, fabric softener sheets, protective
coverings and flexible industrial packaging. The Company's strength in
engineering and extensive range of process technologies are well-suited to
meet the specialized functionality requirements in this category. Customers
typically have very specific performance and quality requirements that demand
efficient design and process conditions, both of which are strategic strengths
of the Company.
The Company produces a broad range of industrial and specialty products,
including alkaline battery separators, electronic clean room wipes,
manufactured housing bottom board fabric (used to enclose the underside of a
manufactured home), home furnishing dust covers and mattress pads, window
coverings, fabric softener sheets, protective apparel and specialized
protective coverings such as golf green covers, pool covers, salt pile covers,
landfill covers and athletic field covers. The Company also produces a variety
of flexible packaging products utilizing coated and uncoated woven polyolefin
fabrics, such as Arbrene(R) and Lumber Guard(R) lumberwrap, which are used to
cover high-quality kiln dried lumber for shipping and storage, fiberglass
packaging tubes, which hold batts of insulation under compression for
efficient storage and shipping, balewrap for synthetic and cotton fibers,
steel and aluminum wrap, which are used to cover mill rolls, and coated woven
bags for animal feed, specialty chemicals and mineral fibers. The Company is a
leading supplier of several of these products, including wetlaid alkaline
battery separators, woven lumberwrap, fiberglass packaging and bottom board
fabric.
The Company also produces a variety of specialized niche products that
further augment the array of end use applications within this product
category. The Company expects that the majority of its long-term growth will
come in the industrial and specialty products category. The Company's current
primary industrial and specialty products and applications are summarized
below:
Product Application
Microporous rollgoods Alkaline battery separators
Kiara(R) Liquid filtration
Key Bak(R) Automotive insulation
Arbrene(R) and Lumber Guard(R) Lumberwrap
Airgard(R) Housewrap
Fab-Strip(TM) Corrugated box reinforcement
Fabrene(TM) Protective coverings and laminated
structures
Agricultural fabric Crop covers
Dust cover Furniture and bedding
The Company's industrial and specialty products are produced primarily using
wetlaid, adhesive bond, through-air fusible fiber bond, spun bond, woven
polyolefin and lamination technologies. Specialized converting facilities
operated by the Company include a wide-width paper/nonwoven/film laminating
and printing facility in Portland, Oregon and a thermal and ultrasonic bonding
facility in Vineland, New Jersey. The Company sells its industrial products
primarily to converter/distributors, except for battery separators, fiberglass
packaging and lumberwrap in the U.S. Pacific Northwest, which are sold by the
Company's own sales team.
46
<PAGE>
Wiping Products
The wiping products category represented approximately 19% and 17%, or
$100.0 million and $73.0 million, of the Company's 1996 pro forma net sales
and 1995 net sales. The Company has a complete line of wiping products used
for food service, institutional, light industrial, janitorial and consumer
markets. In 1995, approximately 13%, or 2.0 billion square yards, of North
American nonwovens roll goods capacity was used to produce wiping products.
Wiping products are categorized as either "premoistened/wet wipes" or "dry
wipes." The Company primarily participates in the "dry wipes" portion of the
market, which the Company believes to have greater potential for growth and
generally contains more value-added, specialty products. Within the "dry
wipes" category, the three general end-use products are food service wipes,
consumer household wipes and industrial and specialty wipes. The Company
maintains a significant market share in the food service category and is a
leading producer for the consumer and industrial categories. Industry sources
estimate that the North American volume growth for nonwovens used in
disposable wipes will be approximately 5% per annum through 2000.
Products within this category include branded and unbranded light to
heavyweight cloth wipes, towels and aprons marketed under the Chix(R), Chix
Plus(R), Chifonet(TM) and Lerette(TM) trademarks, medium to heavyweight open
weave towels marketed under the Fresh Guy(R) trademark and dry, pretreated,
water activated cleaning and sanitizing wipes for the food service industry,
marketed under the Quix(TM) trademark. Products for the industrial, janitorial
and institutional markets include light to heavy-duty towels and cloths sold
under a variety of trademarks including Worxwell(R), Durawipe(R), Masslinn(R)
and Stretch 'N Dust(R). Specialty wipes consist of products designed to meet
specialized customer requirements and specifications and include clean room
wipes used in the electronics, pharmaceutical and office equipment cleaning
industries, tack cloth used by automotive paint shops, and aerospace wipes for
solvent and sealant wiping, surface preparation and general purposes. The
Company produces multi-use kitchen wipes, including Colgate Palmolive's
Handiwipes(R) brand pursuant to a long-term supply agreement. The Company also
markets a line of catering products in Europe, including banquet rolls, table
napkins and table cloths. The Company's primary wiping products and
applications are summarized below:
Product Application Application
Chix(R) and Chix Plus(R) Food service
Fresh Guy(R) Heavyweight food service
Durawipe(R) Industrial
Quix(TM) Sanitizing/food service
Worxwell(R) Consumer and janitorial
Masslinn(R) Janitorial
Stretch 'N Dust(R) Janitorial
Duralace(R) Specialized, clean rooms
Chifonet(TM) Consumer--Europe
Lerette(TM) Food service--Europe
Napkins and tablecloths Catering--Europe
Handiwipes(R) and Heavywipes(R)/1/ Consumer
- --------
/1/Handiwipes(R) and Heavywipes(R) are registered trademarks of Colgate
Palmolive. The Company produces wipes exclusively for Colgate Palmolive under
a long-term supply agreement.
The Company utilizes primarily dry form resin bonded and spunlace
technologies to manufacture its wiping products and also maintains dedicated
converting and packaging equipment. In North America, the Company has a long-
term manufacturing and distribution agreement, which extends through 1998,
with Berkley Medical Resources Inc. ("BMR") in Fairfield, Pennsylvania to
convert, warehouse and distribute a wide range of wiping products. The
equipment used in the converting and
47
<PAGE>
packaging operations is owned by the Company and operated solely for its
benefit. In Europe, the Company operates its own converting and packaging
equipment within the Cuijk manufacturing facility. The Company is a leading
manufacturer and marketer of wiping products as a result of its wide range of
products, wide distribution base of dealers and food service distributors and
reputation for excellent customer and technical support, including the ability
to meet specific customer requirements.
Medical Products
The medical products category represented approximately 17% and 17%, or
$94.0 million and $73.0 million, of the Company's 1996 pro forma net sales and
1995 net sales. The Company's medical products are used in the production of
wound care sponges and dressings, disposable surgical packs, apparel such as
operating room gowns, drapes for operating rooms and facemasks, shoecovers and
headwear. Medical applications represent the second largest market for
nonwoven fabrics, with almost two billion square yards consumed annually in
the United States. Approximately 40% of this demand is for disposable surgical
packs, drapes and gowns, a market in which Johnson & Johnson has a leading
share.
Johnson & Johnson is the Company's primary customer for medical products
pursuant to a long-term supply agreement dated March 15, 1995 (the "Supply
Agreement"). The Supply Agreement grants the Company the exclusive right to
supply Johnson & Johnson with all of its nonwoven fabric requirements,
including those for its entire line of medical products as well as for other
disposable hygiene and wiping applications, for a period of five years, and,
provided that the Company's prices remain competitive with the marketplace,
extends for a period of an additional five years. During the first five-year
period, of which approximately three years still remain, the Company enjoys
significantly favorable pricing terms. In addition, other preferential terms
continue throughout the duration of the contract. Johnson & Johnson accounted
for approximately 29% of the Company's 1996 net sales.
The Company believes, based on industry sources, that the North American
volume growth rate for nonwovens in medical applications will be approximately
2-4% per annum between 1995 and 2000, with much of the growth coming from the
expansion of traditional product lines. A 1992 ruling by the Occupational
Safety and Health Administration ("OSHA") required that employers of
healthcare workers supply personal protective equipment to employees at risk
of exposure to infectious body fluids. Industry sources expect that OSHA rules
will continue to stimulate demand for protective applications for workers,
including those in funeral homes, linen services and law enforcement agencies
in addition to healthcare workers.
Surgical gowns and drapes containing a protective barrier against fluid
strike-through are the largest and fastest growing applications for nonwoven
fabrics in the medical products category. The Company produces Duralace(R)
spunlace fabric for this product group and treats the surface of the fabric to
give it high fluid repellency required for this application. The sponge and
dressing products are produced using spunlace apertured technologies and the
Company's proprietary APEX(R) technology. A recently developed product using
the APEX(R) technology, Mirasorb(R)/1/, is a nonwoven sponge that can replace
woven gauze in some applications at considerably less cost. The Company's
primary medical products and applications are summarized below:
Product Application
Duralace(R) Surgical gowns and drapes
Mirasorb(R) Sponges
Nugauze(R) Nonwoven gauze
- --------
/1/Mirasorb(R) and Nugauze(R) are trademarks of Johnson & Johnson. The Company
furnishes Johnson & Johnson with products used in the manufacture of these
products.
48
<PAGE>
Hygiene Products
The hygiene products category represented approximately 43%, 45% and 81%, or
$234.0 million, $197.6 million and $133.5 million, of the Company's 1996 pro
forma net sales, 1995 net sales, and 1994 net sales, respectively. The Company
produces a variety of nonwoven fabrics and films for use in the production of
diapers, training pants, feminine sanitary protection, baby wet wipes and
adult incontinence products. Today, the Company's customers annually consume
over two billion square yards of nonwoven fabrics for hygiene products. The
Company believes that it has a significant share of the noncaptive North
American topsheet market. Industry sources estimate that the global growth
rate for SMS and spunbond nonwovens in hygiene applications will average 8%
through 2000, primarily due to an increase in the amount of nonwoven fabric
per diaper, increased unit demand from developing countries and the rise in
use of adult incontinence products. Volume growth for nonwovens for use in
hygiene in North America is expected to be 5-6% annually through 2000.
Recent innovations by the Company have broadened its product offering and
provided customers with a full range of specialized components for unique or
distinctive products. Such recent innovations include the Isolite(TM)
topsheet, Multi-Strike(TM) transfer layer, Soft Touch(TM) backsheet fabric,
Dry-Fit(TM) leg cuff fabric, Reticulon(R) sanitary protection facings,
absorbent pads for the Serenity(R)/1/ incontinence guard and Carefree(R)/1/
panty shield and Ensorb(TM) absorbent cores. The Company produces a spunlace
"wet wipe" product for baby wipe applications in Europe for Johnson & Johnson.
This product fills the gap between standard nonwoven wipes and a quality cloth
wipe and has improved thickness and softness over standard airlaid pulp
products. The Company is the only supplier capable of providing all of the
thermal bond, adhesive bond, spunbond, SMS, coextruded apertured films,
through-air bond, spunlace and ultrasonic bond technologies which are required
in the manufacture of these products. The Company's primary hygiene products
and applications are summarized below:
Product Application
Isolite(TM) Coverstock
Multi-Strike(TM) Transfer sublayer
Soft Touch(TM) Clothlike backsheet
Dry-Fit(TM) Leg cuff for diapers
Reticulon(R) Sanitary protection facing
Ensorb(R) Absorbent cores
Novaspun Topsheets
Baby wipes Consumer--Europe
- --------
/1/Serenity(R) and Carefree(R) are Johnson & Johnson trademarks. The Company
furnishes Johnson & Johnson with products used in the manufacture of these
products.
The Company has a significant relationship with Procter & Gamble and
supplies a full range of products to Procter & Gamble on a global basis.
Approximately 14% of the Company's 1996 net sales were related to Procter &
Gamble products. Procter & Gamble and the Company's marketing and research and
development teams work closely as partners in the development of next
generation products. The Company believes that this technical support ensures
that the Company's products will continue to be incorporated into Procter &
Gamble's product designs in the future. The Company also has significant
relationships with private-label producers of diaper products, including
Confab, First Quality Products Inc. and several leading producers in Latin
America, including Absormex. The Company is also the primary supplier to
Johnson & Johnson Personal Products for its nonwoven requirements for sanitary
protection, tampon and adult incontinence products.
NEW PRODUCT DEVELOPMENT
The Company continually develops new products that incorporate the Company's
wide variety of technologies. The Company's research and development efforts
have been focused on increasing its production capacity and improving its
production processes, developing products based on the
49
<PAGE>
Company's existing technologies for new markets and developing new process
technologies to enhance existing businesses and allow entry into new
businesses. The expertise of the Company's research and development staff, who
work closely with manufacturing and marketing personnel, has enabled the
Company to develop innovative products, frequently in response to specific
customer needs. In addition, the Company frequently enters into collaborative
partnerships with its customers to develop and manufacture next-generation
products in response to its customers' changing needs. The Company believes
that these developmental partnerships enhance customer relationships by
ensuring that the Company's products will continue to be incorporated into its
customers' future products. The Company also utilizes in-plant pilot lines
that are installed in its manufacturing facilities in order to develop new
products under real manufacturing conditions prior to commercialization. The
Company currently has several projects in advanced stages of development that
it believes will present the potential for substantial growth.
APEX(R), a new surface-forming technology marketed under the name
MIRATEC(R), has the potential to displace traditional woven textile, knitted
and composite products in many applications because of its favorable price to
value ratio. APEX(R) technology uses advanced nonwoven structural web process
technology to produce low-cost textile replacement fabrics with intricate,
three-dimensional patterns. This technology, which can be applied to most
sheet structures, enhances the Company's ability to gain competitive
advantages by increasing manufacturing efficiency and product differentiation.
Pursuant to an agreement with Johnson & Johnson, products for hygiene and
healthcare applications that are manufactured utilizing the APEX(R) technology
may only be sold to Johnson & Johnson. In all other markets, such as
automotive headliners, home furnishings and filtration products, the Company
may manufacture and freely market products utilizing the APEX(R) technology.
The Company is at the forefront in the use of new generation resins, which
have the potential to produce stronger and thinner fabrics with advanced
performance characteristics such as elasticity, microporosity and surface
adhesion. The Company believes that its state-of-the-art equipment and
manufacturing processes will provide it with the flexibility to process these
advanced resins and allow it to be a leader in the introduction of these
materials for traditional as well as new end uses.
The Company has agreed in collaboration with LANL to develop and
commercialize specific applications of polymer filtration/metal separations in
aqueous, solid and vapor-phase matrices, which permit removal and recovery of
specific metal ions based on sophisticated polymer chemistry. Initial polymer
filtration techniques relate to the removal and recovery of metal ions from
electroplating and metal finishing process waste streams. Additional polymer
filtration/metal separations applications are being identified by the Company
and LANL for commercialization. These techniques have potential applications
in commercial and large-scale waste site cleanup and disposal. The Company
currently markets this product under the Metal-Set(R) brand name.
MARKETING AND SALES
The Company sells to over 1,000 customers in the domestic and international
marketplace. Approximately 60%, 21%, 11% and 8% of the Company's 1996 net
sales were to entities from manufacturing facilities in the United States,
Europe, Canada and Mexico, respectively. Johnson & Johnson, the Company's
largest customer, accounted for approximately 29% of the Company's 1996 net
sales, while sales to Procter & Gamble accounted for approximately 14% of the
Company's net sales for the same period. Sales to the Company's top 20
customers represented approximately 63% of the Company's total 1996 net sales.
The Company sells primarily to manufacturers and converters, which
incorporate the Company's products into their finished goods. The Company
employs direct sales representatives, a number of whom are engineers and each
of whom has advanced technical knowledge of the Company's products and the
applications for which they are used. The Company's sales representatives are
active in the Company's new product development efforts and are strategically
located in the major geographic
50
<PAGE>
regions in which the Company's products are utilized. The woven polyolefin
products are sold primarily through a well-established network of converters,
most of whom have been doing business with the Company for more than 16 years.
Converters add incremental value to the Company's products and service the
small order size requirements typical of many end users.
In certain new high-margin niche markets, the Company has maintained control
over distribution by dealing directly with the end-use customer through its
sales representatives. The Company offers a broad range of high-quality
products, utilizing multiple technologies and materials, allowing its sales
force to offer customers what the Company believes is the widest range and
variety of nonwoven and woven polyolefin products available to meet customers'
requirements from a single source. The Company has utilized its broadened
product base to market its products in high-value niche product areas.
MANUFACTURING PROCESSES
General. The Company's competitive strengths include low-cost, high-quality
manufacturing processes and a broad range of process technologies, which allow
the Company to offer its customers the best-suited product for each respective
application. Additionally, the Company has made significant capital
investments in modern technology and has developed proprietary equipment and
manufacturing techniques. The Company believes that it exceeds industry
standards in productivity, reduction of variability and delivery lead time.
The Company has a wide range of manufacturing capabilities (many of which are
patented) that allow it to produce specialized products which, in certain
cases, cannot be reproduced in the market. Substantially all of the Company's
manufacturing sites have plant-wide real time control and monitoring systems
that constantly monitor key process variables using a sophisticated closed
loop system of computers, sensors and custom software.
Nonwovens. The Company believes that it has the most comprehensive array of
nonwoven manufacturing technologies in the industry. The Company has
capabilities spanning the entire spectrum of nonwoven technologies, including
the following manufacturing processes: spunbond, SMS, thermal and adhesive
bond, spunlace, wet-laid, film extrusion and aperturing, through-air bond,
ultrasonic bond and tenters, which is a finishing process.
Nonwoven rollgoods typically have three process steps: web formation, web
consolidation or bonding and finishing. Web formation is the process by which
previously prepared fibers, filaments or films are arranged into loosely held
networks called webs, batts or sheets. In each process, the fiber material is
laid onto a forming or conveying surface, which may be dry, wet or molten. The
dry-laid process utilizes textile fiber processing equipment, called "cards,"
that have been specifically designed for high-capacity nonwoven production.
The carding process converts bales of entangled fibers into uniform oriented
webs that then feed into the bonding process. The wet-laid process utilizes
papermaking technology in which the fibers are suspended in a water slurry and
deposited onto a moving screen, allowing the water to pass through and the
fibers to collect. In a molten polymer-laid process, extrusion technology is
used to transform polymer pellets into filaments, which are laid on a
conveying screen and interlocked by thermal fusion. In this process, the fiber
formation, web formation and web consolidation are generally performed as a
continuous simultaneous operation, making this method very efficient.
Web consolidation is the process by which the fibers or film are bonded
together using either mechanical, thermal, chemical or solvent means. The
bonding method greatly influences the end products' strength, softness, loft
and utility. The principal bonding processes are thermal bond, resin or
adhesive bond, hydroentanglement or spunlace, binder fiber or through-air
bond, calender, spunbond, meltblown, SMS, ultrasonic bond and needlepunch.
Thermal bond utilizes heated calender rolls with embossed patterns to point
bond or fuse the fibers together. In the resin bond process, an adhesive,
typically latex, is pad rolled onto the web to achieve a bond. Spunlace, or
51
<PAGE>
hydroentanglement, uses high pressure water jets to mechanically entangle the
fibers. Through-air bonding takes place through the fusion of bi-component
fibers in a blown hot air drum. Spunbond and meltblown take advantage of the
melt properties of the resins and may use thermal fusion with the aid of
calender rolls. SMS is the integrated process of combining spunbond and
meltblown sheets in a laminated structure, creating very strong, lightweight
and uniform fabrics. Ultrasonic bonding utilizes high-frequency sound waves
that heat the bonding sites. Needlepunch is a mechanical process in which beds
of needles are punched through the web, entangling the fibers.
Finishing, or post-treatment, adds value and functionality to the product
and typically includes surface treatments for fluid repellency, aperturing,
embossing, laminating, printing and slitting. Spunlace and resin bond systems
also have a post-treatment drying or curing step. Certain products also go
through an aperturing process in which holes are opened in the fabric,
improving absorbency.
Films and Wovens. The woven/film process begins with plastic resin, which is
extruded into a thin plastic film. The film is slit into narrow tapes and
stretched or "oriented," the process through which it derives its high
strength. The tapes are wound onto spools which feed weaving machines. In the
final step, the product is coated for water or chemical resistance,
ultraviolet stabilization and protection, flame retardancy, color and other
specialized characteristics. The Company operates 160-inch and 80-inch coating
lines that have been equipped with the latest technology for gauge control,
print treating, lamination, anti-slip finishes and perforation. The 160-inch
line is one of only two lines of that size in North America. At its Portland,
Oregon facility, the Company extrudes specialized films which are used to
laminate the woven product to paper and has the additional capability of
printing up to four colors on one of the widest printing presses in North
America.
Outside Converting. The Company entered into a five-year manufacturing and
distribution agreement commencing in August 1993 with BMR to convert,
warehouse and distribute a wide range of wiping products. Under the agreement,
the Company sells base fabrics produced at its Benson, North Carolina
manufacturing facility to BMR. BMR then cuts, folds and packages the fabric
using Company-owned machinery in a dedicated facility on behalf of the Company
in accordance with specifications. BMR distributes the products directly to
the Company's customers, while marketing, sales and order processing are the
responsibility of the Company. In Europe, the Company operates its own
cutting, folding and packaging machines at its Cuijk manufacturing facility.
COMPETITION
The Company's primary competitors in its industrial and specialty product
markets are Du Pont, Freudenberg Nonwovens L.P., Kimberly-Clark Corporation
("Kimberly-Clark"), Dexter Nonwovens Division, Kuraray Co., Ltd., Veratec (a
subsidiary of International Paper Co.) and Reemay Inc. (a subsidiary of BBA
Group plc) for nonwoven products and Intertape Polymer Group Inc. and Amoco
Fabrics and Fibers Co. for woven products. Generally, product innovation and
performance, quality, service and cost are the primary competitive factors,
with technical support being highly valued by the largest customers.
The Company's primary competitors in its wiping product markets are Du Pont
in nonwovens and paper producers such as Fort Howard Corporation ("Fort
Howard"), Atlantic Mills Inc., James River Corporation of Virginia ("James
River") and Kimberly-Clark. On May 5, 1997, Fort Howard and James River
announced that they had entered into a definitive merger agreement to combine
the two companies. In addition to like-kind products, the Company's wiping
products also compete with used rags and linen. Generally, cost, distribution
and utility are the principal factors considered in food service and
janitorial end uses, while product innovation, performance and technical
support are the most important factors for specialty and industrial wiping
products.
52
<PAGE>
The Company's primary competitors in its medical product markets are Du Pont
and FiberWeb Group, Inc. (a subsidiary of BBA Group plc). Price, distribution,
variety of product offerings and performance are the chief competitive factors
in this product category.
The Company's primary competitors in its hygiene product categories are
Veratec, FiberWeb Group, Inc. and Poly-Bond Inc. in North America, Corovin
GmbH and J.W. Suominen O.Y. in Europe and Uni-Charm Corp. in Japan. Generally,
product cost, technical capacity and innovation and customer relationships are
the most important competitive factors in these markets. The Company believes
that it is an industry leader in each of these categories.
A number of the Company's niche product applications are sold into select
specialized markets, and the Company believes that the size of such markets,
relative to the amount of capital required for entry, as well as the advanced
manufacturing processes and technical support required to service them,
present barriers to entry. There can be no assurance, however, that these
specialized markets, particularly as niche product applications become
standardized over time, will not attract additional competitors that could
have greater financial, technological, manufacturing and marketing resources
than the Company. See "Risk Factors--Competition in the Company's Markets."
RAW MATERIALS
The primary raw materials used in the manufacture of most of the Company's
products are polypropylene and polyester fiber, polyethylene and polypropylene
resin, and, to a lesser extent, rayon and tissue paper. In 1996, polypropylene
fiber accounted for approximately 23% of the Company's cost of sales. The
prices of polypropylene and polyethylene are a function of, among other
things, manufacturing capacity, demand and the price of crude oil and natural
gas liquids. Historically, the prices of polypropylene and polyethylene have
fluctuated, such as in late 1994 and early 1995 when resin prices increased by
approximately 60%. The sharp increase was primarily due to short-term
interruptions in production capacity and increased demand as a result of an
expanding economy. By mid-1995, supply had increased, reducing prices, which
reductions the Company expects will continue as incremental capacity continues
to be added. In 1996, polypropylene fiber prices remained stable while resin
prices, on average, trended lower. Polyethylene resin prices were lower in the
first half of 1996, but rose in the second half of the year. Polyester fiber
and resin prices experienced substantial declines worldwide during 1996.
There can be no assurance that the prices of polypropylene and polyethylene
will not increase in the future or that the Company will be able to pass on
such increases to its customers as it has generally been able to do in the
past. A significant increase in the prices of polyolefin resins that cannot be
passed on to customers could have a material adverse effect on the Company's
results of operations and financial conditions.
The Company's major suppliers of polypropylene fiber are Hercules and
Danaklon, while its major supplier of polyethylene is Novacor. The Company's
major suppliers of rayon fiber are Lenzing Fibers and Courtaulds Fibers, while
its major suppliers of polyester are Wellman and Du Pont. The Company
purchases its polypropylene resin from Indelpro and Montell, and purchases its
tissue paper from Crown Vantage.
The Company believes that the loss of any one or more of its suppliers would
not have a long-term material adverse effect on the Company because other
manufacturers with whom the Company conducts business would be able to fulfill
the Company's requirements. However, the loss of the Company's suppliers
could, in the short term, adversely affect the Company's business until
alternative supply arrangements were secured. In addition, there is no
assurance that any new supply arrangements entered into by the Company will
have terms as favorable as those contained in current supply arrangements. The
Company has not experienced any significant disruptions in supply as a result
of shortages in raw materials.
53
<PAGE>
ENVIRONMENTAL
The Company is subject to a broad range of federal, foreign, state and local
laws and regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the
Company are laws relating to air emissions, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
applicable environmental requirements.
The Company is also subject to laws, such as CERCLA, that may impose
liability retroactively and without fault for releases or threatened releases
of hazardous substances at on-site or off-site locations. The Company is not
aware of any releases for which it may be liable under CERCLA or any analogous
provision.
Actions by federal, state and local governments in the United States and
abroad concerning environmental matters could result in laws or regulations
that could increase the cost of producing the products manufactured by the
Company or otherwise adversely affect demand for its products. For example,
certain local governments have adopted ordinances prohibiting or restricting
the use or disposal of certain plastic products, such as certain of the
plastic wrapping materials which are produced by the Company. Widespread
adoption of such prohibitions or restrictions could adversely affect demand
for the Company's products and thereby have a material adverse effect upon the
Company. In addition, a decline in consumer preference for plastic products
due to environmental considerations could have a material adverse effect upon
the Company.
Most of the Company's manufacturing processes are mechanical and are
therefore considered to be environmentally benign. The polyolefin resins are
readily recyclable, and the Company maintains a network of recyclers to
receive post-industrial waste for certain of the Company's products. In
addition, each of the Company's manufacturing sites has equipment and
procedures for reclaiming a majority of internally generated scrap, thus
reducing the amount of waste sent to local landfills. As a result, the Company
does not currently anticipate any material adverse effect on its operations,
financial condition or competitive position as a result of its efforts to
comply with environmental requirements. Some risk of environmental liability
is inherent, however, in the nature of the Company's business, and there can
be no assurance that material environmental liabilities will not arise. It is
also possible that future developments in environmental regulation could lead
to material environmental compliance or cleanup costs.
PATENTS AND TRADEMARKS
The Company considers its patents, patent licenses and trademarks, in the
aggregate, to be of material importance to its business and seeks to protect
this proprietary know-how in part through United States and foreign patent and
trademark registrations. The Company maintains over 40 registered trademarks
and over 70 patents or patent licenses in the United States. In addition, the
Company maintains certain trade secrets for which, in order to maintain the
confidentiality of such trade secrets, it has not sought patent protection.
LITIGATION
The Company is currently a party to various claims and legal actions which
arise in the ordinary course of business. The Company believes such claims and
legal actions, individually and in the aggregate, will not have a material
adverse effect on the business, financial condition or results of operations
of the Company.
54
<PAGE>
PROPERTIES
The Company and its subsidiaries operate the following principal
manufacturing plants and other facilities, all of which are owned, except as
noted. All of the Company's owned properties are subject to liens in favor of
the lenders under the Amended Credit Facility.
<TABLE>
<CAPTION>
TOTAL
SQUARE
LOCATION FEET PRINCIPAL FUNCTION
-------- ------- ------------------
<S> <C> <C>
North Little Rock, Arkansas 364,000 Manufacturing
(Plant 1).....................
North Little Rock, Arkansas 119,000 Manufacturing and Warehousing
(Plant 2).....................
Rogers, Arkansas............... 126,000 Manufacturing
Rogers, Arkansas............... 15,000(1) Warehousing
Gainesville, Georgia........... 121,000(1) Manufacturing and Warehousing
Dayton, New Jersey............. 30,000(2) Administration
Landisville, New Jersey........ 245,000 Manufacturing, Sales, Marketing and
Research and Development
Vineland, New Jersey........... 83,500(3) Manufacturing
Benson, North Carolina......... 469,000 Manufacturing, Sales, Marketing and
Warehousing
Raleigh, North Carolina........ 5,300(1) Administration
Mooresville, North Carolina.... 73,500 Manufacturing, Sales, Marketing and
Warehousing
Portland (Clackamas), Oregon... 30,000 Manufacturing
North Charleston, South 4,500(3) Corporate
Carolina......................
Vancouver, British Columbia.... 60,000(1) Manufacturing
Mississauga, Ontario........... 2,900(1) Sales and Marketing
North Bay, Ontario............. 300,000 Manufacturing
North Bay, Ontario............. 28,800(1) Warehousing
Neunkirchen, Germany........... 108,000 Manufacturing, Sales and Marketing
Guadalajara, Mexico............ 6,200(1) Sales, Marketing and Warehousing
Monterrey, Mexico.............. 2,325(1) Sales, Marketing and Warehousing
Mexico City, Mexico............ 9,850(1) Sales, Marketing and Warehousing
San Luis Potosi, Mexico........ 100,000 Manufacturing and Marketing
Cuijk, The Netherlands......... 364,000 Warehousing, Manufacturing, Sales,
Marketing, Warehousing and Research
and Development
</TABLE>
- --------
(1) Leased.
(2) The Company owns this 239,200 square foot facility, leasing it to an
unaffiliated tenant, and subleases 30,000 square feet from such tenant.
The tenant can terminate the Company's sublease upon 12 months' notice.
(3) Leased from entities affiliated with one of the Company's stockholders.
See "Certain Relationships and Related Transactions."
EMPLOYEES
As of June 28, 1997, the Company employed approximately 2,400 persons.
Approximately 279 of the employees in Canada, 20 in Portland, Oregon, 76 in
North Little Rock, Arkansas, 133 in Germany, 188 in Mexico, and 241 in The
Netherlands are represented by labor unions or trade councils. The collective
bargaining agreement for the employees in North Bay, Ontario is scheduled to
expire on December 4, 1997. The Company considers its employee relations to be
very good.
55
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Company's
directors and executive officers as of August 1, 1997:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jerry Zucker................ 47 Chairman, President, Chief Executive Officer
and Director
James G. Boyd............... 52 Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and Director
S. Grant Reeves............. 41 Vice President
Thomas E. Phillips.......... 47 Group Vice President--Finance, Systems and
Administration, Nonwovens
James L. Schaeffer.......... 46 Group Vice President--Operations/
Engineering, Nonwovens
Gregg Wilkinson............. 45 Group Vice President--Marketing and Sales,
Nonwovens
Peter C. Bourgeois.......... 53 Vice President, Wovens
Bruce V. Rauner............. 41 Director
David A. Donnini............ 32 Director
Michael J. McGovern......... 34 Director
L. Glenn Orr, Jr. .......... 56 Director
John F. ("Jack") Ruffle..... 60 Director
</TABLE>
The following table sets forth certain information concerning the
Guarantors' directors and officers as of August 1, 1997. Officers of the
Guarantors serve at the discretion of the respective board of directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<C> <C> <S>
Jerry Zucker..................... 47 Chairman, President, Chief Executive
Officer and Director of PGI Polymer,
FiberTech, FiberGol, Technetics,
Chicopee Holdings, Chicopee, PNA,
FNA, Fabrene Corp., and Fabrene
Group L.L.C. Chairman, President,
Chief Executive Officer of Fabrene
Group.
James G. Boyd.................... 52 Executive Vice President, Treasurer,
Secretary and Director of PGI
Polymer, FiberTech, FiberGol,
Technetics, Chicopee Holdings,
Chicopee, PNA, FNA, Fabrene Corp.,
Fabrene Group L.L.C. and Fabrene
Group.
Peter C. Bourgeois............... 53 Director of Fabrene Corp. and Fabrene
Group.
Bruce V. Rauner.................. 41 Director of PGI Polymer, FiberTech,
FiberGol and Technetics.
David A. Donnini................. 32 Director of PGI Polymer, FiberTech,
FiberGol and Technetics.
</TABLE>
56
<PAGE>
JERRY ZUCKER has served as Chairman, President, Chief Executive Officer and
a Director of the Company, PGI Polymer, FiberTech, FiberGol, Technetics,
Chicopee Holdings, Chicopee, PNA, FNA, Fabrene Corp., and Fabrene Group L.L.C.
since their inception. Mr. Zucker has served as Chairman, President and Chief
Executive Officer of Fabrene Group since its inception. In addition to his
duties with the Company and the above-named subsidiaries, Mr. Zucker presently
serves as Chairman and Chief Executive Officer of InterTech, one of the
Company's principal stockholders, and has served in this capacity since 1983.
JAMES G. BOYD has served as Executive Vice President, Treasurer, Secretary
and a Director of the Company, PGI Polymer, FiberTech, FiberGol, Technetics,
Chicopee Holdings, Chicopee, PNA, FNA, Fabrene Corp., Fabrene Group L.L.C. and
Fabrene Group since their inception. In 1986, Mr. Boyd joined InterTech where
he currently serves as Executive Vice President, Treasurer and Director and
performs various treasury, financial and legal functions for the Company and
its affiliates.
S. GRANT REEVES has served as Vice President of the Company since its
inception. Mr. Reeves joined lnterTech in 1986 and served as General Manager
at Fabrene from 1991 through June 1994.
THOMAS E. PHILLIPS has served as Group Vice President--Finance, Systems and
Administration, Nonwovens, since March 1995. From 1993 until March 1995, Mr.
Phillips served as General Manager and Vice President of FiberTech. Prior to
joining FiberTech, Mr. Phillips served as a Vice President (1986-1992) and a
Senior Vice President (1992-1993) of Reemay, Inc., where his responsibilities
included financial, systems, human resources and administrative functions.
JAMES L. SCHAEFFER has served as Group Vice President--
Operations/Engineering, Nonwovens since March 1995. From 1992 until March
1995, Mr. Schaeffer served as Vice President--Operations/Engineering of
FiberTech. Prior to joining FiberTech, Mr. Schaeffer served as General Manager
for Scott Nonwovens at the Landisville facility from 1990 to 1992.
GREGG WILKINSON has served as Group Vice President--Marketing and Sales,
Nonwovens, since March 1995. From July 1994 until March 1995, Mr. Wilkinson
served as Vice President--Marketing, Sales and Technology of FiberTech and
from August 1993 until July 1994, Mr. Wilkinson served as Director-New
Business Development. For the period 1987 to August 1993, Mr. Wilkinson served
in sales and marketing management capacities with Reemay, Inc., a former
InterTech affiliate.
PETER C. BOURGEOIS has served as Vice President, Wovens, since 1993. Prior
to attaining this position, Mr. Bourgeois had served as Vice President--
Marketing and Sales for Fabrene since June 1989. Mr. Bourgeois has served as a
Director of Fabrene Corp. and Fabrene Group since their inception.
BRUCE V. RAUNER has served as a Director of the Company, PGI Polymer,
FiberTech, FiberGol and Technetics since their inception. Mr. Rauner has been
a Principal and General Partner with Golder, Thoma, Cressey, Rauner, Inc.
("Golder, Thoma") in Chicago, Illinois since 1984, where he is responsible for
originating and making new investments, monitoring portfolio companies and
recruiting and training associates. Mr. Rauner is also a director of Lason,
Inc., Coinmach Laundry Corporation and COREStaff, Inc.
DAVID A. DONNINI has served as a Director of the Company, PGI Polymer,
FiberTech, FiberGol and Technetics since their inception. Mr. Donnini has been
a Principal of Golder, Thoma since 1993. From 1991 to 1993, Mr. Donnini was an
Associate with Golder, Thoma. Prior to joining Golder, Thoma in 1991, Mr.
Donnini attended The Stanford Graduate School of Business. Mr. Donnini is also
a director of Coinmach Laundry Corporation.
MICHAEL J. MCGOVERN has served as a Director of the Company since May 1996.
Mr. McGovern has served as Managing Director in the Global Investment Banking
Division of Chase Securities Inc. since April 1996. Prior thereto, Mr.
McGovern was a Managing Director in Global Corporate Finance
57
<PAGE>
for The Chase Manhattan Bank, N.A. from January 1996 until April 1996. Mr.
McGovern was a Vice President in Global Corporate Finance for The Chase
Manhattan Bank, N.A. from December 1990 until January 1996.
L. GLENN ORR, JR. has served as a Director of the Company since February
1997. Mr. Orr has been Chairman, President and Chief Executive Officer of Orr
Management Company, a management consulting company, since February 1995. From
October 1990 until February 1995, Mr. Orr was Chairman, President and Chief
Executive Officer of Southern National Corporation, a bank holding company.
Mr. Orr is also a director of Southern National Corporation, Ladd Furniture
Company and Highwood Properties.
JOHN F. ("JACK") RUFFLE has served as a Director of the Company since May
1997. Mr. Ruffle served as Vice Chairman and a director of J.P. Morgan & Co.
Incorporated and Morgan Guaranty Trust Company of New York from 1985 through
his retirement in May 1993. Mr. Ruffle is a past president of the Board of
Trustees of the Financial Accounting Foundation and a past chairman of the
Financial Executives Institute. Mr. Ruffle is presently also a director of
Bethlehem Steel Corporation, American Shared Hospital Services, Inc., Trident
Corp., Wackenhut Corrections Corp. and The Johns Hopkins University, and is a
trustee of JPM Series Trust II.
The Company's Board currently consists of seven directors, who are divided
into three classes as nearly equal number as possible, with Messrs. Boyd's and
McGovern's terms expiring in 1998, Messrs. Zucker's and Rauner's terms
expiring in 1999, and Messrs. Donnini's, Orr's and Ruffle's terms expiring in
2000. At each annual meeting of stockholders, successors to the class of
directors whose term expires at such meeting will be elected to serve for
three-year terms or until their successors are duly elected and qualified. The
Board has the power to appoint the officers of the Company. Each officer will
hold office for such term as may be prescribed by the Board and until such
person's successor is chosen and qualified or until such person's death,
resignation or removal.
There are three Committees of the Company's Board: the Compensation
Committee, the 1996 Key Employee Stock Option Plan Committee (the "Stock
Option Committee") and the Audit Committee. The Compensation Committee, which
is composed of Messrs. Donnini and Rauner, reviews and makes recommendations
to the Board regarding salaries, compensation and benefits of executive
officers and key employees of the Company. The Stock Option Committee, which
is composed of Messrs. Donnini and Rauner, is empowered to grant options to
purchase Common Stock of the Company to any key employee in accordance with
the 1996 Key Employee Stock Option Plan. The Audit Committee is composed of
Messrs. McGovern, Donnini and Rauner. Among other duties, the Audit Committee
reviews the internal and external financial reporting of the Company, reviews
the scope of the independent audit, considers comments by the auditors
regarding internal controls and accounting procedures and provides the
management's response to the auditors' comments. The Company does not have a
nominating committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INITIAL PUBLIC OFFERING AND RECAPITALIZATION
In May 1996, the Company completed its initial public offering of 11.5
million shares of Common Stock at a price of $18.00 per share (the "Initial
Public Offering"). Net proceeds to the Company after underwriting fees and
discounts approximated $190.8 million. Pursuant to the Recapitalization
Agreement dated May 6, 1996, all of the warrants to acquire shares of Class C
Common Stock were exercised and the outstanding shares of Class A Common
Stock, Class B Common Stock and Class C Common Stock were converted into a
single class of Common Stock concurrently with the Initial
58
<PAGE>
Public Offering. In addition, the Company's Board of Directors approved an
approximately 19.97 to 1 stock split (collectively, with the effect of the
Recapitalization Agreement, the "Recapitalization"). In addition, the Company
(i) effectively repaid all outstanding indebtedness under the FiberTech and
Chicopee credit facilities and terminated such credit facilities, redeemed
$50.0 million principal amount of the Senior Notes at premium of 112.25% plus
accrued, but unpaid, interest and entered into the Old Credit Facility,
consisting of a $200.0 million term loan and a $125.0 million revolving credit
facility, (ii) redeemed the preferred stock of Chicopee for approximately
$46.9 million, and (iii) redeemed the Company Preferred Stock for
approximately $10.5 million.
Prior to and in connection with the Initial Public Offering, the Company
solicited the consents from holders of the Senior Notes to certain amendments
to the Senior Notes Indenture. Chase Securities Inc. acted as Solicitation
Agent in connection with the solicitation of such consents, as well as Dealer
Manager and Solicitation Agent in connection with the Tender Offer and Consent
Solicitation consummated concurrently with the Initial Offering. Chase
Securities Inc. also acted as co-manager and representative in the Initial
Public Offering. In connection therewith, Chase Securities Inc. received
customary fees and discounts, and was indemnified against certain liabilities,
including liabilities under the Securities Act.
Chase, an affiliate of Chase Securities Inc., acted as agent and lender
under the former FiberTech and Chicopee credit facilities and the Old Credit
Facility. Chase acts as lender and agent under the Amended Credit Facility.
For each such facility, Chase received or will receive customary syndication
fees, commitment fees and annual agency fees.
For a description of certain relationships between the Company and Chase
Securities Inc., Chase and their affiliates, see "Plan of Distribution."
VOTING AGREEMENT
Concurrently with the Initial Public Offering, certain of the stockholders
entered into an agreement (the "Voting Agreement") providing, among other
things, for the nomination and voting for up to six directors of the Company
by such stockholders, who own approximately 46.6% of the outstanding Common
Stock. Under the Voting Agreement, each of the stockholders party thereto will
agree to vote its shares in favor of the Company's Chief Executive Officer and
Executive Vice President, two nominees designated by Golder, Thoma, Cressey
Fund III Limited Partnership ("GTC Fund III") and two outside directors to be
jointly designated by GTC Fund III and lnterTech. Each director nominated by
parties to the Voting Agreement may be removed only at the request of the
party who nominated such director. The Voting Agreement terminates at such
time as (a) GTC Fund III and its affiliates cease to own at least 10% of the
Common Stock and (b) InterTech and its affiliates cease to own at least 10% of
the Common Stock. The stockholders who are parties to the Voting Agreement
hold, in the aggregate, a substantial amount of the voting power of the
Company and thus, if acting in unison or in various combinations, could likely
elect a majority of the directors of the Company even if the Voting Agreement
were not in place.
THE FNA ACQUISITION
In August 1996, the Company completed the acquisition of FNA and its parent,
PNA, collectively a significant producer of polypropylene fabrics for the
nonwovens industry. The transaction, which was financed for approximately
$48.0 million with a combination of borrowings under the Old Credit Facility
and working capital, was accounted for under the purchase method of
accounting. The acquisition of FNA's modern plant facility, built in 1992 and
expanded in 1994, strengthened the Company's strategic position in the hygiene
materials market and broadened its offering of medical and agricultural
materials.
OTHER TRANSACTIONS
The Company's corporate headquarters are housed in space leased by InterTech
from an affiliate of InterTech. A portion of the payments and other expenses,
primarily insurance and allocated costs, are charged to the Company. Such
amounts approximated $2.1 million during 1996.
59
<PAGE>
On September 1, 1993, ConX, Inc. ("ConX"), a subsidiary of InterTech,
acquired a manufacturing facility in Vineland, New Jersey for the benefit of
Technetics, and entered into a lease of the facility to Technetics at a base
rate of $2.50 per square foot, subject to adjustment to account for inflation,
which is comparable to similar properties in the area. The lease terminates on
August 31, 2003 and is subject to a purchase option at termination. The leased
facility consists of 83,500 square feet of manufacturing space and was
acquired by ConX for $1,250,000.
On January 11, 1996, the Company authorized and issued 10,000 shares of
Company Redeemable Preferred Stock to ConX II, Inc. ("ConX II") for $10.0
million cash. Of the $10.0 million purchase price, an aggregate of $4.0
million was loaned to ConX II by InterTech, ZB Holdings (a wholly owned
subsidiary of InterTech) and Mr. Zucker, while $6.0 million was advanced to
ConX II by a third-party lender (the repayment of which was guaranteed by GTC
Fund III). The Company used a portion of the proceeds of the Initial Public
Offering to redeem all of the Company Redeemable Preferred Stock on May 15,
1996.
SECURITY OWNERSHIP
The following information with respect to the outstanding shares of Common
Stock beneficially owned by each director and nominee for director of the
Corporation, the chief executive officer and the four other most highly
compensated executive officers, all beneficial owners of more than five
percent of the Common Stock known to the Corporation and the directors and
executive officers as a group is furnished as of August 1, 1997, except as
otherwise indicated.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------
NUMBER OF PERCENT OF
NAME SHARES(1) CLASS(2)
- ---- ---------- ----------
<S> <C> <C>
Jerry Zucker(3)(4)(5).................................... 5,372,037 16.8%
James G. Boyd(4)(5)(6)................................... 4,337,979 13.6
The InterTech Group, Inc.(5)(7).......................... 3,861,208 12.1
Golder, Thoma, Cressey Fund III Limited
Partnership(4)(5)(8).................................... 7,109,096 22.2
Bruce V. Rauner(8)....................................... 7,109,096 22.2
David A. Donnini......................................... 0 *
Michael J. McGovern...................................... 0 *
John F. ("Jack") Ruffle.................................. 5,000 *
L. Glenn Orr, Jr. ....................................... 0 *
Thomas E. Phillips....................................... 1,500 *
James L. Schaeffer....................................... 2,000 *
Gregg Wilkinson.......................................... 0 *
The Chase Manhattan Foundation(5)(9)..................... 1,152,131 3.6
Leeway & Co.(5)(10)...................................... 795,838 2.5
Alliance Capital Management L.P.(11)..................... 4,134,289 12.9
The Capital Group Companies, Inc.(12).................... 2,042,700 6.4
All directors and executive officers as a group (12 per-
sons)(13)............................................... 12,971,404 40.5
</TABLE>
- --------
(1) Each holder has sole voting and investment power with respect to the
shares listed unless otherwise indicated.
(2) Percentages less than one percent are denoted by an asterisk.
60
<PAGE>
(3) Includes 1,510,829 shares held by Mr. Zucker, 3,599,557 shares held by
InterTech, and 261,651 shares held by FTG. Mr. Zucker is Chairman, Chief
Executive Officer and President of InterTech and FTG, and as a result may
be deemed to have voting and dispositive power over the shares held by
InterTech and FTG.
(4) Each of these Stockholders has entered into an agreement pursuant to
which, upon the occurrence of certain events, Messrs. Zucker and Boyd and
Chase Manhattan Investment Holdings, Inc. ("CMIHI"), and affiliate of
Chase, would acquire additional shares of Common Stock from GTC Fund III,
which would result in an increase in the ownership of Common Stock by
Messrs. Zucker and Boyd and CMIHI and a corresponding decrease in the
ownership of Common Stock by GTC Fund III.
(5) Each of these parties has entered into an agreement providing for the
election of directors. Each such party disclaims beneficial ownership of
shares of Common Stock owned by each other party.
(6) Includes 476,771 shares held by Mr. Boyd, 3,599,557 shares held by
InterTech and 261,651 shares held by FTG. Mr. Boyd is Executive Vice
President, Secretary and Treasurer of InterTech and FTG.
(7) Includes 3,599,557 shares held by InterTech and 261,651 shares held by
FTG. The address of InterTech is 4838 Jenkins Avenue, North Charleston, SC
29405.
(8) All of the reported shares are held by GTC Fund III, of which Golder,
Thoma, Cressey & Rauner, L.P. is the general partner. Mr. Rauner is a
general partner of Golder, Thoma, Cressey & Rauner, L.P., but disclaims
beneficial ownership of such shares. The address of GTC Fund III is c/o
Golder, Thoma, Cressey, Rauner, Inc., 6100 Sears Tower, Chicago, IL 60606-
6402.
(9) The address of The Chase Manhattan Foundation ("CMF"), an affiliate of
CMIHI and Chase, is 600 Fifth Avenue--3rd Floor, New York, NY 10020.
(10) The address of Leeway & Co. is c/o State Street Bank and Trust Co.,
Master Trust Division--Q4W, P.O. Box 1992, Boston, MA 02110.
(11) Alliance Capital Management L.P. reported as of December 31, 1996, sole
voting power of 3,639,289 shares of Common Stock and sole dispositive
power of 3,827,689 shares of Common Stock. The Equitable Life Assurance
Society of the United States reported sole voting and dispositive power
of 304,600 shares of Common Stock. Donaldson, Lufkin & Jenrette
Securities Corporation reported shared voting and dispositive power of
2,000 shares of Common Stock. In addition, AXA Assurances I.A.R.D.
Mutuelle AXA Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle,
Alpha Assurances Vie Mutuelle AXA Courtage Assurance Mutuelle, AXA and
The Equitable Companies Incorporated each reported sole voting power over
3,943,889 shares of Common Stock, sole dispositive power over 4,132,289
shares of Common Stock and shared dispositive power over 2,000 shares of
Common Stock. The information set forth herein is based solely on a Form
13G filed by such entities for the year ended December 31, 1996. The
addresses for such entities, as so reported, were: Alpha Assurances
I.A.R.D. Mutuelle and Alph Assurances Vie Mutuelle, 100-101 Terrasse
Boieldicu, 92042 Paris La Defense, France; AXA Assurances I.A.R.D.
Mutuelle and AXA Assurances Vie Mutuelle, 21, rue de Chateaudun, 75009
Paris, France; AXA Courtage Assurance Mutuelle, 26, rue Louis le Grand,
75002 Paris, France; AXA, 23, Avenue Matignon, 75008 Paris, France; and
The Equitable Companies Incorporated, 787 Seventh Avenue, New York, New
York 10019.
(12) The Capital Group Companies reported as of December 31, 1996, sole voting
power over 654,400 shares of Common Stock and sole dispositive power over
2,042,700 shares of Common Stock. The Capital Group Companies indicated
that such shares are held by either Capital Research and Management
Company or Capital Guardian Trust Company. The information set forth
herein is based solely on a Form 13G filed by such entities for the year
ended December 31, 1996. The address for such entities, as so reported,
was 333 South Hope Street, Los Angeles, California 90071.
(13) Includes shares held by GTC Fund III, InterTech and FTG.
61
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
AMENDED CREDIT FACILITY
General. As part of the Refinancing, the Company and its subsidiaries
entered into the Amended Credit Facility with a group of lenders (the
"Lenders") and with Chase, as Agent, by amending and restating the Old Credit
Facility. The Amended Credit Facility provides for secured revolving credit
facilities of up to $325,000,000. Subject to certain terms and conditions to
be agreed upon by the Company and Chase, a portion of the Amended Credit
Facility may be dedicated to a letter of credit facility. Consistent with the
terms of the Old Credit Facility, a portion of the Amended Credit Facility may
be denominated in Dutch guilders and in Canadian dollars at the Company's
request. All indebtedness under the Amended Credit Facility (including any
hedging arrangements provided by a Lender) is guaranteed, on a joint and
several basis, by each and all of the direct and indirect domestic
subsidiaries of the Company and by Fabrene Group.
Security. The Amended Credit Facility and the related guarantees are secured
by (i) a lien on substantially all of the assets of the Company and its
domestic subsidiaries, (ii) a pledge of all or a portion of the stock of the
direct and indirect subsidiaries of the Company, (iii) a lien on substantially
all of the assets of direct foreign borrowers (to secure direct borrowings by
such borrowers), and (iv) a pledge of certain secured intercompany notes
issued to the Company by non-domestic subsidiaries.
Maturity; Prepayment. The Amended Credit Facility terminates approximately
six years from the date that the Refinancing (including the Initial Offering)
was consummated. The loans will be subject to mandatory prepayment out of
proceeds received in connection with certain casualty events, asset sales and
debt issuances.
Interest Rates. The interest rate applicable to borrowings under the Amended
Credit Facility is, in the case of U.S. dollar denominated loans, the Agent's
base rate or LIBOR, at the Company's option, plus a specified margin. With
respect to portions of the Amended Credit Facility that are denominated in
Dutch guilders or Canadian dollars, the applicable interest rate is based on
the applicable Eurocurrency rate or the Agent's Canadian base rate,
respectively, or at such other rate or rates as may be negotiated between the
Company and the Lenders, plus a specified margin. The applicable margin for
base rate loans ranges from 0% to 1%, and from 0.75% to 2.25% for LIBOR loans,
based on the Company's ratio of total consolidated indebtedness to
consolidated EBITDA calculated on a rolling four quarter basis.
Covenants; Events of Default. The Amended Credit Facility contains covenants
and events of default customary for financings of this type.
OLD CREDIT FACILITY
In connection with the Initial Public Offering, the Company and its
subsidiaries entered into a credit facility dated as of May 15, 1996 among the
Company, its subsidiaries, the financial institutions listed therein, and
Chase, as administrative agent and operations agent (the "Old Credit
Facility"). The Old Credit Facility provided for term loans in an aggregate
principal amount of $195.0 million and revolving loans in an aggregate
principal amount not to exceed $125.0 million. Of the term loans, $130.0
million in the aggregate was denominated in U.S. dollars and was made to the
Company, Chicopee and FiberTech, $40.0 million of the term loans was
denominated in Dutch guilders and was made to Chicopee Holdings B.V., and
$30.0 million of the term loans was denominated in Canadian dollars and was
made to Fabrene. Revolving loans may be denominated in U.S. dollars, Dutch
guilders (up to $15.0 million) and Canadian dollars (up to $5.0 million). All
indebtedness under the Old Credit Facility was guaranteed (in whole or in
part) by each of the Company's domestic and certain of its foreign
subsidiaries. In connection with the Refinancing, the Old Credit Facility was
amended to become the Amended Credit Facility. See "The Refinancing."
62
<PAGE>
SENIOR NOTES
In June 1994, the Company issued and sold (the "1994 Notes Offering") $150.0
million aggregate principal amount of 12 1/4% Senior Notes due 2002 (the "1994
Notes") pursuant to a Purchase Agreement dated June 17, 1994 among the
Company, Chase Securities, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co. (the "1994 Initial Purchasers") and an
indenture dated as of June 24, 1994 between the Company and First Union
National Bank of South Carolina ("First Union"), as amended by the First
Supplemental Indenture dated as of March 15, 1995 between the Company and
First Union, the Second Supplemental Indenture dated as of September 14, 1995
among the Company, First Union and Harris Trust and Savings Bank, as trustee
(the "Senior Notes Trustee"), the Third Supplemental Indenture dated as of
April 9, 1996 between the Company and the Senior Notes Trustee, the Fourth
Supplemental Indenture dated as of August 14, 1996 between the Company and the
Senior Notes Trustee and the Fifth Supplemental Indenture dated as of June 19,
1997 between the Company and the Senior Notes Trustee (as so amended, the
"Senior Notes Indenture"). The 1994 Initial Purchasers subsequently resold the
1994 Notes to qualified institutional buyers pursuant to Rule 144A under the
Securities Act. In October 1995, pursuant to the Company's Registration
Statement on Form S-4 (Reg. No. 33-81862), declared effective by the
Commission on September 29, 1995, the Company consummated an exchange offer
pursuant to which the Company, in exchange for the $150.0 million principal
amount of 1994 Notes outstanding, issued an equal principal amount of 12 1/4%
Senior Notes due 2002 (the "Senior Notes"), which were identical to the 1994
Notes, with the exception that the Senior Notes were registered under the
Securities Act.
In connection with the May 1996 Initial Public Offering, the Company
redeemed $50 million of the outstanding Senior Notes. On July 3, 1997 as part
of the Refinancing, the Company repurchased the remaining $100 million of
outstanding Senior Notes in connection with the Tender Offer and Consent
Solicitation. See "The Refinancing."
DESCRIPTION OF THE EXCHANGE NOTES
The Exchange Notes offered hereby will be issued as a separate series under
the Indenture among the Company, the Guarantors and Harris Trust and Savings
Bank, as trustee (the "Trustee"). The form and terms of the Exchange Notes are
the same as the form and terms of the Old Notes (which they replace) except
that (i) the Exchange Notes bear a Series B designation, (ii) the Exchange
Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, and (iii) the holders of
Exchange Notes will not be entitled to certain rights under the Registration
Rights Agreement, including the provisions providing for an increase in the
interest rate on the Old Notes in certain circumstances relating to the timing
of the Exchange Offer, which rights will terminate when the Exchange Offer is
consummated. The Old Notes issued in the Initial Offering and the Exchange
Notes offered hereby are referred to collectively as the "Notes."
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The definitions of certain capitalized terms used in the
following summary are set forth below under "Certain Definitions." References
in this "Description of the Exchange Notes" section to "the Company" mean only
Polymer Group, Inc. and not any of its Subsidiaries.
GENERAL
The Notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. The Company will
appoint the Trustee, together with its affiliate Harris Trust Company of New
York, to serve as registrar and paying agent under the Indenture at its
offices
63
<PAGE>
at 77 Water Street, New York, New York 10005. No service charge will be made
for any registration of transfer or exchange of the Notes, except for any tax
or other governmental charge that may be imposed in connection therewith. Any
Old Notes that remain outstanding after completion of the Exchange Offer,
together with the Exchange Notes issued in connection with the Exchange Offer,
will be treated as a single class of securities under the Indenture.
RANKING
The Notes will rank junior to, and be subordinated in right of payment to,
all existing and future Senior Indebtedness of the Company, pari passu in
right of payment with all senior subordinated Indebtedness of the Company and
senior in right of payment to all Subordinated Indebtedness of the Company. At
June 28, 1997, after giving pro forma effect to the Refinancing, including the
issuance of the Old Notes in the Initial Offering and the application of the
net proceeds therefrom, the Company would have had approximately $29.0 million
of Senior Indebtedness outstanding (exclusive of unused commitments). All debt
incurred under the Amended Credit Facility constitutes Senior Indebtedness of
the Company, is guaranteed by each of the Guarantors on a senior basis and is
secured by substantially all of the assets of the Company and the Guarantors.
MATURITY, INTEREST AND PRINCIPAL OF THE NOTES
The Notes will be limited to $400.0 million aggregate principal amount and
will mature on July 1, 2007. Cash interest on the Notes will accrue at a rate
of 9% per annum and will be payable semi-annually in arrears on each January 1
and July 1, commencing January 1, 1998, to the holders of record of Notes at
the close of business on December 15 and June 15, respectively, immediately
preceding such interest payment date. Cash interest will accrue from the most
recent interest payment date to which interest has been paid or, if no
interest has been paid, from July 3, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole or in
part, at any time on or after July 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, 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), if redeemed during the 12-month period
beginning on July 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002.......................... 104.625%
2003.......................... 103.083%
2004.......................... 101.542%
2005 and thereafter........... 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to July 1, 2000,
the Company may redeem in the aggregate up to 35% of the originally issued
aggregate principal amount of the Notes with the net cash proceeds of one or
more Public Equity Offerings by the Company at a redemption price in cash
equal to 109.25% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the date of redemption (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% of the
originally issued aggregate principal amount of the Notes must remain
outstanding immediately after giving effect to each such redemption (excluding
any Notes held by the Company or any of its Affiliates). Notice of any such
redemption must be given within 60 days after the date of the closing of the
relevant Public Equity Offering of the Company.
64
<PAGE>
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any time
pursuant to an optional redemption, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not then listed on a national securities exchange, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided, however, that no Notes of a principal amount of $1,000
or less shall be redeemed in part; provided, further, however, that if a
partial redemption is made with the net cash proceeds of a Public Equity
Offering by the Company, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as
nearly a pro rata basis as is practicable (subject to the procedures of The
Depository Trust Company), unless such method is otherwise prohibited. Notice
of redemption shall be mailed by first-class mail at least 30 but not more
than 60 days before the redemption date to each Holder of Notes to be redeemed
at its registered address. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after the
redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the paying
agent for the Notes funds in satisfaction of the applicable redemption price
pursuant to the Indenture.
SUBORDINATION OF THE NOTES
The payment of the principal of, premium, if any, and interest on the Notes
is subordinated in right of payment, to the extent and in the manner provided
in the Indenture, to the prior payment in full in cash of all Senior
Indebtedness.
Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities and excluding any
payment from the trust described under "Satisfaction and Discharge of
Indenture; Defeasance" (a "Defeasance Trust Payment")), upon any dissolution
or winding-up or total liquidation or reorganization of the Company, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
proceedings, all Senior Indebtedness shall first be paid in full in cash
before the Holders of the Notes or the Trustee on behalf of such Holders shall
be entitled to receive any payment by the Company of the principal of,
premium, if any, or interest on the Notes, or any payment by the Company to
acquire any of the Notes for cash, property or securities, or any distribution
by the Company with respect to the Notes of any cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment). Before any payment may be made by, or
on behalf of, the Company of the principal of, premium, if any, or interest on
the Notes upon any such dissolution or winding-up or total liquidation or
reorganization, any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), to which the Holders of the Notes or
the Trustee on their behalf would be entitled, but for the subordination
provisions of the Indenture, shall be made by the Company or by any receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, directly to the holders of the Senior Indebtedness
(pro rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders) or their representatives or to the trustee
or trustees or agent or agents under any agreement or indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such
Senior Indebtedness in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders
of such Senior Indebtedness.
65
<PAGE>
No direct or indirect payment (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment) by or
on behalf of the Company of principal of, premium, if any, or interest on the
Notes, whether pursuant to the terms of the Notes, upon acceleration, pursuant
to an Offer to Purchase or otherwise, will be made if, at the time of such
payment, there exists a default in the payment of all or any portion of the
obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory redemption or prepayment, acceleration or otherwise, and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be immediately accelerated, and upon receipt by the
Trustee of written notice (a "Payment Blockage Notice") from the holder or
holders of such Designated Senior Indebtedness or the trustee or agent acting
on behalf of the holders of such Designated Senior Indebtedness, then, unless
and until such event of default has been cured or waived or has ceased to
exist or such Designated Senior Indebtedness has been discharged or repaid in
full in cash or the benefits of these provisions have been waived by the
holders of such Designated Senior Indebtedness, no direct or indirect payment
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment) will be made by or on behalf of the
Company of principal of, premium, if any, or interest on the Notes, to such
Holders, during a period (a "Payment Blockage Period") commencing on the date
of receipt of such notice by the Trustee and ending 179 days thereafter.
Notwithstanding anything in the subordination provisions of the Indenture or
the Notes to the contrary, (x) in no event will a Payment Blockage Period
extend beyond 179 days from the date the Payment Blockage Notice in respect
thereof was given, (y) there shall be a period of at least 181 consecutive
days in each 360-day period when no Payment Blockage Period is in effect and
(z) not more than one Payment Blockage Period may be commenced with respect to
the Notes during any period of 360 consecutive days. No event of default that
existed or was continuing on the date of commencement of any Payment Blockage
Period with respect to the Designated Senior Indebtedness initiating such
Payment Blockage Period (to the extent the holder of Designated Senior
Indebtedness, or trustee or agent, giving notice commencing such Payment
blockage Period had knowledge of such existing or continuing event of default)
may be, or be made, the basis for the commencement of any other Payment
Blockage Period by the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such event of default has been cured or waived for a period of not less
than 90 consecutive days.
The failure to make any payment or distribution for or on account of the
Notes by reason of the provisions of the Indenture described under this
"Subordination of the Notes" heading will not be construed as preventing the
occurrence of any Event of Default in respect of the Notes. See "Events of
Default" below.
By reason of the subordination provisions described above, in the event of
insolvency of the Company, funds which would otherwise be payable to Holders
of the Notes will be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full in cash, and the Company may
be unable to meet fully its obligations with respect to the Notes.
At the time of the issuance of the Notes, the Amended Credit Facility is
expected to be the only outstanding Senior Indebtedness. Subject to the
restrictions set forth in the Indenture, in the future the Company may issue
additional Senior Indebtedness.
GUARANTEES OF THE NOTES
The Indenture provides that each of the Guarantors will unconditionally
guarantee on a joint and several basis (the "Guarantees") all of the Company's
obligations under the Notes, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The Guarantees
66
<PAGE>
are general unsecured obligations of the Guarantors. The obligations of each
Guarantor under its Guarantee are subordinated and junior in right of payment
to the prior payment in full of all existing and future Guarantor Senior
Indebtedness of such Guarantor to substantially the same extent as the Notes
are subordinated to all existing and future Senior Indebtedness of the
Company. The Guarantors have guaranteed all obligations of the Company under
the Amended Credit Facility, and each Guarantor has granted a security
interest in all or substantially all of its assets to secure the obligations
under the Amended Credit Facility. The obligations of each Guarantor are
limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including any Senior
Indebtedness Incurred after the Issue Date) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under the Indenture, will result in
the obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under Federal or state law. Each
Guarantor that makes a payment or distribution under a Guarantee is entitled
to a contribution from each other Guarantor in a pro rata amount, based on the
net assets of each Guarantor determined in accordance with GAAP.
The Company shall cause each Restricted Subsidiary issuing a Guarantee after
the Issue Date to execute and deliver to the Trustee a supplemental indenture
in form reasonably satisfactory to the Trustee pursuant to which such
Restricted Subsidiary shall become a party to the Indenture and thereby
unconditionally guarantee all of the Company's Obligations under the Notes and
the Indenture on the terms set forth therein. Thereafter, such Restricted
Subsidiary shall (unless released in accordance with the terms of the
Indenture) be a Guarantor for all purposes of the Indenture.
The Indenture provides that if the Notes thereunder are defeased in
accordance with the terms of the Indenture, or if, subject to the requirements
of the first paragraph under "--Merger, Sale of Assets, Etc." all or
substantially all of the assets of any Guarantor or all of the Equity
Interests of any Guarantor are sold (including by issuance or otherwise) by
the Company in a transaction constituting an Asset Sale, and if (x) the Net
Cash Proceeds from such Asset Sale are used in accordance with the covenant
described under "Certain Covenants--Disposition of Proceeds of Asset Sales" or
(y) the Company delivers to the Trustee an Officers' Certificate to the effect
that the Net Cash Proceeds from such Asset Sale shall be used in accordance
with the covenant described under "Certain Covenants--Disposition of Proceeds
of Asset Sales" and within the time limits specified by such covenant, then
such Guarantor (in the event of a sale or other disposition of all of the
Equity Interests of such Guarantor) or the corporation acquiring such assets
(in the event of a sale or other disposition of all or substantially all of
the assets of such Guarantor) shall be released and discharged of its
Guarantee obligations in respect of the Indenture and the Notes.
Any Guarantor that is designated an Unrestricted Subsidiary pursuant to and
in accordance with "Designation of Unrestricted Subsidiaries" below shall upon
such Designation be released and discharged of its Guarantee obligations in
respect of the Indenture and the Notes and any Unrestricted Subsidiary whose
Designation is revoked pursuant to "Designation of Unrestricted Subsidiaries"
below is required to become a Guarantor in accordance with the procedure
described in the third preceding paragraph.
OFFER TO PURCHASE UPON CHANGE OF CONTROL
Following the occurrence of a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Company shall notify the Holders of
the Notes of such occurrence in the manner prescribed by the Indenture and
shall, within 45 days after the Change of Control Date, make an Offer to
Purchase all Notes then outstanding at a purchase price in cash equal to 101%
of the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the Purchase Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
67
<PAGE>
If a Change of Control occurs which also constitutes an event of default
under the Amended Credit Facility, the lenders under the Amended Credit
Facility are entitled to exercise the remedies available to a secured lender
under applicable law and pursuant to the terms of the Amended Credit Facility.
Accordingly, any claims of such lenders with respect to the assets of the
Company will be prior to any claim of the Holders of the Notes with respect to
such assets.
If the Company makes an Offer to Purchase, the Company will comply with all
applicable tender offer laws and regulations and any violation of the
provisions of the Indenture relating to such Offer to Purchase occurring as a
result of such compliance shall not be deemed an Event of Default or an event
that, with the passing of time or giving of notice, or both, would constitute
an Event of Default.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the Holders of the Notes to require
that the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
CERTAIN COVENANTS
Limitation on Indebtedness. The Company shall not, and shall not cause or
permit any Restricted Subsidiary to, directly or indirectly, Incur any
Indebtedness (including Acquired Indebtedness), except for Permitted
Indebtedness; provided, however, that the Company and any Restricted
Subsidiary may Incur Indebtedness if, at the time of and immediately after
giving pro forma effect to such Incurrence of Indebtedness and the application
of the proceeds therefrom, the Consolidated Coverage Ratio would be greater
than 2.0 to 1.0.
The foregoing limitations will not apply to the Incurrence by the Company or
any Restricted Subsidiary of any of the following (collectively, "Permitted
Indebtedness"), each of which shall be given independent effect:
(a) Indebtedness under the Notes;
(b) Indebtedness Incurred pursuant to (i) the Amended Credit Facility
and/or (ii) any other agreements or indentures governing Senior
Indebtedness if at the time of and immediately after giving effect thereto,
the aggregate consolidated Indebtedness Incurred under both clauses (i) and
(ii) would not exceed $325.0 million at any one time outstanding; provided,
however, that such $325.0 million shall be reduced (without duplication) by
the amount of any repayment of Indebtedness under the Amended Credit
Facility pursuant to "Disposition of Proceeds of Asset Sales" below;
(c) Indebtedness of any Restricted Subsidiary owed to and held by the
Company or any Guarantor, other Indebtedness of the Company owed to and
held by any Guarantor which is unsecured and subordinated in right of
payment to the payment and performance of the Company's obligations under
any Senior Indebtedness, the Indenture and the Notes and Indebtedness of a
Foreign Restricted Subsidiary that is not a Guarantor owed to and held by
any other Restricted Subsidiary that is not a Guarantor; provided, however,
that an Incurrence of Indebtedness that is not permitted by this clause (c)
shall be deemed to have occurred upon (i) any sale or other disposition of
any Indebtedness of the Company or any Restricted Subsidiary referred to in
this clause (c) to a Person (other than the Company or a Guarantor), (ii)
any sale or other disposition of Equity Interests of any Guarantor which
holds Indebtedness of the Company or another Restricted Subsidiary such
that such Guarantor ceases to be a Guarantor and (iii) the designation of a
Restricted Subsidiary that is a Guarantor and which holds Indebtedness of
the Company or any other Restricted Subsidiary as an Unrestricted
Subsidiary;
(d) the Guarantees and guarantees by any Guarantor of Indebtedness of the
Company; provided, however, that if such guarantee is of Subordinated
Indebtedness, then the Guarantee of such Guarantor shall be senior to such
Guarantor's guarantee of Subordinated Indebtedness;
68
<PAGE>
(e) Hedging Obligations of the Company or any Guarantor entered into in
the ordinary course of business and not for speculative purposes;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations which
do not exceed $25.0 million in the aggregate at any one time outstanding;
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness Incurred in compliance with the Consolidated Coverage Ratio of
the first paragraph of this covenant or clause (a) of this paragraph of
this covenant; provided, however, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less)) of the Indebtedness being refinanced, plus
the amount of accrued interest thereon, plus the amount of any reasonably
determined prepayment premium necessary to accomplish such refinancing and
such reasonable fees and expenses incurred in connection therewith, (ii)
Indebtedness representing a refinancing of Indebtedness other than Senior
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being refinanced, (iii) Indebtedness that is pari passu with the Notes may
only be refinanced with Indebtedness that is made pari passu with or
subordinate in right of payment to the Notes and Subordinated Indebtedness
may only be refinanced with Subordinated Indebtedness, (iv) no Restricted
Subsidiary that is not a Guarantor may Incur Indebtedness to refinance
Indebtedness of the Company or any Guarantor and (v) Indebtedness of the
Company may only be refinanced by Indebtedness of the Company and
Indebtedness of a Restricted Subsidiary may only be refinanced by
Indebtedness of such Restricted Subsidiary or by the Company; and
(h) in addition to the items referred to in clauses (a) through (f)
above, Indebtedness of the Company (including any Indebtedness under the
Amended Credit Facility that utilizes this subparagraph (h)) having an
aggregate principal amount not to exceed $50.0 million at any one time
outstanding.
Limitation on Senior Subordinated Indebtedness. The Company shall not,
directly or indirectly, Incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Notes and subordinate in
right of payment to any other Indebtedness of the Company.
The Company shall not permit any Guarantor to, and no Guarantor shall,
directly or indirectly, Incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Guarantee of such Guarantor
and subordinate in right of payment to any other Indebtedness of such
Guarantor.
Limitation on Restricted Payments. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any Equity
Interests of the Company or any Restricted Subsidiary or make any payment
or distribution to the direct or indirect holders (in their capacities as
such) of Equity Interests of the Company or any Restricted Subsidiary
(other than any dividends, distributions and payments made to the Company
or any Restricted Subsidiary and dividends or distributions payable to any
Person solely in Qualified Equity Interests of the Company or in options,
warrants or other rights to purchase Qualified Equity Interests of the
Company);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of the Company or any Restricted Subsidiary (other than any such
Equity Interests owned by the Company or any Restricted Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make any
principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness (other
than any Subordinated Indebtedness held by the Company); or
(iv) make any Investment in any Person (other than Permitted Investments)
69
<PAGE>
(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be continuing
at the time or immediately after giving effect to such Restricted Payment;
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of "Limitation on Indebtedness" above; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if such
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (2) the aggregate net cash proceeds received by the Company
either (x) as capital contributions to the Company after the Issue Date or
(y) from the issue and sale (other than to a Restricted Subsidiary) of its
Qualified Equity Interests after the Issue Date (excluding the net proceeds
from any issuance and sale of Qualified Equity Interests financed, directly
or indirectly, using funds borrowed from the Company or any Restricted
Subsidiary until and to the extent such borrowing is repaid), plus (3) the
principal amount (or accreted amount (determined in accordance with GAAP),
if less) of any Indebtedness of the Company or any Restricted Subsidiary
Incurred after the Issue Date which has been converted into or exchanged
for Qualified Equity Interests of the Company, plus (4) without duplication
of any amounts included in clause (i) above, in the case of the disposition
or repayment of, or the receipt by the Company or any Restricted Subsidiary
of any dividends or distributions from, any Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the lesser
of the amount of such Investment and the amount received by the Company or
any Restricted Subsidiary upon such disposition, repayment, dividend or
distribution, plus (5) in the event the Company or any Restricted
Subsidiary makes any Investment in a Person that, as a result of or in
connection with such Investment, becomes a Restricted Subsidiary, an amount
equal to the Company's or any Restricted Subsidiary's existing Investment
in such Person that was previously treated as a Restricted Payment, plus
(6) so long as the Designation thereof was treated as a Restricted Payment
made after the Issue Date, with respect to any Unrestricted Subsidiary that
has been redesignated as a Restricted Subsidiary after the Issue Date in
accordance with "Designation of Unrestricted Subsidiaries" below, an amount
equal to the Company's Investment in such Unrestricted Subsidiary (provided
that such amount shall not in any case exceed the Designation Amount with
respect to such Restricted Subsidiary upon its Designation), plus (7) $25.0
million, minus (8) the Designation Amount (measured as of the date of
Designation) with respect to any Subsidiary of the Company which has been
designated as an Unrestricted Subsidiary after the Issue Date in accordance
with "Designation of Unrestricted Subsidiaries" below.
The foregoing provisions will not prevent (i) the payment of any dividend or
distribution on, or redemption of, Equity Interests within 60 days after the
date of declaration of such dividend or distribution or the giving of formal
notice of such redemption, if at the date of such declaration or giving of
such formal notice such payment or redemption would comply with the provisions
of the Indenture; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other
than to a Restricted Subsidiary) of, Qualified Equity Interests of the
Company; provided, however, that any such net cash proceeds and the value of
any Qualified Equity Interests issued in exchange for such retired Equity
Interests are excluded from clause (c)(2) of the preceding paragraph (and were
not included therein at any time) and are not used to redeem the Notes
pursuant to "--Optional Redemption" above; (iii) the purchase, redemption,
retirement, defeasance or other acquisition of Subordinated Indebtedness, or
any other payment thereon, made in exchange for, or out of the net
70
<PAGE>
cash proceeds of, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of (x) Qualified Equity Interests of the Company;
provided, however, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for Subordinated Indebtedness
are excluded from clauses (c)(2) and (c)(3) of the preceding paragraph (and
were not included therein at any time) and are not used to redeem the Notes
pursuant to "--Optional Redemption" above or (y) Subordinated Indebtedness
permitted to be Incurred pursuant to clause (g) of the second paragraph under
"--Limitation on Indebtedness"; (iv) the making of loans or advances to
officers and directors of the Company or any Restricted Subsidiary entered
into in the ordinary course of business in an amount not to exceed $5.0
million at any one time outstanding; (v) the repurchase, redemption,
defeasance, retirement, refinancing or acquisition for value or payment of
principal of Subordinated Indebtedness at a purchase price not greater than
101% of the principal amount of such Subordinated Indebtedness in the event of
a Change of Control pursuant to a provision similar to the "Offer to Purchase
upon Change of Control" provisions above; provided, however, that prior to any
such repurchase, the Company has made an Offer to Purchase as provided in
"Offer to Purchase upon Change of Control" above with respect to the Notes and
has repurchased all Notes validly tendered for payment in connection with such
Offer to Purchase; or (vi) Investments in joint ventures (however structured)
not to exceed $25.0 million at any one time outstanding; provided, however,
that in the case of each of clauses (ii), (iii), (v) and (vi) no Default or
Event of Default shall have occurred and be continuing or would arise
therefrom.
In determining the amount of Restricted Payments permissible under this
covenant, amounts expended pursuant to clauses (i) and (iv) of the immediately
preceding paragraph shall be included as Restricted Payments. The amount of
any non-cash Restricted Payment shall be deemed to be equal to the Fair Market
Value thereof at the date of the making of such Restricted Payment.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions to the Company or any other Restricted Subsidiary on its Equity
Interests or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (b) make loans or advances to, or guarantee any
Indebtedness or other obligations of, or make any Investment in, the Company
or any other Restricted Subsidiary or (c) transfer any of its properties or
assets to the Company or any other Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) the Amended
Credit Facility, or any other agreement of the Company or the Restricted
Subsidiaries outstanding on the Issue Date, in each case as in effect on the
Issue Date, and any amendments, restatements, renewals, replacements or
refinancings thereof; provided, however, that any such amendment, restatement,
renewal, replacement or refinancing is no more restrictive in the aggregate
with respect to such encumbrances or restrictions than those contained in the
agreement being amended, restated, reviewed, replaced or refinanced; (ii)
applicable law; (iii) any instrument governing Indebtedness or Equity
Interests of an Acquired Person acquired by the Company or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent
such Indebtedness was Incurred by such Acquired Person in connection with, as
a result of or in contemplation of such acquisition); provided, however, that
such encumbrances and restrictions are not applicable to the Company or any
Restricted Subsidiary, or the properties or assets of the Company or any
Restricted Subsidiary, other than the Acquired Person; (iv) customary non-
assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices; (v) Purchase Money Indebtedness
for property acquired in the ordinary course of business that only imposes
encumbrances and restrictions on the property so acquired; (vi) any agreement
for the sale or disposition of the Equity Interests or assets of any
Restricted Subsidiary; provided, however, that such encumbrances and
restrictions described in this clause (vi) are only applicable to such
Restricted Subsidiary or assets, as applicable, and any such sale or
disposition is made in compliance with "Disposition of Proceeds of Asset
Sales" below to the extent applicable thereto; (vii) refinancing Indebtedness
permitted under clause (h) of the second paragraph of "Limitation on
Indebtedness" above; provided, however, that such encumbrances and
restrictions
71
<PAGE>
contained in the agreements governing such Indebtedness are no more
restrictive in the aggregate than those contained in the agreements governing
the Indebtedness being refinanced immediately prior to such refinancing; or
(viii) the Indenture.
Designation of Unrestricted Subsidiaries. The Company may designate after
the Issue Date any Subsidiary of the Company as an "Unrestricted Subsidiary"
under the Indenture (a "Designation") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph
of "Limitation on Indebtedness" above; and
(iii) the Company would be permitted to make an Investment (other than a
Permitted Investment) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to the first paragraph of
"Limitation on Restricted Payments" above in an amount (the "Designation
Amount") equal to the amount of the Company's Investment in such Subsidiary
on such date.
Neither the Company nor any Restricted Subsidiary shall at any time (x)
provide credit support for, subject any of its property or assets (other than
the Equity Interests of any Unrestricted Subsidiary) to the satisfaction of,
or guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary, except for
any non-recourse guarantee given solely to support the pledge by the Company
or any Restricted Subsidiary of the capital stock of any Unrestricted
Subsidiary. For purposes of the foregoing, the Designation of a Subsidiary of
the Company as an Unrestricted Subsidiary shall be deemed to include the
Designation of all of the Subsidiaries of such Subsidiary.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") only if:
(i) no Default or Event of Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of the
Indenture.
All Designations and Revocations must be evidenced by resolutions of the
Board of Directors of the Company, delivered to the Trustee certifying
compliance with the foregoing provisions.
Limitation on Liens. The Company shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, Incur any Liens of any
kind against or upon any of their respective properties or assets now owned or
hereafter acquired, or any proceeds therefrom or any income or profits
therefrom, to secure any Indebtedness unless contemporaneously therewith
effective provision is made, (x) in the case of the Company, to secure the
Notes and all other amounts due under the Indenture and any other class of
Senior Subordinated Indebtedness, and (y) in the case of a Restricted
Subsidiary which is a Guarantor, to secure such Restricted Subsidiary's
Guarantee of the Notes and all other amounts due under the Indenture, in each
case, equally and ratably with such Indebtedness (or, in the event that such
Indebtedness is subordinated in right of payment to the Notes or such
Restricted Subsidiary's Guarantee, prior to such Indebtedness) with a Lien on
the same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (i) Liens securing Senior
Indebtedness (including, without limitation, Indebtedness incurred under the
Amended Credit Facility) and (ii) Permitted Liens.
72
<PAGE>
Disposition of Proceeds of Asset Sales. The Company shall not, and shall not
cause or permit any Restricted Subsidiary to, directly or indirectly, make any
Asset Sale, unless (i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal
to the Fair Market Value of the assets sold or otherwise disposed of and (ii)
at least 75% of such consideration consists of (A) cash or Cash Equivalents,
or (B) properties, capital assets and interests in joint ventures (however
structured) that replace the properties and assets that were the subject of
such Asset Sale or in properties and capital assets that will be used in the
business of the Company and its Restricted Subsidiaries as existing at such
time or in businesses reasonably related thereto (as determined in good faith
by the Company's Board of Directors) ("Replacement Assets"). The amount of any
Indebtedness (other than any Subordinated Indebtedness) of the Company or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Company and the Restricted Subsidiaries are fully and
unconditionally released shall be deemed to be cash for purposes of
determining the percentage of cash consideration received by the Company or
the Restricted Subsidiaries.
The Company or such Restricted Subsidiary, as the case may be, may (i) apply
the Net Cash Proceeds of any Asset Sale within 270 days of receipt thereof to
repay Senior Indebtedness and permanently reduce any related commitment, or
(ii) make an Investment in Replacement Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale are not
applied within 270 days of such Asset Sale as described in clause (i) or (ii)
of the immediately preceding paragraph (such Net Cash Proceeds, the
"Unutilized Net Cash Proceeds"), the Company shall, within 45 days after such
270th day, make an Offer to Purchase all outstanding Notes and other Senior
Subordinated Indebtedness, pro rata, up to a maximum principal amount
(expressed as a multiple of $1,000) of Notes and other Senior Subordinated
Indebtedness equal to such Unutilized Net Cash Proceeds, at a purchase price
in cash equal to 100% of the principal amount thereof (or the accreted value
of such other Senior Subordinated Indebtedness, if such other Senior
Subordinated Indebtedness is issued at a discount), plus accrued and unpaid
interest thereon, if any, to the Purchase Date; provided, however, that the
Offer to Purchase may be deferred until there are aggregate Unutilized Net
Cash Proceeds equal to or in excess of $25.0 million, at which time the entire
amount of such Unutilized Net Cash Proceeds, and not just the amount in excess
of $25.0 million, shall be applied as required pursuant to this paragraph.
With respect to any Offer to Purchase effected pursuant to this covenant,
among the Notes, to the extent the aggregate principal amount of Notes and
other Senior Subordinated Indebtedness tendered pursuant to such Offer to
Purchase exceeds the Unutilized Net Cash Proceeds to be applied to the
repurchase thereof, such Notes and other Senior Subordinated Indebtedness
shall be purchased pro rata based on the aggregate principal amount of such
Notes and other Senior Subordinated Indebtedness tendered (or the accreted
value of such other Senior Subordinated Indebtedness, if such other Senior
Subordinated Indebtedness is issued at a discount) by each holder of Notes and
such other Senior Subordinated Indebtedness. To the extent the Unutilized Net
Cash Proceeds exceed the aggregate amount of Notes and other Senior
Subordinated Indebtedness tendered pursuant to such Offer to Purchase, the
Company may retain and utilize any portion of the Unutilized Net Cash Proceeds
not applied to repurchase the Notes and other Senior Subordinated Indebtedness
for any purpose consistent with the other terms of the Indenture.
In the event that the Company makes an Offer to Purchase the Notes and other
Senior Subordinated Indebtedness, the Company shall comply with any applicable
securities laws and regulations, and any violation of the provisions of the
Indenture relating to such Offer to Purchase occurring as a result of such
compliance shall not be deemed an Event of Default or an event that with the
passing of time or giving of notice, or both, would constitute an Event of
Default.
Each Holder shall be entitled to tender all or any portion of the Notes
owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must
73
<PAGE>
be tendered in an integral multiple of $1,000 principal amount and subject to
any proration among tendering Holders and holders of other Senior Subordinated
Indebtedness as described above.
Merger, Sale of Assets, etc. The Company shall not consolidate with or merge
with or into (whether or not the Company is the Surviving Person) any other
entity and the Company shall not and shall not cause or permit any Restricted
Subsidiary to, sell, convey, assign, transfer, lease or otherwise dispose of
all or substantially all of the Company's and the Restricted Subsidiaries'
properties and assets (determined on a consolidated basis for the Company and
the Restricted Subsidiaries) to any entity in a single transaction or series
of related transactions, unless: (i) either (x) the Company shall be the
Surviving Person or (y) the Surviving Person (if other than the Company) shall
be a corporation organized and validly existing under the laws of the United
States of America or any State thereof or the District of Columbia or, if any
such Restricted Subsidiary was a Foreign Restricted Subsidiary, under the laws
of the United States of America or any state thereof or the District of
Columbia or the jurisdiction under which such Foreign Restricted Subsidiary
was organized, and shall, in any such case, expressly assume by a supplemental
indenture, the due and punctual payment of the principal of, premium, if any,
and interest on all the Notes and the performance and observance of every
covenant of the Indenture and the Registration Rights Agreement to be
performed or observed on the part of the Company; (ii) immediately thereafter,
no Default or Event of Default shall have occurred and be continuing; and
(iii) immediately after giving effect to any such transaction involving the
Incurrence by the Company or any Restricted Subsidiary, directly or
indirectly, of additional Indebtedness (and treating any Indebtedness not
previously an obligation of the Company or any Restricted Subsidiary in
connection with or as a result of such transaction as having been Incurred at
the time of such transaction), the Surviving Person (A) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth of
the Company immediately prior to such transaction and (B) could Incur, on a
pro forma basis after giving effect to such transaction as if it had occurred
at the beginning of the four quarter period immediately preceding such
transaction for which consolidated financial statements of the Company are
available, at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph of
"Limitation on Indebtedness" above.
Notwithstanding the foregoing clause (iii) of the immediately preceding
paragraph, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company or any
Restricted Subsidiary that is a Guarantor.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interest of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
No Guarantor (other than a Guarantor whose Guarantee is to be released in
accordance with the terms of its Guarantee and the Indenture as provided in
the third paragraph under "Guarantees of the Notes" above) shall consolidate
with or merge with or into another Person, whether or not such Person is
affiliated with such Guarantor and whether or not such Guarantor is the
Surviving Person, unless (i) the Surviving Person (if other than such
Guarantor) is a corporation organized and validly existing under the laws of
the United States, any State thereof or the District of Columbia or, if any
such Guarantor was a Foreign Restricted Subsidiary, under the laws of the
United States of America or any state thereof or the District of Columbia or
the jurisdiction under which the Foreign Restricted Subsidiary was organized;
(ii) the Surviving Person (if other than such Guarantor) expressly assumes by
a supplemental indenture all the obligations of such Guarantor under its
Guarantee of the Notes and the performance and observance of every covenant of
the Indenture and the Registration Rights Agreement to be performed or
observed by such Guarantor, (iii) at the time of and immediately after such
Disposition, no Default or Event of Default shall have occurred and be
continuing; and (iv)
74
<PAGE>
immediately after giving effect to any such transaction involving the
Incurrence by such Guarantor, directly or indirectly, of additional
Indebtedness (and treating any Indebtedness not previously an obligation of
such Guarantor in connection with or as a result of such transaction as having
been Incurred at the time of such transaction), the Company could Incur, on a
pro forma basis after giving effect to such transaction as if it had occurred
at the beginning of the latest fiscal quarter for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated
Coverage Ratio of the first paragraph of "Limitation on Indebtedness" above;
provided, however, that this paragraph shall not be a condition to a merger or
consolidation of a Guarantor if such merger or consolidation only involves the
Company and/or one or more other Guarantors. Notwithstanding the foregoing,
nothing in this covenant shall prohibit the consolidation or merger with or
into or the sale of all or substantially all of the assets or properties of a
Guarantor to any other Restricted Subsidiary that is a Guarantor.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs
in which the Company or a Guarantor, as the case may be, is not the Surviving
Person and the Surviving Person is to assume all the Obligations of the
Company under the Notes, the Indenture and the Registration Rights Agreement
or of such Guarantor under its Guarantee, the Indenture and the Registration
Rights Agreement, as the case may be, pursuant to a supplemental indenture,
such Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of, the Company or such Guarantor, as the case
may be, and the Company, as the case may be, shall be discharged from its
Obligations under the Indenture and the Notes or such Guarantor shall be
discharged from its Obligations under the Indenture and its Guarantee.
Transactions with Affiliates. The Company shall not, and shall not cause or
permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into any transaction (or series of related transactions)
with or for the benefit of any of their respective Affiliates or any officer,
director or employee of the Company or any Restricted Subsidiary (each an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
which are no less favorable to the Company or such Restricted Subsidiary, as
the case may be, than would be available in a comparable transaction with an
unaffiliated third party and (ii) (A) if such Affiliate Transaction (or series
of related Affiliate Transactions) involves aggregate payments or the transfer
of other consideration between the Company and an Affiliate of the Company
having a Fair Market Value in excess of $15.0 million, such Affiliate
Transaction is in writing and the Company delivers an officer's certificate to
the Trustee certifying that such Affiliate Transaction (or series of Affiliate
Transactions) complies with the foregoing provisions, (B) if such Affiliate
Transaction (or series of related Affiliate Transactions) involves aggregate
payments or the transfer of other consideration between the Company and an
Affiliate of the Company having a Fair Market Value in excess of $15.0
million, such Affiliate Transaction is in writing and a majority of the
disinterested members of the Board of Directors of the Company shall have
approved such Affiliate Transaction and determined that such Affiliate
Transaction complies with the foregoing provisions. In addition, any Affiliate
Transaction involving aggregate payments or the transfer of other
consideration between the Company and an Affiliate of the Company having a
Fair Market Value in excess of $25.0 million will also require a written
opinion from an Independent Financial Advisor (filed with the Trustee) stating
that the terms of such Affiliate Transaction are fair, from a financial point
of view, to the Company or the Restricted Subsidiary involved in such
Affiliate Transaction, as the case may be.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and any Wholly
Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents
of the Company or any Restricted Subsidiary of the Company as determined in
good faith by the Company's Board of Directors; (iii) any transactions
undertaken pursuant to any contractual obligations or rights in existence
75
<PAGE>
on the Issue Date (as in effect on the Issue Date); (iv) any Restricted
Payments made in compliance with "Limitation on Restricted Payments" above;
(v) loans and advances to officers, directors and employees of the Company or
any Restricted Subsidiary for travel, entertainment, moving and other
relocation expenses, in each case made in the ordinary course of business; and
(vi) the entering into by the Company and any of its consolidated Restricted
Subsidiaries of a tax sharing or similar arrangement.
Limitation on the Sale or Issuance of Equity Interests of Restricted
Subsidiaries. The Company shall not sell any Equity Interest of a Restricted
Subsidiary, and shall not cause or permit any Restricted Subsidiary, directly
or indirectly, to issue or sell any Equity Interests, except: (i) to the
Company or a Wholly Owned Restricted Subsidiary; or (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary. Notwithstanding the foregoing, the
Company is permitted to sell all the Equity Interest of a Restricted
Subsidiary as long as the Company is in compliance with the terms of the
covenant described under "Disposition of Proceeds of Asset Sales" and, if
applicable, "Merger, Sale of Assets, etc." above.
Limitation on Guarantees by Restricted Subsidiaries. The Indenture provides
that in the event the Company (i) organizes or acquires any Domestic
Restricted Subsidiary after the Issue Date that is not a Guarantor or (ii)
causes or permits any Foreign Restricted Subsidiary that is not a Guarantor
to, directly or indirectly, guarantee the payment of any Indebtedness of the
Company or any Domestic Restricted Subsidiary ("Other Indebtedness") then, in
each case the Company shall cause such Restricted Subsidiary to simultaneously
execute and deliver a supplemental indenture to the Indenture pursuant to
which it will become a Guarantor under the Indenture; provided, however, that
in the event a Domestic Restricted Subsidiary is acquired in a transaction in
which a merger agreement is entered into, such Domestic Restricted Subsidiary
shall not be required to execute and deliver such supplemental indenture until
the consummation of the merger contemplated by any such merger agreement;
provided, further, that if such Other Indebtedness is (i) Indebtedness that is
ranked pari passu in right of payment with the Notes or the Guarantee of such
Restricted Subsidiary, as the case may be, the Guarantee of such Subsidiary
shall be pari passu in right of payment with the guarantee of the Other
Indebtedness; or (ii) Subordinated Indebtedness, the Guarantee of such
Subsidiary shall be senior in right of payment to the guarantee of the Other
Indebtedness (which guarantee of such Subordinated Indebtedness shall provide
that such guarantee is subordinated to the Guarantees of such Subsidiary to
the same extent and in the same manner as the other Indebtedness is
subordinated to the Notes or the Guarantee of such Restricted Subsidiary, as
the case may be).
Provision of Financial Information. Whether or not the Company is subject to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision
thereto, the Company shall file with the SEC (if permitted by SEC practice and
applicable law and regulations) the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
SEC pursuant to such Section 13(a) or 15(d) or any successor provision thereto
if the Company were so subject, such documents to be filed with the SEC on or
prior to the respective dates (the "Required Filing Dates") by which the
Company would have been required so to file such documents if the Company were
so subject. The Company shall also in any event (a) within 15 days of each
Required Filing Date (whether or not permitted or required to be filed with
the SEC) (i) transmit (or cause to be transmitted) by mail to all Holders, as
their names and addresses appear in the Note register, without cost to such
Holders upon their request, and (ii) file with the Trustee, copies of the
annual reports, quarterly reports and proxy statements which the Company is
required to file with the SEC pursuant to the preceding sentence, or, if such
filing is not so permitted, information and data of a similar nature, and (b)
if, notwithstanding the preceding sentence, filing such documents by the
Company with the SEC is not permitted by SEC practice or applicable law or
regulations, promptly upon written request supply copies of such documents to
any Holder. In addition, for so long as any Notes remain outstanding and prior
to the later of the consummation of the the Exchange Offer and the filing of
the Initial Shelf Registration Statement, if required, the Company will
furnish to the Holders, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
76
<PAGE>
EVENTS OF DEFAULT
The occurrence of any of the following is defined as an "Event of Default"
under the Indenture: (a) failure to pay principal of (or premium, if any, on)
any Note when due (whether or not prohibited by the provisions of the
Indenture described under "Subordination of the Notes" above); (b) failure to
pay any interest on any Note when due, continued for 30 days or more (whether
or not prohibited by the provisions of the Indenture described under
"Subordination of the Notes" above); (c) default in the payment of principal
of or interest on any Note required to be purchased pursuant to any Offer to
Purchase required by the Indenture when due and payable or failure to pay on
the Purchase Date the Purchase Price for any Note validly tendered pursuant to
any Offer to Purchase required by the Indenture (whether or not prohibited by
the provisions of the Indenture described under "Subordination of the Notes"
above); (d) failure to perform or comply with any of the provisions described
under "Certain Covenants-- Merger, Sale of Assets, etc." above; (e) failure to
perform any other covenant, warranty or agreement of the Company under the
Indenture or in the Notes or of the Guarantors under the Indenture or in the
Guarantees continued for 30 days or more after written notice to the Company
by the Trustee or Holders of at least 25% in aggregate principal amount of the
outstanding Notes; (f) default or defaults under the terms of one or more
instruments evidencing or securing Indebtedness of the Company or any of its
Restricted Subsidiaries having an outstanding principal amount of $20.0
million or more individually or in the aggregate that has resulted in the
acceleration of the payment of such Indebtedness or failure by the Company or
any of its Restricted Subsidiaries to pay principal of at least $20.0 million
when due at the stated maturity of any such Indebtedness and such default or
defaults shall have continued after any applicable grace period and shall not
have been cured or waived within 10 days after the occurrence thereof; (g) the
rendering of a final judgment or judgments (not subject to appeal) against the
Company or any of its Restricted Subsidiaries in an amount of $20.0 million or
more (net of any amounts covered by reputable and creditworthy insurance
companies) which remains undischarged or unstayed for a period of 60 days
after the date on which the right to appeal has expired; (h) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any of its
Significant Restricted Subsidiaries; or (i) other than as provided in or
pursuant to any Guarantee or the Indenture, the Guarantee of any Guarantor
that constitutes a Significant Restricted Subsidiary ceases to be in full
force and effect or is declared null and void and unenforceable or found to be
invalid or any Guarantor that is a Significant Restricted Subsidiary denies
its liability under its Guarantee (other than by reason of a release of such
Guarantor from its Guarantee in accordance with the terms of the Indenture and
such Guarantee).
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the
Trustee is under no obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the Holders of Notes,
unless such Holders shall have offered to the Trustee reasonable indemnity.
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred on such Trustee.
If an Event of Default with respect to the Notes (other than an Event of
Default with respect to the Company described in clause (h) of the preceding
paragraph) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Notes, by notice in
writing to the Company may declare the unpaid principal of (and premium, if
any) and accrued interest to the date of acceleration on all the outstanding
Notes to be due and payable immediately and, upon any such declaration, such
principal amount (and premium, if any) and accrued interest, notwithstanding
anything contained in the Indenture or the Notes to the contrary, will become
immediately due and payable; provided, however, that so long as the Amended
Credit Facility shall be in full force and effect, if an Event of Default
shall have occurred and be continuing (other than an Event of Default with
respect to the Company described in clause (h) of the second preceding
paragraph), the Notes shall not become due and payable until the earlier to
occur of (x) five business days following delivery
77
<PAGE>
of written notice of such acceleration of the Notes to the agent under the
Amended Credit Facility and (y) the acceleration (ipso facto or otherwise) of
any Indebtedness under the Amended Credit Facility. If an Event or Default
specified in clause (h) of the preceding paragraph with respect to the Company
occurs under the Indenture, the Notes will ipso facto become immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder of the Notes.
Any such declaration with respect to the Notes may be annulled by the
Holders of a majority in aggregate principal amount of the outstanding Notes
upon the conditions provided in the Indenture. For information as to waiver of
defaults, see "Modification and Waiver" below.
The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Notes
outstanding, give the Holders of the Notes thereof notice of all uncured
Defaults or Events of Default thereunder known to it; provided, however, that,
except in the case of a Default or an Event of Default in payment with respect
to the Notes or a Default or Event of Default in complying with "Certain
Covenants--Merger, Sale of Assets, etc." above, the Trustee shall be protected
in withholding such notice if and so long as a committee of its trust officers
in good faith determines that the withholding of such notice is in the
interest of the Holders of the Notes.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder
shall have previously given to the Trustee written notice of a continuing
Event of Default thereunder and unless the Holders of at least 25% of the
aggregate principal amount of the outstanding Notes shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as the Trustee, and the Trustee shall have not have received from
the Holders of a majority in aggregate principal amount of such outstanding
Notes a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. However, such limitations do not
apply to a suit instituted by a Holder of such a Note for enforcement of
payment of the principal of and premium, if any, or interest on such Note on
or after the respective due dates expressed in such Note.
The Company is required to furnish to the Trustee annually a statement as to
the performance by it of certain of its obligations under the Indenture and as
to any default in such performance.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATOR AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any of its Affiliates, as such, shall have any liability for any
obligations of the Company or any of its Affiliates under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its and the Guarantors' substantive obligations in
respect of the Notes by delivering all outstanding Notes to the Trustee for
cancellation and paying all sums payable by it on account of principal of,
premium, if any, and interest on all Notes or otherwise. In addition to the
foregoing, the Company may, provided that no Default or Event of Default has
occurred and is continuing or would arise therefrom (or, with respect to a
Default or Event of Default specified in clause (h) of "Events of Default"
above, occurs at any time on or prior to the 91st calendar day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until after such 91st day)) under the Indenture and provided that no
default under any Senior Indebtedness would result therefrom, terminate its
and the Guarantors' substantive obligations in respect of the Notes (except
for its obligations to pay the principal of (and premium, if any, on) and the
interest on the Notes and the Guarantors' Guarantee thereof) by (i) depositing
with the Trustee, under the terms of an
78
<PAGE>
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining Indebtedness on such
Notes; (ii) delivering to the Trustee either an Opinion of Counsel or a ruling
directed to the Trustee from the Internal Revenue Service to the effect that
the Holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit and termination of
obligations; (iii) delivering to the Trustee an Opinion of Counsel to the
effect that the Company's exercise of its option under this paragraph will not
result in any of the Company, the Trustee or the trust created by the
Company's deposit of funds pursuant to this provision becoming or being deemed
to be an "investment company" under the Investment Company Act of 1940, as
amended (the "Investment Act"); and (iv) complying with certain other
requirements set forth in the Indenture. In addition, the Company may,
provided that no Default or Event of Default has occurred and is continuing or
would arise therefrom (or, with respect to a Default or Event of Default
specified in clause (h) of "Events of Default" above, occurs at any time on or
prior to the 91st calendar day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after such
91st day)) under the Indenture and provided that no default under any Senior
Indebtedness would result therefrom, terminate all of its and the Guarantors'
substantive obligations in respect of the Notes (including its obligations to
pay the principal of (and premium, if any, on) and interest on the Notes and
the Guarantors' Guarantee thereof) by (i) depositing with the Trustee, under
the terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining
Indebtedness on the Notes; (ii) delivering to the Trustee either a ruling
directed to the Trustee from the Internal Revenue Service to the effect that
the Holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and termination of obligations
or an Opinion of Counsel addressed to the Trustee based upon such a ruling or
based on a change in the applicable federal tax law since the date of the
Indenture, to such effect; (iii) delivering to the Trustee an Opinion of
Counsel to the effect that the Company's exercise of its option under this
paragraph will not result in any of the Company, the Trustee or the trust
created by the Company's deposit of funds pursuant to this provision becoming
or being deemed to be an "investment company" under the Investment Act; and
(iv) complying with certain other requirements set forth in the Indenture.
The Company may make an irrevocable deposit pursuant to this provision only
if at such time it is not prohibited from doing so under the subordination
provisions of the Indenture or certain covenants in the Senior Indebtedness
and the Company has delivered to the Trustee and any Paying Agent an Officers'
Certificate to that effect.
GOVERNING LAW
The Indenture, the Notes and the Guarantees are governed by the laws of the
State of New York without regard to principles of conflicts of laws.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantors, and the Trustee with the consent of the Holders of a majority
in aggregate principal amount of the outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes);
provided, however, that no such modification or amendment to the Indenture
may, without the consent of the Holder of each Note affected thereby, (a)
change the maturity of the principal of or any installment of interest on any
such Note or alter the optional redemption or repurchase provisions of any
such Note or the Indenture in a manner adverse to the Holders of the Notes;
(b) reduce the principal amount of (or the premium) of any such Note; (c)
reduce the rate of or extend the time for payment of interest on any such
Note; (d) change the place or currency of payment of principal of (or premium)
or interest on any such Note; (e) modify any provisions of the Indenture
relating to the waiver of past defaults (other than to add sections of the
Indenture or the Notes subject thereto) or the right
79
<PAGE>
of the Holders of Notes to institute suit for the enforcement of any payment
on or with respect to any such Note or any Guarantee in respect thereof or the
modification and amendment provisions of the Indenture and the Notes (other
than to add sections of the Indenture or the Notes which may not be amended,
supplemented or waived without the consent of each Holder therein affected);
(f) reduce the percentage of the principal amount of outstanding Notes
necessary for amendment to or waiver of compliance with any provision of the
Indenture or the Notes or for waiver of any Default in respect thereof; (g)
waive a default in the payment of principal of, interest on, or redemption
payment with respect to, the Notes (except a rescission of acceleration of the
Notes by the Holders thereof as provided in the Indenture and a waiver of the
payment default that resulted from such acceleration); (h) modify the ranking
or priority of any Note or the Guarantee in respect thereof of any Guarantor
or modify the definition of Senior Indebtedness or Guarantor Senior
Indebtedness or amend or modify the subordination provisions of the Indenture
in any manner adverse to the Holders of the Notes; (i) modify the provisions
of any covenant (or the related definitions) in the Indenture requiring the
Company to make an Offer to Purchase in the event of a Change of Control in a
manner materially adverse to the Holders of Notes affected thereby otherwise
than in accordance with the Indenture; or (j) release any Significant
Restricted Subsidiary that is a Guarantor from any of its obligations under
its Guarantee or the Indenture otherwise than in accordance with the
Indenture.
The Holders of a majority in aggregate principal amount of the outstanding
Notes, on behalf of all Holders of Notes, may waive compliance by the Company
and the Guarantors with certain restrictive provisions of the Indenture.
Subject to certain rights of the Trustee, as provided in the Indenture, the
Holders of a majority in aggregate principal amount of the Notes, on behalf of
all Holders, may waive any past default under the Indenture (including any
such waiver obtained in connection with a tender offer or exchange offer for
the Notes), except a default in the payment of principal, premium or interest
or a default arising from failure to purchase any Notes tendered pursuant to
an Offer to Purchase, or a default in respect of a provision that under the
Indenture cannot be modified or amended without the consent of the Holder of
each Note that is affected.
THE TRUSTEE
Except during the continuance of a Default, the Trustee will perform only
such duties as are specifically set forth in the Indenture. During the
existence of a Default, the Trustee will exercise such rights and powers
vested in it under the Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, any Guarantor or any other obligor upon the
Notes, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claim as security or otherwise.
The Trustee is permitted to engage in other transactions with the Company or
an Affiliate of the Company; provided, however, that if it acquires any
conflicting interest (as defined in the Indenture or in the Trust Indenture
Act), it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time
such Person becomes a Restricted Subsidiary or is merged or consolidated with
or into the Company or any Restricted Subsidiary.
80
<PAGE>
"Acquired Person" means, with respect to any specified Person, any other
Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of transfers of
cash or other property to others or payments for property or services for the
account or use of others, or otherwise) by the Company or any Restricted
Subsidiary to any other Person, or any acquisition or purchase of Equity
Interests of any other Person by the Company or any Restricted Subsidiary, in
either case pursuant to which such Person shall become a Restricted Subsidiary
or shall be consolidated with or merged into the Company or any Restricted
Subsidiary or (ii) any acquisition by the Company or any Restricted Subsidiary
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business.
"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; provided, however, that for purposes of
the "Transactions with Affiliates" covenant, the term "Affiliate" shall not
include Chase Securities Inc. or its affiliates. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.
"Amended Credit Facility" means the Second Amended, Restated and
Consolidated Credit Agreement, dated as of July 3, 1997, by and among the
Company, the Subsidiaries of the Company identified on the signature pages
thereof and any Subsidiary that is later added thereto, the lenders named
therein, and The Chase Manhattan Bank, as Administrative Agent, as amended,
including any deferrals, renewals, extensions, replacements, refinancings or
refundings thereof, or amendments, modifications or supplements thereto and
any agreement providing therefor (including any restatements thereof and any
increases in the amount of the commitment thereunder), whether by or with the
same or any other lender, creditor, group of lenders or group of creditors,
and including related notes, guarantee and note agreements and other
instruments and agreements executed in connection therewith.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
(that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction)
to any Person other than the Company or a Wholly Owned Restricted Subsidiary,
in one transaction or a series of related transactions, of (i) any Equity
Interest of any Restricted Subsidiary (other than directors' qualifying
shares, to the extent mandated by applicable law); (ii) any assets of the
Company or any Restricted Subsidiary which constitute substantially all of an
operating unit or line of business of the Company or any Restricted
Subsidiary; or (iii) any other property or asset of the Company or any
Restricted Subsidiary outside of the ordinary course of business (including
the receipt of proceeds paid on account of the loss of or damage to any
property or asset and awards of compensation for any asset taken by
condemnation, eminent domain or similar proceedings). For the purposes of this
definition, the term "Asset Sale" shall not include (a) any transaction
consummated in compliance with "Certain Covenants--Merger, Sale of Assets,
etc." above and the creation of any Lien not prohibited by "Certain
Covenants--Limitation on Liens" above; (b) sales of property or equipment that
has become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Restricted Subsidiary, as
the case may be; (c) any transaction consummated in compliance with "Certain
Covenants--Limitation on Restricted Payments" above; (d) any transfers of
properties and assets between Wholly Owned Restricted Subsidiaries; (e) any
transaction pursuant to which the Company or any Restricted Subsidiary
transfers property to a Person and the Company or such Restricted Subsidiary
leases such property from such Person; provided, however, that such
transaction complies with "Limitation on Indebtedness" above; and (f) sales of
Investments (i) that were originally made pursuant to clause (a)
81
<PAGE>
of the definition of "Permitted Investments" or (ii) to the extent that such
Investments were treated as Restricted Payments. In addition, solely for
purposes of "Certain Covenants--Disposition of Proceeds of Asset Sales" above,
any sale, conveyance, transfer, lease or other disposition of any property or
asset, whether in one transaction or a series of related transactions,
involving assets with a Fair Market Value not in excess of $5.0 million in any
fiscal year shall be deemed not to be an Asset Sale.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be properly capitalized on the balance sheet in accordance
with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency
or instrumentality thereof having maturities of not more than six months from
the date of acquisition; (c) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described
in clauses (b) and (c) above entered into with any financial institution
meeting the qualifications specified in clause (c) above; (e) commercial paper
rated P-1, A-1 or the equivalent thereof by Moody's Investors Service, Inc. or
Standard & Poor's Corporation, respectively, and in each case maturing within
six months after the date of acquisition; and (f) corporate securities having
a rating equal to or higher than BBB- and Baa3, or the equivalents thereof, by
both Standard & Poors Ratings Group and Moody's Investor Service, Inc.,
respectively, if both such entities rate the securities, or having such rating
from one of such entities if only one such entity is rating such Securities.
"Change of Control" means the occurrence of any of the following events
(whether or not approved by the Board of Directors of the Company): (i) any
Person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
including any group acting for the purpose of acquiring, holding or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act),
other than one or more Permitted Holders, is or becomes the "beneficial owner"
(as defined in Rule 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, upon the happening of an event
or otherwise), directly or indirectly, of more than 35% of the total voting
power of the then outstanding Voting Equity Interests of the Company; (ii) the
Company consolidates with, or merges with or into, another Person (other than
the Company or a Wholly Owned Restricted Subsidiary) or the Company or any of
its Subsidiaries sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets of the Company and its
Subsidiaries (determined on a consolidated basis) to any Person (other than
the Company or any Wholly Owned Restricted Subsidiary), other than any such
transaction where immediately after such transaction the Person or Persons
that "beneficially owned" (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 securities that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time) immediately prior to such transaction, directly or indirectly, a
majority of the total voting power of the then outstanding Voting Equity
Interests of Holdings or the Company, as the case may be, "beneficially own"
(as so determined), directly or indirectly, a majority of the total voting
power of the then outstanding Voting Equity Interests of the surviving or
transferee Person; (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders
of the Company was approved by a vote of a majority of the directors of the
Company
82
<PAGE>
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 of the
Company then in office; or (iv) the Company is liquidated or dissolved or
adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions described under "Certain Covenants--Merger, Sale
of Assets, etc."
"Change of Control Date" has the meaning set forth under "Offer to Purchase
upon Change of Control" above.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the four quarter
period of the most recent four consecutive fiscal quarters for which financial
statements are available ending prior to the date of such determination (the
"Four Quarter Period") to (ii) Consolidated Fixed Charges for such Four
Quarter Period; provided, however, that (1) if the Company or any Restricted
Subsidiary has incurred any Indebtedness since the beginning of such Four
Quarter Period that remains outstanding on such date of determination or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated
Fixed Charges for such Four Quarter Period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such Four Quarter Period and the discharge
of any other Indebtedness repaid, repurchased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the
first day of such Four Quarter Period, (2) if since the beginning of such Four
Quarter Period the Company or any Restricted Subsidiary shall have made any
Asset Sale, the Consolidated EBITDA for such Four Quarter Period shall be
reduced by an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Sale for such
Four Quarter Period or increased by an amount equal to the Consolidated EBITDA
(if negative) directly attributable thereto for such Four Quarter Period and
Consolidated Fixed Charges for such Four Quarter Period shall be reduced by an
amount equal to the Consolidated Fixed Charges directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased
or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Sale for such Four
Quarter Period (or, if the Equity Interests of any Restricted Subsidiary are
sold, the Consolidated Fixed Charges for such Four Quarter Period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale), (3) if since the beginning of such
Four Quarter Period the Company or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary (or any
Person that becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit or a line of a business or which
constitutes Replacement Assets, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro
forma effect to (x) such Investment or acquisition of assets (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred
on the first day of such Four Quarter Period and (y) net cost savings that the
Company reasonably believes in good faith could have been achieved during the
Four Quarter Period as a result of such Investment or acquisition and which
cost savings could then be reflected in pro forma financial statements under
GAAP (provided that both (A) such cost savings were identified and quantified
in an Officer's Certificate delivered to the Trustee at the time of the
consummation of the Investment or acquisition and (B) with respect to each
Investment or acquisition completed prior to the 90th day preceding such date
of determination, actions were commenced or initiated by the Company within 90
days of such Investment or acquisition to effect such cost savings identified
in such officer's certificate and (4) if since the beginning of such Four
Quarter Period any Person (that subsequently became a Restricted Subsidiary or
was merged with or into the Company or any Restricted Subsidiary since the
beginning of such Four Quarter Period) shall have made any Asset Sale or any
Investment
83
<PAGE>
or acquisition of assets that would have required an adjustment pursuant to
clause (2) or (3) above if made by the Company or a Restricted Subsidiary
during such Four Quarter Period, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro
forma effect thereto as if such Asset Sale, Investment or acquisition of
assets occurred on, with respect to any Investment or acquisition, the first
day of such Four Quarter Period and, with respect to any Asset Sale, the day
prior to the first day of such Four Quarter Period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Fixed Charges associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in
accordance with GAAP. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any
agreement under which Interest Rate Protection Obligations are outstanding
applicable to such Indebtedness if such agreement under which such Hedging
Obligations are outstanding has a remaining term as at the date of
determination in excess of 12 months); provided, however, that the
Consolidated Fixed Charges of the Company attributable to interest on any
Indebtedness Incurred under a revolving credit facility computed on a pro
forma basis shall be computed based upon the average daily balance of such
Indebtedness during the Four Quarter Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Interest Expense for such period; (iii) Consolidated Non-
cash Charges for such period; and (iv) expenses relating to employee profit
sharing arising in connection with applicable Mexican statutory requirements
less (A) all non-cash items increasing Consolidated Net Income for such period
and (B) all cash payments during such period relating to non-cash charges that
were added back in determining Consolidated EBITDA in any prior period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Equity Interest of such Person (other than dividends paid solely in
Qualified Equity Interests) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Income Tax Expense" means, with respect to the Company for any
period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for any
period, without duplication, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Hedging Obligations,
(c) the interest portion of any deferred payment obligation, (d) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and (e) all capitalized interest
and all accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the
Company and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net income
(loss) of the Company and the Restricted Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such person is not a Restricted
84
<PAGE>
Subsidiary, except (A) to the extent of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution and (B) the Company's equity in a net loss of
any such Person (other than an Unrestricted Subsidiary) for such period shall
be included in determining such Consolidated Net Income; (ii) any net income
(loss) of any person acquired by the Company or a Restricted Subsidiary in a
pooling of interests transaction for any period prior to the date of such
acquisition; (iii) any net income (but not loss) of any Restricted Subsidiary
if such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company to the extent of
such restrictions; (iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or the Restricted Subsidiaries
(including pursuant to any sale/leaseback transaction) outside of the ordinary
course of business; (v) any extraordinary gain or loss; (vi) the cumulative
effect of a change in accounting principles; (vii) any restoration to income
of any contingency reserve of an extraordinary, non-recurring or unusual
nature, except to the extent that provision for such reserve was made out of
Consolidated Net Income accrued at any time following the Issue Date; and
(viii) gains and losses resulting from foreign currency transaction
adjustments.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Equity
Interests of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period the sum of (i) depreciation, (ii) amortization and (iii) other non-cash
expenses of such Person and its Restricted Subsidiaries reducing Consolidated
Net Income of such Person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP (excluding, for
purposes of clause (iii) only, such charges which require an accrual of or a
reserve for cash charges for any future period).
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Indebtedness" means (a) any Indebtedness outstanding
under the Amended Credit Facility and (b) any other Senior Indebtedness which,
at the time of determination, has an aggregate principal amount outstanding,
together with any commitments to lend additional amounts, of at least $25.0
million, if the instrument governing such Senior Indebtedness expressly states
that such Indebtedness is "Designated Senior Indebtedness" for purposes of the
Indenture and a Board Resolution setting forth such designation by the Company
has been filed with the Trustee.
"Designation" has the meaning set forth under "Certain Covenants--
Designation of Unrestricted Subsidiaries" above.
"Designation Amount" has the meaning set forth under "Certain Covenants--
Designation of Unrestricted Subsidiaries" above.
"Disposition" means, with respect to any Person, any merger, consolidation
or other business combination involving such Person (whether or not such
Person is the Surviving Person) or the sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of such Person's
assets.
"Disqualified Equity Interest" means any Equity Interest which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof
(except, in each case, upon the occurrence of a Change of Control), in whole
or in part, or exchangeable into Indebtedness on or prior to the earlier of
the maturity date of the Notes or the date on which no Notes remain
outstanding.
85
<PAGE>
"Domestic Restricted Subsidiary" means a Restricted Subsidiary of the
Company organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially
inside the United States.
"Equity Interest" in any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
in such Person, including any Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Expiration Date" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair
Market Value of any such asset or assets shall be determined conclusively by
the Board of Directors of the Company acting in good faith, and shall be
evidenced by resolutions of the Board of Directors of the Company delivered to
the Trustee.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the Company
not organized under the laws of the United States or any political subdivision
thereof and the operations of which are located substantially outside of the
United States.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in the United States which are applicable at the date of
determination and which are consistently applied for all applicable periods.
"guarantee" means, as applied to any obligation, (i) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means the guarantee of the Notes by each Guarantor under the
Indenture.
"Guarantor" means (i) each Domestic Restricted Subsidiary in existence on
the Issue Date, (ii) Fabrene Group, Inc., and (iii) each other Restricted
Subsidiary, formed, created or acquired before or after the Issue Date,
required to become a Guarantor after the Issue Date pursuant to "Limitation on
Guarantees by Restricted Subsidiaries" above.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, at any
date, (a) all Obligations of such Guarantor under the Amended Credit Facility;
(b) all Hedging Obligations of such Guarantor; (c) all Obligations of such
Guarantor under stand-by letters of credit; and (d) all other Indebtedness of
such Guarantor for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness unless the
instrument under which such Indebtedness of such Guarantor for money borrowed
is Incurred expressly provides that such Indebtedness for money borrowed is
not senior or superior in right of payment to such Guarantor's
86
<PAGE>
Guarantee of the Notes, and all renewals, extensions, modifications,
amendments or refinancings thereof. Notwithstanding the foregoing, Guarantor
Senior Indebtedness shall not include (a) to the extent that it may constitute
Indebtedness, any Obligation for federal, state, local or other taxes; (b) any
Indebtedness among or between such Guarantor and any Subsidiary of such
Guarantor or any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries; unless, and for so long as such Indebtedness has been pledged to
secure obligations under or in respect of Guarantor Senior Indebtedness; (c)
to the extent that it may constitute Indebtedness, any Obligation in respect
of any trade payable Incurred for the purchase of goods or materials, or for
services obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of the Indenture; (e) Indebtedness
evidenced by such Guarantor's Guarantee of the Notes; (f) Indebtedness of such
Guarantor that is expressly subordinate or junior in right of payment to any
other Indebtedness of such Guarantor; (g) to the extent that it may constitute
Indebtedness, any obligation owing under leases (other than Capitalized Lease
Obligations) or management agreements; (h) any obligation that by operation of
law is subordinate to any general unsecured obligations of such Guarantor; (i)
Indebtedness represented by guarantees of the Existing Notes; and (j)
Indebtedness of a Guarantor to the extent such Indebtedness is owed to and
held by any Federal, state, local or other governmental authority.
"Hedging Agreement" means, with respect to any Person, all interest rate
swap or similar agreements or foreign currency or commodity hedge, exchange or
similar agreements of such Person.
"Hedging Obligations" means, with respect to any Person, the Obligations of
such Person under Hedging Agreements.
"Holders" means the registered holders of the Notes.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
GAAP or otherwise, of any such Indebtedness or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall have
meanings correlative to the foregoing). Indebtedness of any Acquired Person or
any of its Subsidiaries existing at the time such Acquired Person becomes a
Restricted Subsidiary (or is merged into or consolidated with the Company or
any Restricted Subsidiary), whether or not such Indebtedness was Incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Restricted Subsidiary (or being merged into or consolidated with
the Company or any Restricted Subsidiary), shall be deemed Incurred at the
time any such Acquired Person becomes a Restricted Subsidiary or merges into
or consolidates with the Company or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses; (c) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
incurred in the ordinary course of business and payable in accordance with
industry practices, or other accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith); (e) every Capital Lease Obligation of such Person; (f) every net
obligation under Hedging Agreements of such Person; (g) every obligation of
the type referred to in clauses (a) through (f) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor, guarantor or otherwise; and (h) any and all deferrals,
87
<PAGE>
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (a) shall never be calculated
taking into account any cash and cash equivalents held by such Person; (b)
shall not include obligations of any Person (x) arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence, (y) resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices and (z) under stand-by letters of credit to the
extent collateralized by cash or Cash Equivalents; (c) which provides that an
amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be deemed to be incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination; (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company or any Restricted Subsidiary; and (e) shall not include
obligations under performance bonds, performance guarantees, surety bonds and
appeal bonds, letters of credit or similar obligations, incurred in the
ordinary course of business.
"Independent Financial Advisor" means a nationally recognized, accounting,
appraisal, investment banking firm or consultant which, in the judgment of the
Board of Directors of the Company, is independent and qualified to perform the
task for which it is to be engaged.
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
any liquidation, dissolution or winding up of such Person, or any bankruptcy,
reorganization, insolvency, receivership or similar proceeding with respect to
such Person, whether voluntary or involuntary.
"Interest" means, with respect to the Notes, the sum of any cash interest
and any Additional Interest (as defined under "Registration Rights" below) on
the Notes.
"Investment" means, with respect to any Person, any direct or indirect loan,
advance, guarantee or other extension of credit or capital contribution to (by
means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. For
purposes of the "Limitation on Restricted Payments" covenant above, the amount
of any Investment shall be the original cost of such Investment, plus the cost
of all additions thereto, but without any other adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment; reduced by the payment of dividends or distributions in
connection with such Investment or any other amounts received in respect of
such Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or
any Restricted Subsidiary sells or otherwise disposes of any Voting Equity
Interests of any direct or indirect Restricted Subsidiary such that, after
giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, greater than 50% of the outstanding Voting Equity
Interests of such Restricted Subsidiary, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition.
"Issue Date" means the original issue date of the Notes.
"Lien" means any lien, mortgage, charge, security interest, hypothecation,
assignment for security or encumbrance of any kind (including any conditional
sale or capital lease or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
"Maturity Date" means the date, which is set forth on the face of the Notes,
on which the Notes will mature.
88
<PAGE>
"Net Cash Proceeds" means the aggregate proceeds in the form of cash or Cash
Equivalents received by the Company or any Restricted Subsidiary in respect of
any Asset Sale, including all cash or Cash Equivalents received upon any sale,
liquidation or other exchange of proceeds of Asset Sales received in a form
other than cash or Cash Equivalents, net of (a) the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board
of Directors of the Company to be provided as a reserve, in accordance with
GAAP, against any liabilities associated with such assets which are the
subject of such Asset Sale; including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee (provided that the amount of any such reserves shall be deemed to
constitute Net Cash Proceeds at the time such reserves shall have been
reversed or are not otherwise required to be retained as a reserve); and (e)
with respect to Asset Sales by Restricted Subsidiaries, the portion of such
cash payments attributable to Persons holding a minority interest in such
Restricted Subsidiary.
"Obligations" means any principal, interest (including, without limitation,
Post-Petition Interest), penalties, fees, indemnifications, reimbursement
obligations, damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on behalf
of the Company by first-class mail, postage prepaid, to each holder at his
address appearing in the register for the Notes on the date of the Offer
offering to purchase up to the principal amount of Notes specified in such
Offer at the purchase price specified in such Offer (as determined pursuant to
the Indenture if so required). Unless otherwise required by applicable law,
the Offer shall specify an expiration date (the "Expiration Date") of the
Offer to Purchase, which shall be not less than 20 Business Days nor more than
60 days after the date of such Offer, and a settlement date (the "Purchase
Date") for purchase of Notes to occur no later than five Business Days after
the Expiration Date. The Company shall notify the Trustee at least 15 Business
Days (or such shorter period as is acceptable to the Trustee) prior to the
mailing of the Offer of the Company's obligation to make an Offer to Purchase,
and the Offer shall be mailed by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company. The Offer shall
contain all the information required by applicable law to be included therein.
The Offer shall contain all instructions and materials necessary to enable
such Holders to tender Notes pursuant to the Offer to Purchase. The Offer
shall also state: (1) the Section of the Indenture pursuant to which the Offer
to Purchase is being made; (2) the Expiration Date and the Purchase Date; (3)
the aggregate principal amount of the outstanding Notes offered to be
purchased by the Company pursuant to the Offer to Purchase (including, if less
than 100%, the manner by which such amount has been determined pursuant to the
Section of the Indenture requiring the Offer to Purchase) (the "Purchase
Amount"); (4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Notes accepted for payment (as specified
pursuant to the Indenture) (the "Purchase Price"); (5) that the Holder may
tender all or any portion of the Notes registered in the name of such Holder
and that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount; (6) the place or places where Notes are
to be surrendered for tender pursuant to the Offer to Purchase; (7) that
interest on any Note not tendered or tendered but not purchased by the Company
pursuant to the Offer to Purchase will continue to accrue; (8) that on the
Purchase Date the Purchase Price will become due and payable upon each Note
being accepted for payment pursuant to the Offer to Purchase and that interest
thereon shall cease to accrue on and after
89
<PAGE>
the Purchase Date; (9) that each Holder electing to tender all or any portion
of a Note pursuant to the Offer to Purchase will be required to surrender such
Note at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing); (10) that
(a) if Notes in an aggregate principal amount less than or equal to the
Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to
Purchase, the Company shall purchase all such Notes and (b) if Notes in an
aggregate principal amount in excess of the Purchase Amount are tendered and
not withdrawn pursuant to the Offer to Purchase, the Company shall purchase
Notes having an aggregate principal amount equal to the Purchase Amount on a
pro rata basis (with such adjustments as may be deemed appropriate so that
only Notes in denominations of $1,000 principal amount or integral multiples
thereof shall be purchased); and (11) that in the case of any Holder whose
Note is purchased only in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes, of any authorized denomination as requested by
such Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance with
the provisions above pertaining to any Offer.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Holder" means Golder, Thoma, Cressey Fund III Limited
Partnership, The InterTech Group, Inc. (for so long as Messrs. Zucker and Boyd
own 100% of the issued and outstanding stock thereof), Mr. Zucker and Mr. Boyd
and members of either of their immediate families and trusts of which such
persons are the beneficiaries and The Chase Manhattan Corporation and its
subsidiaries or The Chase Manhattan Foundation.
"Permitted Indebtedness" has the meaning set forth in the second paragraph
of "Certain Covenants--Limitation on Indebtedness" above.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (c)
Hedging Obligations; (d) bonds, notes, debentures or other securities received
as a result of Asset Sales permitted under "Certain Covenants--Disposition of
Proceeds of Asset Sales" above not to exceed 25% of the total consideration
for such Asset Sales; (e) Investments in the Company and Investments in a
Restricted Subsidiary or a Person that, as a result of or in connection with
such Investment, becomes a Restricted Subsidiary or is merged with or into or
consolidated with the Company or another Restricted Subsidiary; (f)
Investments existing as of the Issue Date; and (g) any Investment consisting
of a guarantee by a Restricted Subsidiary of Senior Indebtedness or any
guarantee of Indebtedness otherwise permitted by the Indenture.
"Permitted Junior Securities" means any securities of the Company or any
other Person that are (i) equity securities without special covenants or (ii)
debt securities expressly subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding, to substantially the same
extent as, or to a greater extent than, the Notes are subordinated as provided
in the Indenture, in any event pursuant to a court order so providing and as
to which (a) the rate of interest on such securities shall not exceed the
effective rate of interest on the Notes on the date of the Indenture, (b) such
securities shall not be entitled to the benefits of covenants or defaults
materially more beneficial to the holders of such securities than those in
effect with respect to the Notes on the date of the Indenture and (c) such
securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date six months
following the final scheduled maturity
90
<PAGE>
date of the Senior Indebtedness (as modified by the plan of reorganization of
readjustment pursuant to which such securities are issued).
"Permitted Liens" means (a) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure
any property or assets of the Company or any Restricted Subsidiary other than
the property or assets subject to the Liens prior to such merger or
consolidation; (b) Liens imposed by law such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith and by appropriate proceedings; (c)
Liens existing on the Issue Date; (d) Liens securing only the Notes or the
Guarantees; (e) Liens in favor of the Company or any Restricted Subsidiary
(including any such Liens securing Indebtedness, to the extent and for so long
as such Indebtedness is pledged to secure Senior Indebtedness); (f) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided, however,
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or minor imperfections of title that in
the aggregate do not in any case materially detract from the properties
subject thereto or interfere with the ordinary conduct of the business of the
Company and the Restricted Subsidiaries; (h) Liens resulting from the deposit
of cash or notes in connection with contracts, tenders or expropriation
proceedings, or to secure workers' compensation, surety or appeal bonds, costs
of litigation when required by law and public and statutory obligations or
obligations under franchise arrangements entered into in the ordinary course
of business; (i) Liens securing Indebtedness consisting of Capital Lease
Obligations, Purchase Money Indebtedness, mortgage financings, industrial
revenue bonds or other monetary obligations, in each case incurred solely for
the purpose of financing all or any part of the purchase price or cost of
construction or installation of assets used in the business of the Company or
the Restricted Subsidiaries, or repairs, additions or improvements to such
assets, provided, however, that (I) such Liens secure Indebtedness in an
amount not in excess of the original purchase price or the original cost of
any such assets or repair, addition or improvement thereto (plus an amount
equal to the reasonable fees and expenses in connection with the incurrence of
such Indebtedness), (II) such Liens do not extend to any other assets of the
Company or the Restricted Subsidiaries (and, in the case of repair, addition
or improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (III) the
Incurrence of such Indebtedness is permitted by "Certain Covenants--Limitation
on Indebtedness" above and (IV) such Liens attach within 90 days of such
purchase, construction, installation, repair, addition or improvement; and (j)
Liens to secure any refinancings, renewals, extensions, modifications or
replacements (collectively, "refinancing") (or successive refinancings), in
whole or in part, of any Indebtedness secured by Liens referred to in the
clauses above so long as such Lien does not extend to any other property
(other than improvements thereto).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, limited liability
limited partnership, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person
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 such 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.
91
<PAGE>
"Preferred Equity Interest", in any Person, means an Equity Interest of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over
Equity Interests of any other class in such Person.
"principal" of a debt security means the principal of the security plus,
when appropriate, the premium, if any, on the security.
"Public Equity Offering" means, with respect to the Company, an underwritten
public offering of Qualified Equity Interests of the Company pursuant to an
effective registration statement filed under the Securities Act (excluding
registration statements filed on Form S-8).
"Purchase Amount" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Date" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or the cost of construction or improvement of any
property; provided, however, that the aggregate principal amount of such
Indebtedness does not exceed the lesser of the Fair Market Value of such
property or such purchase price or cost, including any refinancing of such
Indebtedness that does not increase the aggregate principal amount (or
accreted amount, if less) thereof as of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer to
Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest in such
Person other than any Disqualified Equity Interest.
"Redemption Date" has the meaning set forth in the third paragraph of
"Optional Redemption" above.
"Replacement Assets" has the meaning set forth in the first paragraph under
"Certain Covenants--Disposition of Proceeds of Asset Sales" above.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a resolution of
the Board of Directors of the Company delivered to the Trustee, as an
Unrestricted Subsidiary pursuant to "Certain Covenants--Designation of
Unrestricted Subsidiaries" above. Any such designation may be revoked by a
resolution of the Board of Directors of the Company delivered to the Trustee,
subject to the provisions of such covenant.
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" means, at any date, (a) all Obligations of the Company
under the Amended Credit Facility; (b) all Hedging Obligations of the Company;
(c) all Obligations of the Company under stand-by letters of credit; and (d)
all other Indebtedness of the Company for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness, unless the instrument under which such Indebtedness of the
Company for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment
to the Notes, and all renewals, extensions, modifications, amendments or
refinancings thereof. Notwithstanding the foregoing, Senior Indebtedness shall
not include (a) to the extent that it may constitute Indebtedness, any
Obligation for Federal, state, local or other taxes; (b) any Indebtedness
among or between the Company and any Subsidiary of the Company or any
Affiliate of the Company or any of such Affiliate's Subsidiaries; unless and
for so long as such Indebtedness has been pledged to secure obligations under
or in respect of Senior Indebtedness; (c) to the extent that it
92
<PAGE>
may constitute Indebtedness, any Obligation in respect of any trade payable
Incurred for the purchase of goods or materials, or for services obtained, in
the ordinary course of business; (d) that portion of any Indebtedness that is
Incurred in violation of the Indenture; (e) Indebtedness evidenced by the
Notes; (f) Indebtedness of the Company that is expressly subordinate or junior
in right of payment to any other Indebtedness of the Company; (g) to the
extent that it may constitute Indebtedness, any obligation owing under leases
(other than Capitalized Lease Obligations) or management agreements; (h) any
obligation that by operation of law is subordinate to any general unsecured
obligations of the Company; (i) Indebtedness represented by the Existing
Notes; and (j) Indebtedness of the Company to the extent such Indebtedness is
owed to and held by any Federal, state, local or other governmental authority.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu in right of payment with the Notes and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Significant Restricted Subsidiary" means, at any date of determination, (a)
any Restricted Subsidiary that, together with its Subsidiaries that constitute
Restricted Subsidiaries (i) for the most recent fiscal year of the Company
accounted for more than 10.0% of the consolidated revenues of the Company and
the Restricted Subsidiaries or (ii) as of the end of such fiscal year, owned
more than 10.0% of the consolidated assets of the Company and the Restricted
Subsidiaries, all as set forth on the consolidated financial statements of the
Company and the Restricted Subsidiaries for such year prepared in conformity
with GAAP, and (b) any Restricted Subsidiary which, when aggregated with all
other Restricted Subsidiaries that are not otherwise Significant Restricted
Subsidiaries and as to which any event described in clause (h) of "Events of
Default" above has occurred, would constitute a Significant Restricted
Subsidiary under clause (a) of this definition.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is
due and payable.
"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Notes or such
Guarantor's Guarantee, as the case may be.
"Subsidiary" means, with respect to any Person, (a) any corporation of which
the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, through one or more Persons by such Person, or
(b) any other Person of which at least a majority of Voting Equity Interests
are at the time, directly or indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or that
makes any Disposition, the Person formed by or surviving such Disposition or
the Person to which such Disposition is made.
"United States Government Obligations" means direct non-callable obligations
of the United States of America for the payment of which the full faith and
credit of the United States is pledged.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to "Certain Covenants--Designation of Unrestricted Subsidiaries"
above. Any such designation may be revoked by a resolution of the Board of
Directors of the Company delivered to the Trustee, subject to the provisions
of such covenant.
"Unutilized Net Cash Proceeds" has the meaning set forth in the third
paragraph under "Certain Covenants--Disposition of Proceeds of Asset Sales"
above.
93
<PAGE>
"Voting Equity Interests" means Equity Interests in a corporation or other
Person with voting power under ordinary circumstances entitling the holders
thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary all of
the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company and/or one
or more Wholly Owned Restricted Subsidiaries.
BOOK-ENTRY; DELIVERY AND FORM
The Notes initially will be represented by one or more permanent global
certificates in definitive, duly registered form (the "Global Notes"). The
Global Notes will be deposited on the date of issuance with, or on behalf of,
The Depository Trust Company, New York, New York ("DTC") and registered in the
name of a nominee of DTC.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of Notes
of the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and
the transfer of such ownership will be effected only through, records
maintained by DTC or its nominee (with respect to interests of participants)
and the records of participants (with respect to interests of persons other
than participants). Such accounts initially will be designated by or on behalf
of the Initial Purchaser and ownership of beneficial interests in the Global
Notes will be limited to persons who have accounts with DTC ("participants")
or persons who hold interests through participants. QIBs and institutional
Accredited Investors who are not QIB's may hold their interests in the Global
Notes directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in the Global Notes
will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the Notes.
Payments of the principal of, premium (if any) and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Company, the Trustee or any Paying Agent
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, and interest on the Global Notes, will credit
participants' accounts with payments in amount proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Notes
held through such participants will be
94
<PAGE>
governed by standing instructions and customary practice, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same-day funds. If a holder requires physical delivery of a
certificate in registered form (a "Certificated Security") for any reason,
including to sell Notes to persons in states which require physical delivery
of the Notes, or to pledge such securities, such holder must transfer its
interest in a Global Note in accordance with the normal procedures of DTC and
with the procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the Indenture, DTC will exchange the Global
Notes for Certificated Securities, which it will distribute to its
participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Issuer within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.
REGISTRATION RIGHTS
The following description of the Registration Rights Agreement is a summary
only, does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the Registration Rights
Agreement.
DEFINITIONS. As used in this section, the following terms shall have the
following meanings:
Closing Date: July 3, 1997, the closing date of the Initial Offering of the
Old Notes.
Effectiveness Date: The 150th day after the Closing Date; provided, however,
that, with respect to the Initial Shelf Registration Statement, (i) if the
Filing Date in respect thereof is fewer than 60 days
95
<PAGE>
prior to the 150th day after the Closing Date, then the Effectiveness Date in
respect thereof shall be the 60th day after such Filing Date and (ii) if the
Filing Date is after the filing of the Exchange Offer Registration Statement
with the SEC, then the Effectiveness Date in respect thereof shall be the 60th
day after such Filing Date.
Expiration Date: The 30th day after the Effectiveness Date; provided,
however, that if the Exchange Offer is required by applicable law to be open
for a period of more than 30 days, the Expiration Date shall mean the last
date of such period.
Filing Date: The 60th day after the Closing Date; provided, however, that,
with respect to the Initial Shelf Registration Statement, (i) if a Shelf
Registration Event shall have occurred fewer than 30 days prior to the 60th
day after the Closing Date, then the Filing Date in respect thereof shall be
the 30th day after such Shelf Registration Event and (ii) if a Shelf
Registration Event shall have occurred after the filing of the Exchange Offer
Registration Statement with the SEC, then the Filing Date in respect thereof
shall be the 30th day after such Shelf Registration Event.
Registrable Securities: The Old Notes upon original issuance thereof and at
all times subsequent thereto, each Exchange Note (as defined below) as to
which clause (v) of paragraph (b) of "The Exchange Offer--Purpose and Effect
of the Exchange Offer" below is applicable upon original issuance and at all
times subsequent thereto and, if issued, the Private Exchange Notes (as
defined in the Registration Rights Agreement), until in the case of any such
Old Notes, Exchange Notes or Private Exchange Notes, as the case may be, (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which clause (v) of paragraph (b) of "The Exchange Offer--Purpose and Effect
of the Exchange Offer" below is applicable, the Exchange Offer Registration
Statement) covering such Old Notes, Exchange Notes or Private Exchange Notes
has been declared effective by the SEC and such Old Notes, Exchange Notes or
Private Exchange Notes, as the case may be, have been disposed of in
accordance with such effective Registration Statement, (ii) such Old Notes,
Exchange Notes or Private Exchange Notes, as the case may be, are sold in
compliance with Rule 144 under the Securities Act, (iii) such Old Note has
been exchanged for an Exchange Note pursuant to the Exchange Offer and clause
(v) of paragraph (b) of "The Exchange Offer--Purpose and Effect of the
Exchange Offer" below is not applicable thereto, or (iv) such Old Notes,
Exchange Notes or Private Exchange Notes, as the case may be, cease to be
outstanding.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on July 3, 1997 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Old Notes to qualified institutional buyers in
reliance on Rule 144A under the Securities Act. As a condition to the Purchase
Agreement, the Company, the Guarantors and the Initial Purchaser entered into
the Registration Rights Agreement on the date of the Initial Offering (the
"Issue Date"). Certain terms of the Registration Rights Agreement are
summarized as follows:
(a) The Company and each of the Guarantors agree to file with the Securities
and Exchange Commission (the "SEC" or "Commission"), on or before the Filing
Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Securities for a like aggregate principal amount of senior
subordinated debt securities of the Company which are identical to the Old
Notes and are guaranteed, jointly and severally, by each of the Guarantors
(the "Exchange Notes") (and which are entitled to the benefits of a trust
indenture which is identical to the Indenture (other than such changes as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification of such trust indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act"))
96
<PAGE>
and which has been qualified under the Trust Indenture Act), except that the
Exchange Notes shall have been registered pursuant to an effective
Registration Statement under the Securities Act and shall contain no
restrictive legend thereon. The Exchange Offer will be registered under the
Securities Act on the appropriate form (the "Exchange Offer Registration
Statement") and will comply with all applicable tender offer rules and
regulations under the Exchange Act. The Company and each of the Guarantors
agree to use their respective best efforts to (i) cause the Exchange Offer
Registration Statement to become effective and commence the Exchange Offer on
or prior to the Effectiveness Date, (ii) keep the Exchange Offer open until
the Expiration Date and (iii) exchange Exchange Notes for all Notes validly
tendered and not withdrawn pursuant to the Exchange Offer on or prior to the
fifth day following the Expiration Date.
The Company and each of the Guarantors shall use their respective best
efforts to keep the Exchange Offer Registration Statement effective and to
amend and supplement the prospectus contained therein in order to permit such
prospectus to be lawfully delivered by all persons subject to the prospectus
delivery requirements of the Securities Act for at least 180 days (or such
shorter time as such persons must comply with such requirements in order to
resell the Exchange Notes) (the "Applicable Period").
(b) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to
effect the Exchange Offer, (ii) the Exchange Offer is not commenced on or
prior to the Effectiveness Date, (iii) the Exchange Offer is not, for any
reason, consummated on or prior to the fifth day after the Expiration Date,
(iv) any Holder of Private Exchange Notes so requests, or (v) in the case of
any Holder that participates in the Exchange Offer, such Holder does not
receive Exchange Notes on the date of the exchange that may be sold without
restriction under Federal securities laws (the occurrence of any such event, a
"Shelf Registration Event"), then, in the case of each of clauses (i) through
(v) of this sentence, the Company shall promptly deliver to the Holders and
the Trustee notice thereof (the "Shelf Notice") and thereafter the Company and
each of the Guarantors shall file an Initial Shelf Registration Statement
pursuant to the terms of the Registration Rights Agreement.
SHELF REGISTRATION. If a Shelf Registration Event has occurred (and whether
or not an Exchange Offer Registration Statement has been filed with the SEC or
has become effective, or the Exchange Offer has been consummated), then:
(a) Initial Shelf Registration Statement. The Company and each of the
Guarantors shall promptly prepare and file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule
415 covering all of the Registrable Securities (the "Initial Shelf
Registration Statement"). The Company and each of the Guarantors shall file
with the SEC the Initial Shelf Registration Statement on or prior to the
Filing Date. The Initial Shelf Registration Statement shall be on Form S-1 or
another appropriate form if available, permitting registration of such
Registrable Securities for resale by such holders in the manner designated by
them (including, without limitation, in one or more underwritten offerings).
The Company and each of the Guarantors shall not permit any securities other
than the Registrable Securities to be included in the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement. The
Company and each of the Guarantors shall use their respective best efforts to
cause the Initial Shelf Registration Statement to be declared effective under
the Securities Act on or prior to the Effectiveness Date, and to keep the
Initial Shelf Registration Statement continuously effective under the
Securities Act until the date which is 24 months from the Closing Date or such
shorter period ending when (i) all Registrable Securities covered by the
Initial Shelf Registration Statement have been sold in the manner set forth
and as contemplated in the Initial Shelf Registration Statement or (ii) a
Subsequent Shelf Registration Statement covering all of the Registrable
Securities has been declared effective under the Securities Act (such 24 month
or shorter period, the "Effectiveness Period").
97
<PAGE>
(b) Subsequent Shelf Registration Statements. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases
to be effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the securities registered
thereunder), the Company and each of the Guarantors shall use their respective
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event the Company and each of the Guarantors
shall within 45 days of such cessation of effectiveness amend the Shelf
Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company and each of the
Guarantors shall use their respective best efforts to cause the Subsequent
Shelf Registration Statement to be declared effective as soon as reasonably
practicable after such filing and to keep such Registration Statement
continuously effective until the end of the Effectiveness Period. As used
herein the term "Shelf Registration Statement" means the Initial Shelf
Registration Statement and any Subsequent Shelf Registration Statement.
(c) Supplements and Amendments. The Company and each of the Guarantors shall
promptly supplement and amend the Shelf Registration Statement if required by
the rules, regulations or instructions applicable to the registration form
used for such Shelf Registration Statement, if required by the Securities Act,
or if reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Securities covered by such Registration Statement or
by any underwriter of such Registrable Securities.
ADDITIONAL INTEREST. The Company agrees to pay, as liquidated damages,
additional interest on the Old Notes ("Additional Interest") under the
circumstances and to the extent set forth below (each of which shall be given
independent effect and shall not be duplicative):
(i) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement has not been filed on or prior to the
applicable Filing Date (unless, with respect to the Exchange Offer
Registration Statement, a Shelf Event described in clause (i) of paragraph
(b) of "--Purpose and Effect of Exchange Offer" above shall have occurred
prior to the Filing Date), Additional Interest shall accrue on the Old
Notes over and above the stated interest in an amount equal to $0.192 per
week (or any part thereof) per $1,000 principal amount of the Old Notes;
(ii) if either the Exchange Offer Registration Statement or the Initial
Shelf Registration Statement is not declared effective by the SEC on or
prior to the Effectiveness Date (unless, with respect to the Exchange Offer
Registration Statement, a Shelf Event described in clause (i) of paragraph
(b) of "--Purpose and Effect of Exchange Offer" above shall have occurred),
Additional Interest shall accrue on the Old Notes over and above the stated
interest in an amount equal to $0.192 per week (or any part thereof) per
$1,000 principal amount of Old Notes; and
(iii) if (A) the Company has not exchanged Exchange Notes for all Old
Notes validly tendered and not withdrawn in accordance with the terms of
the Exchange Offer on or prior to the fifth day after the Expiration Date,
or (B) the Exchange Offer Registration Statement ceases to be effective at
any time prior to the Expiration Date, or (C) if applicable, any Shelf
Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the Old
Notes over and above the stated interest in an amount equal to $0.192 per
week (or any part thereof) per $1,000 principal amount of the Old Notes
commencing on the (x) sixth day after the Expiration Date, in the case of
(A) above, or (y) the day the Exchange Offer Registration Statement ceases
to be effective in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above;
provided, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement as required hereunder (in the case
of clause (i) of this paragraph), (2) upon
98
<PAGE>
the effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement as required hereunder (in the case of clause (ii) of
this paragraph) or (3) upon the exchange of Exchange Notes for all Old Notes
validly tendered and not withdrawn (in the case of clause (iii)(A) of this
paragraph), or upon the effectiveness of the Exchange Offer Registration
Statement which had ceased to remain effective (in the case of clause (iii)(B)
of this paragraph), or upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause (iii)(C)
of this paragraph), or upon the effectiveness of a Subsequent Shelf
Registration Statement (in the case of clause (iii)(C) of this paragraph),
Additional Interest on the Old Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue (but
any accrued amount shall be payable).
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
of Exchange Notes in exchange for each $1,000 principal amount of outstanding
Old Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer. However, Old Notes may be
tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a Series B
designation and a different CUSIP Number from the Old Notes, (ii) the Exchange
Notes have been registered under the Securities Act and hence will not bear
legends restricting the transfer thereof and (iii) the holders of the Exchange
Notes will not be entitled to certain rights under the Registration Rights
Agreement, including the provisions providing for an increase in the interest
rate on the Old Notes in certain circumstances relating to the timing of the
Exchange Offer, all of which rights will terminate when the Exchange Offer is
terminated. The Exchange Notes will evidence the same debt as the Old Notes
and will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $400,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
August 27, 1997 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.
99
<PAGE>
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
October 3, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral
or written notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Old Notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the Exchange
Notes. Such interest will be paid with the first interest payment on the
Exchange Notes on January 1, 1998. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each January 1
and July 1, commencing on January 1, 1998.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
For a holder to validly tender Old Notes pursuant to the Exchange Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantee, or (in the case of a book-
entry transfer) an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents must be received by the Exchange Agent at the
address set forth under "Exchange Agent" prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, prior to 5:00 p.m., New York City
time, on the Expiration Date, either (a) certificates for tendered Old Notes
must be received by the Exchange Agent at such address or (b) such Old Notes
must be transferred pursuant to the procedures for book-entry transfer
described below (and a confirmation of such tender received by the Exchange
Agent, including an Agent's Message if the tendering holder has not delivered
a Letter of Transmittal). The term "Agent's Message" means a message,
transmitted by the book-entry transfer facility, The Depository Trust Company
(the "Book-Entry Transfer Facility"), to and received by the Exchange Agent
and forming a part of a book-entry confirmation, which states that the Book-
Entry Transfer Facility has received an express acknowledgment from the
tendering participant that such participant has received and agrees to be
bound by the Letter of Transmittal and that the Company may enforce such
Letter of Transmittal against such participant.
100
<PAGE>
By executing the Letter of Transmittal (or transmitting an Agent's Message
in lieu thereof), each holder will make to the Company the representations set
forth above in the third paragraph under the heading "--Purpose and Effect of
the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See
"Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a recognized participant in the Securities
Transfer Agent Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (each a "Medallion
Signature Guarantor"), unless the Old Notes tendered pursuant thereto are
tendered (i) by a registered holder who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of a member firm of a registered national securities exchange, a
member of the NASD or a commercial bank or trust company having an office or
correspondent in the United States (each of the foregoing being an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes with the
signature thereon guaranteed by a Medallion Signature Guarantor.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Old Notes at the Book-Entry Transfer Facility for the purpose of facilitating
the Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Old Notes by causing such Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account with
respect to the Old Notes in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Although delivery of the Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility, an appropriate Letter of Transmittal properly
completed and duly executed with any required signature
101
<PAGE>
guarantee (or, in the case of book-entry transfer, an Agent's Message in lieu
thereof) and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the right in its sole discretion to waive any defects,
irregularities or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived
will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal (or, in the case of book-entry transfer, an Agent's Message) or
any other required documents to the Exchange Agent or (iii) who cannot
complete the procedures for book-entry transfer (including delivery of an
Agent's Message), prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution (i) an Agent's Message with respect to guaranteed
delivery that is accepted by the Company, or (ii) a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Old Notes and the principal amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility), and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal or
facsimile thereof (or, in the case of book-entry transfer, an Agent's
Message), as well as the certificate(s) representing all tendered Old Notes
in proper form for transfer (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
102
<PAGE>
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Old Notes to be withdrawn
(the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case
of Old Notes transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited), (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such
Old Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Old Notes so withdrawn are validly retendered. Any Old Notes which
have been tendered but which are not accepted for exchange will be returned to
the holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries;
(b) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the sole judgment
of the Company, might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and
return all tendered Old Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of holders to withdraw
such Old Notes (see
"--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn.
103
<PAGE>
EXCHANGE AGENT
Harris Trust and Savings Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
HARRIS TRUST AND SAVINGS BANK
By Mail: Overnight Courier:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 77 Water Street, 4th Floor
P.O. Box 1023 New York, NY 10005
New York, NY 10268-1023 Attention: Reorganization Dept.
Attention: Reorganization Dept.
By Hand: Facsimile Transmission:
(for Eligible Institutions Only)
c/o Harris Trust Company of New York (212) 701-7636 or 7637
Receive Window
77 Water Street, 5th Floor
New York, NY 10005
Attention: Reorganization Dept.
For Information Telephone (call collect):
(212) 701-7624
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, less the original issue discount (net of
amortization) as reflected in the Company's accounting records on the date of
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. Certain expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule
104
<PAGE>
144A, to a person inside the United States whom the seller reasonably believes
is a qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel reasonably acceptable to the Company), (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, or (iv) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third
parties, the Company believes that a holder or other person who receives
Exchange Notes, whether or not such person is the holder (other than a person
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) who receives Exchange Notes in exchange for Old Notes in the
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes, will be allowed to
resell the Exchange Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Exchange Notes
a prospectus that satisfies the requirements of Section 10 of the Securities
Act. However, if any holder acquires Exchange Notes in the Exchange Offer for
the purpose of distributing or participating in a distribution of the Exchange
Notes, such holder cannot rely on the position of the staff of the Commission
enunciated in such no-action letters or any similar interpretive letters, and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Further, each Participating Broker-
Dealer that receives Exchange Notes for its own account in exchange for Old
Notes, where such Old Notes were acquired by such Participating Broker-Dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent
to the Company in the Letter of Transmittal that (i) the Exchange Notes are to
be acquired by the holder or the person receiving such Exchange Notes, whether
or not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act, and (v) the holder or any such other person acknowledges
that if such holder or other person participates in the Exchange Offer for the
purpose of distributing the Exchange Notes it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on those no-
action letters. As indicated above, each Participating Broker-Dealer that
receives an Exchange Note for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see "Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury
regulations, judicial authority and administrative rulings and practice. There
can be no assurance that the Internal Revenue Service (the "Service") will not
take a contrary view, and no ruling from the Service has been or will be
sought. Legislative, judicial or
105
<PAGE>
administrative changes or interpretations may be forthcoming that could alter
or modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders (including insurance companies, tax-
exempt organizations, financial institutions. broker-dealers, foreign
corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. The Company
recommends that each holder consult such holder's own tax advisor as to the
particular tax consequences of exchanging such holder's Old Notes for Exchange
Notes, including the applicability and effect of any state, local or foreign
tax laws.
The Company believes that the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as an "exchange" for
federal income tax purposes because the Exchange Notes will not be considered
to differ materially in kind or extent from the Old Notes. Rather, the
Exchange Notes received by a holder will be treated as a continuation of the
Old Notes in the hands of such holder. As a result, there should be no federal
income tax consequences to holders exchanging Old Notes for Exchange Notes
pursuant to the Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of Exchange
Notes received in exchange for Old Notes where such Old Notes were acquired as
a result of market-making activities or other trading activities. The Company
has agreed that for a period of 180 days after the Expiration Date, they will
make this Prospectus, as amended or supplemented, available to any
Participating Broker-Dealer for use in connection with any such resale. In
addition, until December 3, 1997 (90 days after the commencement of the
Exchange Offer), all dealers effecting transactions in the Exchange Notes may
be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by
Participating Broker-Dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the Exchange Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such Participating Broker-
Dealer and/or the purchasers of any such Exchange Notes. Any Participating
Broker-Dealer that resells the Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
For a period of 180 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such
documents in the Letter of Transmittal.
106
<PAGE>
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Kirkland & Ellis, Chicago, Illinois.
EXPERTS
The consolidated financial statements and schedule of Polymer Group, Inc.
included herein and appearing in Polymer Group, Inc.'s Annual Report (Form 10-
K) as of December 28, 1996 and December 30, 1995 and for each of the three
years ended December 28, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein
and included herein and incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
In connection with the Chicopee Acquisition on March 15, 1995, the Company
appointed Ernst & Young LLP, independent auditors, as independent accountants
for Chicopee B.V., an indirect foreign subsidiary, to replace Coopers &
Lybrand (Nederland) ("C&L Nederland"), independent public accountants
affiliated with Coopers & Lybrand International, whom the Company dismissed as
of March 15, 1995.
During the two fiscal years prior to the Chicopee Acquisition, there were no
disagreements with C&L Nederland on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure nor
did C&L Nederland's reports on the financial statements for such periods
contain an adverse opinion or disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit scope or accounting.
In connection with the filing of the Company's Registration Statement on
Form S-1, C&L Nederland was provided with a copy of this disclosure and was
requested by the Company to furnish a letter addressed to the Commission
stating whether they agree with the above statements. A copy of C&L
Nederland's letter to the Commission was filed as an exhibit to the
Registration Statement on Form S-1.
107
<PAGE>
POLYMER GROUP, INC.
INDEX TO FINANCIAL STATEMENTS
POLYMER GROUP, INC.
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors......................... F-2
Consolidated Balance Sheets as of December 28, 1996 and December 30, 1995. F-3
Consolidated Statements of Operations for the fiscal years ended December
28, 1996,
December 30, 1995 and December 31, 1994................................ F-4
Consolidated Statements of Shareholders' Equity (Deficit) for the fiscal
years ended
December 28, 1996, December 30, 1995 and December 31, 1994............. F-5
Consolidated Statements of Cash Flows for the fiscal years ended December
28, 1996,
December 30, 1995 and December 31, 1994................................ F-6
Notes to Consolidated Financial Statements for the fiscal years ended
December 28, 1996, December 30, 1995 and December 31, 1994............. F-7
Condensed Consolidated Balance Sheets as of June 28, 1997 (unaudited) and
December 28, 1996 ..................................................... F-32
Consolidated Statements of Operations (unaudited) for the three and six
months ended
June 28, 1997 and June 29, 1996........................................ F-33
Condensed Consolidated Statements of Cash Flows (unaudited) for the six
months ended June 28, 1997 and June 29, 1996........................... F-34
Notes to Condensed Consolidated Financial Statements for the three and six
months ended
June 28, 1997 and June 29, 1996........................................ F-35
</TABLE>
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Polymer Group, Inc.
We have audited the accompanying consolidated balance sheets of Polymer
Group, Inc. as of December 28, 1996 and December 30, 1995, and the related
consolidated statements of operations, shareholders' equity (deficit), and
cash flows for each of the three years in the period ended December 28, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Polymer
Group, Inc. at December 28, 1996 and December 30, 1995 and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 28, 1996 in conformity with generally accepted
accounting principles.
Ernst & Young llp
Greenville, South Carolina
January 23, 1997
F-2
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
------------ ------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and equivalents..................................... $ 37,587 $ 18,088
Marketable securities.................................... 10,892 4,861
Accounts receivable, net................................. 64,752 58,288
Inventories.............................................. 55,637 47,882
Deferred income taxes.................................... 5,172 4,100
Other.................................................... 10,387 13,691
-------- --------
Total current assets................................. 184,427 146,910
Property, plant and equipment, net........................ 406,527 380,338
Intangibles, loan acquisition and organization costs, net. 96,932 95,753
Deferred income taxes..................................... 10,741 9,500
Other..................................................... 9,488 5,480
-------- --------
Total assets......................................... $708,115 $637,981
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable......................................... $ 36,059 $ 36,550
Accrued liabilities...................................... 33,130 29,813
Income taxes payable..................................... 1,196 4,295
Deferred income taxes.................................... 1,391 3,756
Current portion of long-term debt........................ 19,497 10,938
-------- --------
Total current liabilities............................ 91,273 85,352
Long-term debt, less current portion...................... 362,745 439,940
Deferred income taxes..................................... 52,115 43,192
Other noncurrent liabilities.............................. 6,064 11,406
Mandatory redeemable preferred stock of subsidiary; 13%
cumulative, non-voting, $.01 par value--0 shares
authorized, issued and outstanding at 1996 (40,000 shares
authorized, issued and outstanding at 1995); plus
accumulated dividends of $0 at 1996 ($4,575 at 1995);
mandatory redemption value of $0 at 1996 ($44,575 at
1995).................................................... -- 44,339
Shareholders' equity:
Series preferred stock--$.01 par value, 10,000,000
shares authorized at 1996 (0 at 1995); 0 shares issued
and outstanding at 1996 and 1995........................ -- --
Common stock--$.01 par value, 100,000,000 shares
authorized at 1996 (0 at 1995); 32,000,000 shares
issued and outstanding at 1996 (0 at 1995).............. 320 --
Non-voting common stock--$.01 par value, 3,000,000
shares authorized at 1996 (0 at 1995); 0 shares issued
and outstanding at 1996 and 1995........................ -- --
Class A-1 common stock--$.0005 par value, 0 shares
authorized at 1996 (8,985,641 at 1995); 0 shares issued
and outstanding at 1996 (5,359,615 at 1995)............. -- 3
Class A-2 common stock--$.0005 par value, 0 shares
authorized at 1996 (998,405 at 1995); 0 shares issued
and outstanding at 1996 (698,883 at 1995)............... -- --
Class A-3 common stock--$.0005 par value, 0 shares
authorized at 1996 (2,995,214 at 1995); 0 shares issued
and outstanding at 1996 (2,296,330 at 1995)............. -- 1
Class B common stock--$.0005 par value, 0 shares
authorized at 1996 (11,980,854 at 1995); 0 shares
issued and outstanding at 1996 (10,727,437 at 1995)..... -- 6
Class C common stock--$.0005 par value, 0 shares
authorized at 1996 (4,992,023 at 1995), 0 shares issued
and outstanding at 1996 and 1995........................ -- --
Additional paid-in capital............................... 243,662 53,134
(Deficit)................................................ (54,783) (52,653)
Cumulative translation adjustment........................ 6,790 12,919
Unrealized holding gain (loss) on marketable securities.. (71) 342
-------- --------
195,918 13,752
-------- --------
Total liabilities and shareholders' equity........... $708,115 $637,981
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
--------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales............................... $521,368 $437,638 $165,333
Cost of goods sold...................... 389,013 333,606 129,071
-------- -------- --------
Gross profit............................ 132,355 104,032 36,262
Selling, general and administrative
expenses............................... 70,207 61,744 20,699
-------- -------- --------
Operating income........................ 62,148 42,288 15,563
Other expense:
Interest expense, net................. 33,641 37,868 13,216
Foreign currency transaction losses,
net.................................. 2,955 22,811 17,332
-------- -------- --------
36,596 60,679 30,548
-------- -------- --------
Income (loss) before income taxes and
extraordinary item..................... 25,552 (18,391) (14,985)
Income taxes............................ 10,730 5,216 3,353
-------- -------- --------
Income (loss) before extraordinary item. 14,822 (23,607) (18,338)
Extraordinary item, loss from
extinguishment of debt, net of income
tax benefit of $7,492 in 1996 ($1,846
in 1994)............................... (13,932) -- (4,372)
-------- -------- --------
Net income (loss)....................... 890 (23,607) (22,710)
Redeemable preferred stock dividends and
accretion.............................. (3,020) (4,839) (1,209)
-------- -------- --------
Net (loss) applicable to common stock... $ (2,130) $(28,446) $(23,919)
======== ======== ========
Net income (loss) per common share:
Income (loss) before extraordinary
item................................. $ .43 $ (1.39) $ (.95)
Extraordinary item, net of income tax
benefit.............................. (.51) -- (.21)
-------- -------- --------
Net (loss) applicable to common stock... $ (.08) $ (1.39) $ (1.17)
======== ======== ========
Weighted average number of shares....... 27,688 20,500 20,500
======== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE FISCAL YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER
31, 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
UNREALIZED
HOLDING
CUMULATIVE GAIN
ADDITIONAL TRANSLATION (LOSS) ON
COMMON PAID-IN ADJUSTMENTS MARKETABLE
STOCK CAPITAL (DEFICIT) AND OTHER SECURITIES TOTAL
------ ---------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance--January 1,
1994................... $ 2 $ 78 $ (52) $ (620) $ -- $ (592)
Exchange of preferred
stock and shareholder
loans for common stock. -- 23,929 -- -- -- 23,929
Cash paid to and
collected from
shareholders........... -- (595) (236) 80 -- (751)
Acquisition of
affiliate.............. -- (876) -- (698) -- (1,574)
Issuance of stock
(29,435,640 shares).... 15 -- -- -- -- 15
Net loss................ -- -- (22,710) -- -- (22,710)
Foreign currency
translation
adjustments............ -- 90 -- 5,022 -- 5,112
Cumulative dividends on
redeemable preferred
stock and discount
accretion.............. -- -- (1,209) -- -- (1,209)
---- -------- -------- ------ ----- --------
Balance--December 31,
1994................... 17 22,626 (24,207) 3,784 -- 2,220
Exchange of Class A and
B stock (32,959,130
shares)................ (17) (22,626) -- -- -- (22,643)
Issuance of Class A-1
stock (5,359,615
shares)................ 3 21,155 -- -- -- 21,158
Issuance of Class A-2
stock (698,883 shares). -- 4,015 -- -- -- 4,015
Issuance of Class A-3
stock (2,296,330
shares)................ 1 4,621 -- -- -- 4,622
Issuance of Class B
stock (10,727,437
shares)................ 6 22,843 -- -- -- 22,849
Issuance of warrants.... -- 500 -- -- -- 500
Net loss................ -- -- (23,607) -- -- (23,607)
Foreign currency
translation
adjustments............ -- -- -- 9,135 -- 9,135
Cumulative dividends on
redeemable preferred
stock and discount
accretion.............. -- -- (4,839) -- -- (4,839)
Unrealized holding gain
on marketable
securities............. -- -- -- -- 342 342
---- -------- -------- ------ ----- --------
Balance--December 30,
1995................... 10 53,134 (52,653) 12,919 342 13,752
Exercise of warrants
(1,417,735 shares)..... 1 (1) -- -- -- --
Approximate 19.97 to 1
stock split............ 194 (194) -- -- -- --
Issuance of stock, net
of costs incurred
(11,500,000 shares).... 115 190,723 -- -- -- 190,838
Net income.............. -- -- 890 -- -- 890
Foreign currency
translation
adjustments............ -- -- -- (6,129) -- (6,129)
Cumulative dividends on
redeemable preferred
stock and discount
accretion.............. -- -- (3,020) -- -- (3,020)
Unrealized holding
(loss) on marketable
securities............. -- -- -- -- (413) (413)
---- -------- -------- ------ ----- --------
Balance--December 28,
1996................... $320 $243,662 $(54,783) $6,790 $ (71) $195,918
==== ======== ======== ====== ===== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
POLYMER GROUP, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
--------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Operating activities
Net income (loss)..................... $ 890 $ (23,607) $ (22,710)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary item, net of income tax
benefit.............................. 13,932 -- 4,372
Depreciation and amortization expense. 36,767 29,834 8,348
Foreign currency transaction losses,
net.................................. 2,955 22,811 17,055
Provision for losses on accounts
receivable and price concessions..... 9,060 5,788 435
Provision for deferred income taxes... 339 (1,375) 582
Changes in operating assets and
liabilities, net of effect
of acquisitions:
Accounts receivable................. (11,966) (16,160) (7,401)
Inventories......................... (6,353) (7,799) 3,953
Accounts payable and accrued
expenses........................... (5,860) (2,666) 13,381
Other, net.......................... (3,667) 4,730 (629)
--------- --------- ---------
Net cash provided by operating
activities....................... 36,097 11,556 17,386
Investing activities
Purchases of property, plant and
equipment............................ (26,739) (47,842) (11,341)
Purchases of marketable securities.... (22,879) (22,521) (4,705)
Proceeds from sales of marketable
securities........................... 16,713 19,929 2,707
Acquisition of businesses, net of cash
acquired............................. (52,466) (281,358) (48,643)
Organization and other costs.......... (1,051) (1,416) 607
--------- --------- ---------
Net cash (used in) investing
activities....................... (86,422) (333,208) (61,375)
Financing activities
Issuance of common stock, net of costs
incurred............................. 190,838 30,000 15
Proceeds from debt.................... 308,277 273,654 189,514
Payments of debt...................... (375,989) (13,638) (113,404)
Issuance of redeemable preferred stock
and warrants......................... 10,000 40,000 --
Redemption of preferred stock......... (57,359) -- (13,324)
Loan acquisition, debt prepayment and
other costs, net..................... (11,376) (2,380) (4,319)
--------- --------- ---------
Net cash provided by financing
activities....................... 64,391 327,636 58,482
Effect of exchange rate changes on cash. 5,433 (1,724) (3,359)
--------- --------- ---------
Net increase in cash and
equivalents...................... 19,499 4,260 11,134
Cash and equivalents at beginning
of year.......................... 18,088 13,828 2,694
--------- --------- ---------
Cash and equivalents at end of
year............................. $ 37,587 $ 18,088 $ 13,828
========= ========= =========
Noncash investing and financing
activities
Issuance of common stock in exchange
for preferred stock, cumulative
dividends and common stock in
affiliated companies................. $ -- $ -- $ 23,065
Cumulative dividends on redeemable
preferred stock and accretion........ 3,020 4,839 1,209
Approximate 19.97 to 1 stock split.... 194 -- --
Supplemental information
Cash paid for interest................ 38,111 43,186 3,949
Cash paid for income taxes............ 6,602 5,027 1,298
Acquisition of businesses:
Fair value of assets acquired......... 61,946 358,814 122,165
Liabilities assumed and incurred...... 9,480 77,456 73,522
Cash paid............................. 52,466 281,358 48,643
</TABLE>
See accompanying notes.
F-6
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Polymer Group, Inc. ("Polymer Group" or "Company") operates in one business
segment, manufacturing and marketing woven and nonwoven polyolefin fabric. The
Company's principal lines of business include hygiene and medical products for
consumer applications, wiping products and industrial and specialty products.
The Company operates thirteen manufacturing facilities located in the United
States, Canada, Mexico, The Netherlands and Germany.
(b) Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements of Polymer Group, a
Delaware corporation incorporated on June 16, 1994, are prepared on the basis
of generally accepted accounting principles and include the accounts of the
Company and its subsidiaries, all of which are wholly-owned. All material
intercompany accounts are eliminated in consolidation. Certain amounts
previously presented in the consolidated financial statements for prior
periods have been reclassified to conform to current classification. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(c) Revenue Recognition
Revenue from product sales is recognized at the time ownership of goods
transfers to the customer and the earnings process is complete.
(d) Cash Equivalents and Investment Income
Investment securities with maturities of three months or less at the time of
acquisition are considered cash equivalents. Investment income approximated
$1.9 million in 1996 and consists primarily of interest income from highly
liquid investment sources. Interest expense in the consolidated statements of
operations is net of investment income and capitalized interest (see
explanation (h) below). Investment income was not significant in 1995 or 1994.
(e) Marketable Securities
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," the
Company has classified equity securities as available-for-sale which are
carried at fair value based on quoted market prices. Unrealized holding gains
and losses on available-for-sale securities are included as a component of
shareholders' equity. Realized gains and losses are determined on the specific
identification method and included in the determination of net income.
Marketable securities as of December 28, 1996 and December 30, 1995 consist of
the following:
<TABLE>
<CAPTION>
1996 1995
------- ------
(IN THOUSANDS)
<S> <C> <C>
Marketable securities (common and preferred stock):
Cost................................................... $10,963 $4,519
Unrealized gains....................................... -- 342
Unrealized (losses).................................... (71) --
------- ------
Gross fair value....................................... $10,892 $4,861
======= ======
</TABLE>
F-7
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(f) Accounts Receivable and Concentration of Credit Risks
Accounts receivable potentially expose the Company to concentration of
credit risk, as defined by Statement of Financial Accounting Standards No. 105
"Disclosure of Information about Financial Instruments with Off-Balance Sheet
Risk and Financial Instruments with Concentration of Credit Risk." The Company
provides credit in the normal course of business and performs ongoing credit
evaluations on certain of its customers' financial condition, but generally
does not require collateral to support such receivables. The Company also
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other
information. The allowance for doubtful accounts was $3.8 and $1.9 million at
December 28, 1996 and December 30, 1995, respectively, which management
believes is adequate to provide for credit loss in the normal course of
business, as well as losses for customers who have filed for protection under
the bankruptcy law. Johnson & Johnson ("J&J") and The Procter & Gamble Company
("P&G") accounted for approximately 29% and 14%, respectively, of the
Company's sales in 1996. In 1995, J&J and P&G accounted for approximately 28%
and 15%, respectively, of the Company's sales. P&G accounted for approximately
38% of the Company's sales in 1994.
(g) Inventories
Inventories are stated at the lower of cost or market using the first-in,
first-out method of accounting. Supply inventories not expected to be utilized
within one year are classified as other non-current assets. Inventories,
classified as current assets, as of December 28, 1996 and December 30, 1995,
consist of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Finished goods........................................... $26,809 $22,476
Work in process and stores and maintenance parts......... 3,328 4,010
Raw materials............................................ 25,500 21,396
------- -------
Total................................................ $55,637 $47,882
======= =======
</TABLE>
(h) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is computed for financial reporting purposes on the
straight-line method over the estimated useful lives of the related assets.
The estimated useful lives established for building and land improvements
range from 18 to 33 years, and the estimated useful lives established for
machinery, equipment and other fixed assets range from 3 to 15 years. Costs of
the construction of certain long-term assets include capitalized interest
which is amortized over the estimated useful life of the related asset. The
Company capitalized approximately $0.8, $1.9 and $0.5 million of interest
costs during 1996, 1995 and 1994, respectively.
(i) Intangibles, Loan Acquisition and Organization Costs
The excess of cost over the fair value of net assets of companies acquired
is amortized on the straight-line method over an estimated useful life of 40
years. Identified intangible assets consist primarily of costs allocated in
the acquisitions to supply agreements, proprietary technology and other
acquisition related arrangements. Such costs are amortized on the straight-
line method over periods not exceeding an estimated useful life of ten years.
Capitalized organization costs are amortized over five years on the straight-
line method. Loan acquisition costs relating to long-term debt are amortized
F-8
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
over the term of the related debt. The lives established for these assets are
a composite of many factors; accordingly, the Company evaluates the continued
appropriateness of these lives based upon the latest available economic
factors and circumstances. The carrying value of goodwill is reviewed if the
facts and circumstances suggest that it may be impaired. If this review
indicates that goodwill will not be recoverable, as determined based on the
undiscounted cash flows of the entity acquired over the remaining amortization
period, the Company's carrying value of the goodwill is reduced by the
estimated shortfall of cash flows.
(j) Derivatives
The Company does not use derivative financial instruments for trading
purposes. Such products are used only to manage well-defined interest rate
risks. Premiums paid for purchased interest rate cap agreements are charged to
expense over the rate cap period. On May 16, 1996, and in connection with the
Amended Credit Facility (see Note 8. Long-Term Debt), the Company entered into
a London Interbank Offered Rate ("LIBOR")-based interest rate cap agreement.
The agreement period extends through March 30, 1999, subject to adjustment,
and provides for a notional amount of $100.0 million which declines ratably
over the rate cap term. If the rate cap exceeds 9% on each quarterly reset
date, as defined in the agreement, the Company is entitled to receive an
amount by which the rate cap exceeds 9%. Over the term of the agreement in
1996, such amount did not exceed 9%. Charges to expense in 1996 related to
derivative products were not significant.
(k) Fair Value of Financial Instruments
The Company has estimated the fair value amounts of financial instruments as
required by Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", using available market information
and appropriate valuation methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value.
Accordingly, such estimates are not necessarily indicative of the amounts that
the Company would realize in a current market exchange. The carrying amount of
cash and equivalents, marketable securities, accounts receivable, other assets
and accounts payable are reasonable estimates of their fair values. Fair value
of the Company's long-term debt was estimated using interest rates at those
dates for issuance of such financial instruments with similar terms and
remaining maturities and other independent valuation methodologies. The
estimated fair value of long-term debt at December 28, 1996 and December 30,
1995 was $391.2 million and $445.2 million, respectively.
(l) Income Taxes
The provision for income taxes and corresponding balance sheet accounts are
determined in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109"). Under FAS 109, the deferred
tax liabilities and assets are determined based upon temporary differences
between the basis of certain assets and liabilities for income tax and
financial reporting purposes. A valuation allowance is recognized if it is
more likely than not that some portion or all of a deferred tax asset will not
be ultimately realized.
(m) Research and Development
The cost of research and development is charged to expense as incurred and
is included in selling, general and administrative expense in the consolidated
statement of operations. The Company incurred approximately $6.9, $6.4 and
$2.9 million of research and development expense during 1996, 1995 and 1994,
respectively.
F-9
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(n) Foreign Currency Translation
For all periods through December 28, 1996, the local currencies of the
Company's foreign subsidiaries have been determined to be the functional
currencies in accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation" ("FAS 52"). Assets and liabilities of the
Company's foreign subsidiaries are translated into United States dollars at
current exchange rates and resulting translation adjustments are included as a
separate component of shareholders' equity while revenue and expense accounts
of these operations are translated at weighted average exchange rates during
the period. Transaction gains and losses are included in the determination of
net income. See Note 18. Subsequent Events for discussion of the Company's
change in functional currency for its Mexican subsidiary from the nuevo peso
to the United States dollar.
(o) Net Income (Loss) Per Common Share
Net income (loss) per common share is determined by dividing net income
(loss) applicable to common stock by the average number of shares outstanding
during the period. Stock options are considered common stock equivalents, but
are excluded from the calculation of net income (loss) per common share since
their effect is antidilutive.
(p) New Accounting Standards
On December 31, 1995, the Company adopted the provisions of Financial
Accounting Standards Board ("FASB") Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("FAS 121"), which requires impairment losses to be recorded on long-lived
assets used in operations when indicators are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. The effect of adoption did not have a material impact on the
Company's results of operations during 1996. In connection with the Company's
initial public offering of common stock ("IPO"), the Company adopted the
provisions of FASB Statement No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 establishes financial accounting and
reporting standards for stock-based compensation plans. As permitted by FAS
123, the Company elected to account for stock-based compensation awards in
accordance with Accounting Principles Board Opinion No. 25. Accordingly, the
Company has disclosed information required by FAS 123 in Note 11. Stock Option
Plan.
NOTE 2. INITIAL PUBLIC OFFERING
Initial Public Offering
On May 15, 1996, the Company completed the IPO, in which it offered and sold
11.5 million shares of its common stock at a price of $18.00 per share. Net
proceeds to the Company after underwriting fees and other related costs were
approximately $190.8 million. Pursuant to the Recapitalization Agreement dated
May 6, 1996, all of the warrants to acquire shares of Class C common stock
were exercised, and the outstanding shares of Class A common stock, Class B
common stock, and Class C common stock were converted into shares of a single
class of common stock concurrently with the IPO. In connection with the IPO,
the Company's Board of Directors ("Board") approved an approximate 19.97 to 1
stock split. Accordingly, all common share and warrant data in the
consolidated financial statements have been restated to reflect such stock
split. In connection with consummation of the IPO, the Company consummated the
following transactions: (i) effectively repaid all outstanding indebtedness
under the FiberTech and Chicopee credit facilities and
F-10
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
terminated such credit facilities and redeemed $50.0 million principal amount
of the 12 1/4% Senior Notes at a premium of 112.25% plus accrued and unpaid
interest and entered into a new credit facility (together with the IPO, the
"Recapitalization") (see Note 8. Long-Term Debt); (ii) redeemed the preferred
stock of Chicopee, Inc. at a price of $1,000 per share plus accrued but unpaid
dividends (approximately $46.9 million); and (iii) redeemed the preferred
stock of the Company, which was issued on January 11, 1996 (see Note 17.
Certain Matters), at a price of $1,000 per share plus accrued but unpaid
dividends (approximately $10.5 million). Redeemable preferred stock activity
during 1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------
1996 1995
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period......................... $ 44,339 $ --
Issuances of redeemable preferred stock................ 10,000 39,500
Accrued dividends and discount accretion............... 3,020 4,839
Redemption of redeemable preferred stock............... (57,359) --
-------- -------
Balance at end of period............................... $ -- $44,339
======== =======
</TABLE>
Shareholders' Equity
As a result of the IPO, the Company's authorized capital stock consists of
100,000,000 shares of common stock, par value $0.01 per share, 3,000,000
shares of non-voting common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share. Subject to certain
regulatory limitations, the non-voting common stock is convertible on a one-
for-one basis into common stock at the option of the holder. The Company's
Board may, without further action by Polymer Group's shareholders, from time
to time, direct the issuance of shares of preferred stock in series and may,
at the time of issuance, determine the rights, preferences, conversion
features, dividend rate (including whether such dividend shall be cumulative
or noncumulative) and limitations of each series. Satisfaction of any dividend
preferences of outstanding shares of preferred stock would reduce the amount
of funds available for common dividends. Holders of shares of preferred stock
may be entitled to receive a preference payment in the event of any
liquidation, dissolution or winding-up of the Company before any payment is
made to holders of shares of common stock. Following the IPO, 100,000 shares
of junior preferred stock were reserved for issuance in connection with the
Rights Plan (see Note 12. Shareholder Rights Plan).
NOTE 3. ORGANIZATION AND ACQUISITIONS
On June 24, 1994, the Company issued $150.0 million in 12 1/4% Senior Notes
(see Note 8. Long-Term Debt); acquired two affiliated companies, PGI Polymer,
Inc. ("PGI") and Fabrene Inc. ("Fabrene"); and acquired Bonlam, S.A. de C.V.
("Bonlam"). Following these transactions, PGI, Fabrene and Bonlam became
wholly-owned subsidiaries of the Company. PGI, a holding company, was acquired
by exchanging 1,522,370 shares of the Company's common stock and approximately
$13.3 million in cash for all of the outstanding shares of common stock and
preferred stock of PGI, and accrued dividends thereon. The acquisition was
considered to be between entities under common control and was accounted for
at historical cost in a manner similar to a pooling of interests. The net
assets of PGI on a historical cost basis were approximately $16.3 million at
the time of the acquisition. Prior to the acquisitions of PGI and Fabrene by
the Company, PGI owned 27% of Fabrene, a Canadian-based manufacturer and
marketer of woven polyolefin fabrics. This equity interest was
F-11
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
acquired indirectly by the Company in connection with the acquisition of PGI.
The remaining 73% was acquired by the Company in a transaction accounted for
by the purchase method of accounting. To effect the transaction, Fabrene
acquired shares of its common stock and warrants from a shareholder, and
repaid a subordinated loan to the shareholder for $12.5 million in cash. The
remaining shareholders of Fabrene exchanged their common stock and common
stock warrants for 128,220 shares of common stock of the Company and
approximately $0.8 million in cash. The Company's total cost of acquiring the
ownership not previously owned by PGI was approximately $7.0 million. The
Company also acquired all the outstanding common stock of Bonlam, a Mexican-
based manufacturer and marketer of spunbond nonwoven products, for
approximately $40.7 million in a transaction accounted for by the purchase
method of accounting.
On March 15, 1995, the Company completed the acquisition ("Chicopee
Acquisition") of the Nonwovens Business of Johnson & Johnson Advanced
Materials Company and Chicopee B.V. (collectively, "Chicopee") from J&J for an
aggregate consideration of $290.0 million in a transaction accounted for by
the purchase method of accounting. Chicopee manufactures and markets nonwoven
roll and converted products, with a leading market share in the domestic and
international health care market. On August 14, 1996, PGI completed the
acquisition ("FNA Acquisition") of the business of FNA Polymer Corp. ("FNA")
(formerly known as Fitesa North America Corporation) for approximately $48.0
million in a transaction accounted for by the purchase method of accounting.
FNA produces polypropylene fabrics for the nonwovens industry. The results of
FNA are included in the accompanying consolidated statements of operations for
the period from the date of acquisition through December 28, 1996.
The following pro forma information in the table below is based on
historical financial statements of the Company, FNA and Chicopee adjusted to
give effect to the IPO, the FNA Acquisition, the Chicopee Acquisition and the
financing thereof as if such events occurred on December 31, 1995 and January
1, 1995, respectively. The allocation of the purchase price for the FNA
Acquisition is subject to revision based on facts and circumstances. The
accompanying unaudited pro forma financial information in the table below does
not purport to represent what the Company's results of operations would have
been had the FNA Acquisition, the Chicopee Acquisition and the IPO actually
occurred at the beginning of the respective periods, or project the Company's
results of operations for any future periods.
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net sales.............................................. $540,395 $519,600
Income before extraordinary item....................... 19,323 10,284
Net income............................................. 4,765 2,858
Per share:
Income before extraordinary item....................... $ .60 $ .32
Net income............................................. .15 .09
</TABLE>
F-12
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of December 28, 1996 and December 30, 1995,
consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cost:
Land................................................ $ 9,272 $ 9,091
Buildings and land improvements..................... 84,089 75,297
Machinery, equipment and other...................... 365,464 316,712
Construction in progress............................ 12,915 18,429
-------- --------
471,740 419,529
Less accumulated depreciation......................... (65,213) (39,191)
-------- --------
$406,527 $380,338
======== ========
</TABLE>
Depreciation charged to expense was $27.2, $21.0 and $6.3 million during
1996, 1995 and 1994, respectively.
NOTE 5. INTANGIBLES, LOAN ACQUISITION AND ORGANIZATION COSTS
Intangibles, loan acquisition and organization costs as of December 28, 1996
and December 30, 1995, consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cost:
Goodwill............................................ $ 61,801 $ 41,837
Identified intangibles:
Supply agreement.................................. 13,431 13,000
Proprietary technology............................ 24,100 24,100
Other............................................. 902 876
Loan acquisition costs.............................. 8,302 21,613
Organization costs.................................. 6,752 7,375
-------- --------
115,288 108,801
Less accumulated amortization....................... (18,356) (13,048)
-------- --------
$ 96,932 $ 95,753
======== ========
</TABLE>
Amortization charged to expense was $9.6, $8.9 and $2.1 million during 1996,
1995 and 1994, respectively. The approximate $20.0 million increase in
goodwill between 1996 and 1995 results from the FNA Acquisition. Additionally,
the $13.3 million decrease in loan acquisition costs between 1996 and 1995
results from the early extinguishment of debt in connection with the IPO as
discussed in Note 2. Initial Public Offering and Note 15. Quarterly Results of
Operations (Unaudited).
F-13
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. ACCRUED LIABILITIES
Accrued liabilities as of December 28, 1996 and December 30, 1995, consist
of the following:
<TABLE>
<CAPTION>
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued liabilities:
Interest payable............................................. $ 6,778 $ 8,898
Salaries, wages and other fringe benefits.................... 7,116 5,924
Restructuring costs.......................................... 10,036 7,540
Other........................................................ 9,200 7,451
------- -------
$33,130 $29,813
======= =======
</TABLE>
In connection with the Chicopee Acquisition, management of the Company
adopted a plan to relocate manufacturing equipment, corporate offices and
certain equipment used in Chicopee's North American research and development
activities to other sites within the United States. Accordingly, the Company
provided for accrued restructuring costs of approximately $17.9 million in
connection with the allocation of the purchase price to the fair value of
assets acquired and liabilities assumed. During 1996 and 1995, the Company
charged approximately $3.5 million and $2.4 million, respectively, against the
accrued restructuring reserve. In 1996, the charges against the restructuring
reserve related primarily to: (i) the relocation of assets, including
equipment used in production and research and development related activities
($2.5 million); (ii) the relocation of the acquiree's corporate headquarters
($0.8 million); and (iii) other miscellaneous costs within the provisions of
the restructuring plan ($0.2 million). At December 28, 1996, the Company's
total accrued restructuring costs associated with the plan approximated $12.0
million. Management currently estimates that approximately $10.0 million of
the total accrued restructuring costs will be incurred during 1997; therefore,
this portion of the total accrual has been recognized as a current liability
in the consolidated balance sheet.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases certain manufacturing, warehousing and other facilities
and equipment under operating leases. The leases on most of the properties
contain renewal provisions. Rent expense (net of sub-lease income), including
incidental leases, approximated $2.4, $2.3 and $0.3 million in 1996, 1995 and
1994, respectively. Rental income approximated $2.2 and $2.3 million in 1996
and 1995, respectively. The approximate net minimum rental payments required
under operating leases that have initial or remaining non-cancelable lease
terms in excess of one year at December 28, 1996 are:
<TABLE>
<CAPTION>
GROSS LEASE NET
MINIMUM AND SUB- MINIMUM
RENTAL LEASE RENTAL
PAYMENTS (INCOME) PAYMENTS
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
1997......................................... $1,778 $ (445) $ 1,333
1998......................................... 1,484 (1,068) 416
1999......................................... 1,302 (1,068) 234
2000......................................... 1,213 (1,068) 145
2001......................................... 1,137 (1,068) 69
Thereafter................................... 2,086 (14,408) (12,322)
------ -------- --------
$9,000 $(19,125) $(10,125)
====== ======== ========
</TABLE>
F-14
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Purchase Commitments
At December 28, 1996, the Company had commitments of approximately $73.5
million related to the purchase of raw materials and converting services and
approximately $30.9 million related to capital projects.
Collective Bargaining Agreements
At December 28, 1996, the Company had a total of approximately 2,300
employees worldwide. Of this total, approximately 900 employees are
represented by labor unions or trade councils that have entered into separate
collective bargaining agreements with the Company. Approximately 34% of the
Company's labor force is covered by collective bargaining agreements which
will expire within one year.
Environmental
The Company is subject to a broad range of federal, foreign, state and local
laws governing regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the
Company are laws relating to air emissions, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
environmental requirements. The Company is also subject to laws, such as the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 ("CERCLA"), that may impose liability retroactively and without fault
for releases of hazardous substances at on-site or off-site locations. The
Company is not aware of any releases for which it may be liable under CERCLA
or any analogous provision. As a result, the Company does not currently
anticipate any material adverse effect on its operations, financial condition
or competitive position as a result of its efforts to comply with
environmental requirements. Some risk of environmental liability is inherent,
however, in the nature of the Company's business, and there can be no
assurance that material environmental liabilities will not arise.
F-15
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. LONG-TERM DEBT
Long-term debt as of December 28, 1996 and December 30, 1995, consists of
the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Senior Notes, due July 15, 2002, interest rate 12 1/4%...... $100,000 $150,000
Term Loans, Facility A, B and C payable in quarterly
installments ranging from $751 to $9,588 for the period
from March 31, 1997 through March 31, 2002; interest at
rates ranging from 4.88% to 7.44%.......................... 199,189 --
Revolving Credit Facility, due March 31, 2002 (subject to
two one-year extensions at the request of the Company),
interest at rates ranging from 4.88% to 7.50%.............. 80,894 --
FiberTech Revolving Credit Facility, Tranche A aggregate
principal of $46,600 due 1997; Tranche B aggregate
principal of $25,000 due 1998, interest at rates ranging
from 9.00% to 10.50%, paid in full in 1996 in connection
with the IPO............................................... -- 71,600
Chicopee Term Loans, Tranche A--$10,000 payable in 1996,
$20,000 payable in 1997, $25,000 payable in 1998, $30,000
payable in 1999, $34,000 payable in 2000, and $6,000
payable in 2001; Tranche B--$850 payable yearly from 1996
through 2000, $34,000 payable in 2001, $42,000 payable in
2002 and $4,113 payable in 2003, interest at base or LIBOR
rates plus a margin ranging from 1.50% to 3.25%, paid in
full in 1996 in connection with the IPO.................... -- 209,363
Chicopee Revolving Credit Facility, due 2001, interest at
rates ranging from 8.63% to 10.50%, paid in full in 1996 in
connection with the IPO.................................... -- 18,000
Other....................................................... 2,159 1,915
-------- --------
382,242 450,878
Less current maturities..................................... 19,497 10,938
-------- --------
Total....................................................... $362,745 $439,940
======== ========
</TABLE>
Long-term debt maturities consist of the following (in thousands):
<TABLE>
<S> <C>
1997............................................................. $ 19,497
1998............................................................. 26,834
1999............................................................. 36,850
2000............................................................. 46,789
2001............................................................. 56,517
Thereafter....................................................... 195,755
</TABLE>
Senior Notes
In June 1994, the Company issued and sold ("Notes Offering") $150.0 million
principal amount of 12 1/4% Senior Notes due 2002 ("Original Notes") pursuant
to a Purchase Agreement dated June 17, 1994 and an indenture dated June 24,
1994, as amended by the First Supplemental Indenture dated as of March 15,
1995, and the Second Supplemental Indenture dated as of September 14, 1995,
and the Third Supplemental Indenture dated as of April 9, 1996 (as so amended
the "Indenture"). The Senior Notes are unsecured senior obligations of the
Company and are guaranteed by certain of the
F-16
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Company's subsidiaries as more fully discussed in Note 9. Selected Financial
Data of Guarantors. The Senior Notes are subject to redemption at any time on
or after July 15, 1998 at the option of the Company based on certain
redemption prices including accrued and unpaid interest, if any, to the
redemption date. Notwithstanding the foregoing, at any time prior to July 15,
1997, the Company was entitled to redeem up to $50.0 million of the Senior
Notes originally issued at a redemption price of 112.25% of the principal
amount redeemed plus accrued interest to the redemption date. Accordingly, the
Company, in connection with its IPO, redeemed $50.0 million of the Senior
Notes for approximately $58.7 million. See Note 2. Initial Public Offering.
The Indenture contains a number of covenants restricting the operations of the
Company and its subsidiaries, including covenants regarding limitations on
dividends and other restrictions. As of December 28, 1996, the Company was in
compliance with covenant provisions associated with the Senior Notes. If a
change of control (as defined in the Indenture) occurs at any time, then each
holder shall have the right to require that the Company purchase the Senior
Notes in whole or in part at an amount equal to 101% of the principal amount
of such Senior Notes, plus accrued interest.
Existing Credit Facility
In connection with the IPO, the Company and its subsidiaries entered into a
new credit facility (the "Existing Credit Facility"). The Existing Credit
Facility consists of term loans in the aggregate principal amount of $200.0
million and revolving credit loans in an aggregate principal amount not to
exceed $125.0 million. $130.0 million in the aggregate of the term loans are
denominated in United States dollars, $40.0 million of the term loans are
denominated in Dutch guilders and $30.0 million of the term loans are
denominated in Canadian dollars. Revolving loans may be denominated in United
States dollars, Dutch guilders (up to $15.0 million) and Canadian dollars (up
to $5.0 million). All indebtedness under the Existing Credit Facility is
guaranteed (in whole or in part) by each of the Company's domestic and certain
of its foreign subsidiaries. The interest rates applicable to borrowings under
the Existing Credit Facility are, in the case of United States dollar
denominated loans, the agent's base rate or LIBOR, in the case of Dutch
guilder denominated loans, the applicable Eurocurrency rate, and in the case
of Canadian dollar denominated loans, the agent's Canadian base rate or the BA
rate, in each case plus a margin determined on the basis of the ratio of the
Company's total consolidated indebtedness to its consolidated earnings before
interest, taxes, depreciation and amortization on a rolling four quarter
basis. The margin applicable to base rate loans range from 0.0% to 1.25% and
the margin for LIBOR, Eurocurrency and BA loans range from 1.0 % to 2.5%. The
Existing Credit Facility contains covenants customary for financings of this
type. As of December 28, 1996, the Company was in compliance with covenant
provisions associated with the Existing Credit Facility. In order to enter
into the Existing Credit Facility with terms and conditions described above,
the Company was required to obtain the affirmative consents of holders of a
majority of the outstanding principal amount of the Senior Notes. Pursuant to
a consent solicitation statement dated March 14, 1996, the Company solicited
and received the required consents, and accordingly, the Company and the
trustee executed a Third Supplemental Indenture that became effective
concurrently with consummation of the IPO, which allowed the Company to enter
into the Existing Credit Facility. Commitment fees on the Existing Credit
Facility are generally equal to a percentage of the daily unused average
amount of each such commitment. At December 28, 1996, unused commitments under
the Existing Credit Facility approximated $44.1 million. Loan acquisition
costs, including commitment fees, approximated $5.3 million and $13.5 million
in 1996 and 1995, respectively.
F-17
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Payment of the Senior Notes is unconditionally guaranteed, jointly and
severally, on a senior basis by certain of the Company's wholly-owned
subsidiaries ("Guarantors"). Management has determined that separate complete
financial statements of the Guarantors would not be material to users of the
financial statements. The following sets forth condensed consolidating
financial statements of the Guarantors and Non-Guarantor subsidiaries (in
thousands):
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
ASSETS SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------ ------------ ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Cash & equivalents......... $ 16,329 $18, 254 $ 3,004 $ -- $ 37,587
Marketable securities...... -- -- 10,892 -- 10,892
Accounts receivable, net... 29,848 34,904 -- -- 64,752
Inventories................ 34,088 21,595 -- (46) 55,637
Other...................... 12,447 1,902 1,395 (185) 15,559
---------- -------- -------- ----------- --------
Total current assets... 92,712 76,655 15,291 (231) 184,427
Due from affiliates........ 377,780 671 57,236 (435,687) --
Investment in subsidiaries. 250,589 -- 389,769 (640,358) --
Property, plant &
equipment, net............ 266,446 137,942 2,139 -- 406,527
Intangibles, loan
acquisition and
organization costs, net... 36,743 57,027 1,218 1,944 96,932
Other...................... 7,963 6,381 6,143 (258) 20,229
---------- -------- -------- ----------- --------
Total assets........... $1,032,233 $278,676 $471,796 $(1,074,590) $708,115
========== ======== ======== =========== ========
<CAPTION>
LIABILITIES & SHAREHOLDERS'
EQUITY
- ---------------------------
<S> <C> <C> <C> <C> <C>
Accounts payable, accrued
liabilities and other..... $ 43,546 $ 22,636 $ 5,944 $ (350) $ 71,776
Current portion of long-
term debt................. 11,069 6,985 1,443 -- 19,497
---------- -------- -------- ----------- --------
Total current
liabilities........... 54,615 29,621 7,387 (350) 91,273
Due to affiliates.......... 301,447 38,450 95,790 (435,687) --
Long-term debt, less
current portion........... 129,931 69,257 163,557 -- 362,745
Deferred income taxes and
other..................... 18,765 31,110 9,144 (840) 58,179
Shareholders' equity....... 527,475 110,238 195,918 (637,713) 195,918
---------- -------- -------- ----------- --------
Total liabilities and
shareholders' equity.. $1,032,233 $278,676 $471,796 $(1,074,590) $708,115
========== ======== ======== =========== ========
</TABLE>
F-18
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
ASSETS SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------ ------------ ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Cash & equivalents......... $ 8,595 $ 9,207 $ 286 $ -- $ 18,088
Marketable securities...... -- -- 4,861 -- 4,861
Accounts receivable, net... 28,766 29,522 -- -- 58,288
Inventories................ 28,168 19,748 -- (34) 47,882
Other...................... 15,373 1,222 -- 1,196 17,791
-------- -------- -------- --------- --------
Total current assets... 80,902 59,699 5,147 1,162 146,910
Due from affiliates........ 161,336 546 140,593 (302,475) --
Investment in subsidiaries. 115,214 -- 78,105 (193,319) --
Property, plant &
equipment, net............ 235,870 144,467 -- 1 380,338
Intangibles, loan
acquisition and
organization costs, net... 32,427 63,141 -- 185 95,753
Other...................... 5,649 5,834 -- 3,497 14,980
-------- -------- -------- --------- --------
Total assets........... $631,398 $273,687 $223,845 $(490,949) $637,981
======== ======== ======== ========= ========
<CAPTION>
LIABILITIES & SHAREHOLDERS'
EQUITY
- ---------------------------
<S> <C> <C> <C> <C> <C>
Accounts payable, accrued
liabilities and other..... $ 43,872 $ 19,679 $ 10,121 $ 742 $ 74,414
Current portion of long-
term debt................. 10,850 88 -- -- 10,938
-------- -------- -------- --------- --------
Total current
liabilities........... 54,722 19,767 10,121 742 85,352
Due to affiliates.......... 47,628 204,875 49,972 (302,475) --
Long-term debt, less
current portion........... 288,113 1,827 150,000 -- 439,940
Deferred income taxes and
other..................... 18,018 33,835 -- 2,745 54,598
Redeemable preferred stock. 44,339 -- -- -- 44,339
Shareholders' equity....... 178,578 13,383 13,752 (191,961) 13,752
-------- -------- -------- --------- --------
Total liabilities and
shareholders' equity.. $631,398 $273,687 $223,845 $(490,949) $637,981
======== ======== ======== ========= ========
</TABLE>
F-19
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFI-
GUARANTOR GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $335,477 $187,754 $ -- $ (1,863) $521,368
Cost of goods sold...... 264,027 126,836 1 (1,851) 389,013
-------- -------- -------- -------- --------
Gross profit.......... 71,450 60,918 (1) (12) 132,355
Selling, general and
administrative
expenses............... 38,281 32,710 (453) (331) 70,207
-------- -------- -------- -------- --------
Operating income...... 33,169 28,208 452 319 62,148
Other expense, net...... 11,772 13,806 11,018 -- 36,596
-------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item... 21,397 14,402 (10,566) 319 25,552
Income taxes............ 4,698 1,659 4,373 -- 10,730
-------- -------- -------- -------- --------
Income before
extraordinary item... 16,699 12,743 (14,939) 319 14,822
Extraordinary item...... (10,745) 793 (3,980) -- (13,932)
Equity in earnings of
subsidiaries........... -- -- 19,809 (19,809) --
-------- -------- -------- -------- --------
Net income.............. 5,954 13,536 890 (19,490) 890
Redeemable preferred
stock dividends and
accretion.............. (2,551) -- (3,020) 2,551 (3,020)
-------- -------- -------- -------- --------
Income (loss) applicable
to common stock........ $ 3,403 $ 13,536 $ (2,130) $(16,939) $ (2,130)
======== ======== ======== ======== ========
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFI-
GUARANTOR GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $287,418 $154,025 $ -- $ (3,805) $437,638
Cost of goods sold...... 230,740 106,670 -- (3,804) 333,606
-------- -------- -------- -------- --------
Gross profit.......... 56,678 47,355 -- (1) 104,032
Selling, general and
administrative
expenses............... 38,502 23,242 -- -- 61,744
-------- -------- -------- -------- --------
Operating income...... 18,176 24,113 -- (1) 42,288
Other expense, net...... 15,733 44,671 275 -- 60,679
-------- -------- -------- -------- --------
Income (loss) before
income taxes......... 2,443 (20,558) (275) (1) (18,391)
Income taxes............ 742 1,709 2,765 -- 5,216
Equity in earnings
(loss) of subsidiaries. -- -- (20,567) 20,567 --
-------- -------- -------- -------- --------
Net income (loss)....... 1,701 (22,267) (23,607) 20,566 (23,607)
Redeemable preferred
stock dividends and
accretion.............. (4,839) -- (4,839) 4,839 (4,839)
-------- -------- -------- -------- --------
(Loss) applicable to
common stock........... $ (3,138) $(22,267) $(28,446) $ 25,405 $(28,446)
======== ======== ======== ======== ========
</TABLE>
F-20
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMBINED COMBINED RECLASSIFI-
GUARANTOR NON-GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $126,310 $ 39,782 $ -- $ (759) $165,333
Cost of goods sold...... 103,167 26,632 -- (728) 129,071
-------- -------- -------- ------- --------
Gross profit.......... 23,143 13,150 -- (31) 36,262
Selling, general and
administrative
expenses............... 14,946 5,904 -- (151) 20,699
-------- -------- -------- ------- --------
Operating income...... 8,197 7,246 -- 120 15,563
Other expense, net...... 3,746 26,462 286 54 30,548
-------- -------- -------- ------- --------
Income (loss) before
income taxes and
extraordinary item... 4,451 (19,216) (286) 66 (14,985)
Income taxes............ 1,128 1,036 1,189 -- 3,353
-------- -------- -------- ------- --------
Income before
extraordinary item... 3,323 (20,252) (1,475) 66 (18,338)
Extraordinary item...... (1,803) (2,569) -- -- (4,372)
Equity in (loss) of
subsidiaries........... -- -- (21,235) 21,235 --
-------- -------- -------- ------- --------
Net income (loss)....... 1,520 (22,821) (22,710) 21,301 (22,710)
Redeemable preferred
stock dividends and
accretion.............. (1,209) -- (1,209) 1,209 (1,209)
-------- -------- -------- ------- --------
Income (loss) applicable
to common stock........ $ 311 $(22,821) $(23,919) $22,510 $(23,919)
======== ======== ======== ======= ========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFI-
GUARANTOR GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities... $ 31,224 $17,997 $ 3,580 $(16,704) $ 36,097
Investing activities
Purchases of property,
plant and equipment.. (13,029) (11,569) (2,141) -- (26,739)
Purchases of
marketable
securities........... -- -- (22,879) -- (22,879)
Proceeds from sales of
marketable
securities........... -- -- 16,713 -- 16,713
Acquisition of
businesses, net of
cash acquired........ -- -- (52,466) -- (52,466)
Other costs........... (520) -- (531) -- (1,051)
-------- ------- ------- -------- --------
Net cash (used in)
investing activities... (13,549) (11,569) (61,304) -- (86,422)
Financing activities
Issuance of common
stock, net of costs
incurred............. -- -- 190,838 -- 190,838
Proceeds from debt.... 165,900 75,377 67,000 -- 308,277
Payments of debt...... (323,863) (126) (52,000) -- (375,989)
Issuance of redeemable
preferred stock...... -- -- 10,000 -- 10,000
Redemption of
preferred stock...... -- -- (57,359) -- (57,359)
Intercompany
transactions, net.... 151,691 (71,487) (96,908) 16,704 --
Loan acquisition and
other costs.......... (3,669) (1,145) (6,562) -- (11,376)
-------- ------- ------- -------- --------
Net cash provided by
(used in) financing
activities............. (9,941) 2,619 55,009 16,704 64,391
Effect of exchange rate
changes on cash........ -- -- 5,433 -- 5,433
-------- ------- ------- -------- --------
Net increase in cash and
equivalents............ 7,734 9,047 2,718 -- 19,499
Cash and equivalents at
beginning of year...... 8,595 9,207 286 -- 18,088
-------- ------- ------- -------- --------
Cash and equivalents at
end of year............ $116,329 $18,254 $ 3,004 $ -- $ 37,587
======== ======= ======= ======== ========
</TABLE>
F-21
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFI-
GUARANTOR GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
(used by) operating
activities............. $ 33,304 $(8,663) $(34,302) $21,217 $ 11,556
Investing activities
Purchases of property,
plant and equipment.. (17,951) (29,891) -- -- (47,842)
Purchases of
marketable
securities........... -- -- (22,521) -- (22,521)
Proceeds from sales of
marketable
securities........... -- -- 19,929 -- 19,929
Acquisition of
businesses, net of
cash acquired........ -- -- (281,358) -- (281,358)
Other costs........... (1,416) -- (399) 399 (1,416)
-------- ------- -------- ------- --------
Net cash (used in)
investing activities... (19,367) (29,891) (284,349) 399 (333,208)
Financing activities
Issuance of common
stock, net of costs
incurred............. 30,000 -- -- -- 30,000
Proceeds from debt.... 273,654 -- -- -- 273,654
Payments of debt...... (13,638) -- -- -- (13,638)
Issuance of redeemable
preferred stock...... 40,000 -- -- -- 40,000
Intercompany
transactions, net.... (344,207) 44,046 321,777 (21,616) --
Loan acquisition and
other costs.......... (1,263) -- (1,117) -- (2,380)
-------- ------- -------- ------- --------
Net cash provided by
(used in) financing
activities............. (15,454) 44,046 320,660 (21,616) 327,636
Effect of exchange rate
changes on cash........ -- -- (1,724) -- (1,724)
-------- ------- -------- ------- --------
Net increase (decrease)
in cash and
equivalents............ (1,517) 5,492 285 -- 4,260
Cash and equivalents at
beginning of year...... 10,112 3,715 1 -- 13,828
-------- ------- -------- ------- --------
Cash and equivalents at
end of year............ $ 8,595 $ 9,207 $ 286 $ -- $ 18,088
======== ======= ======== ======= ========
</TABLE>
F-22
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFI-
GUARANTOR GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
(used by) operating
activities............. $ 9,059 $(5,616) $(3,373) $17,316 $ 17,386
Investing activities
Purchases of property,
plant and equipment.. (6,401) (4,940) -- -- (11,341)
Purchases of
marketable
securities........... -- -- (4,705) -- (4,705)
Proceeds from sales of
marketable
securities........... -- -- 2,707 -- 2,707
Acquisition of
businesses, net of
cash acquired........ -- -- (48,643) -- (48,643)
Other costs........... -- -- 607 -- 607
-------- ------- ------- ------- --------
Net cash (used in)
investing activities... (6,401) (4,940) (50,034) -- (61,375)
Financing activities
Issuance of common
stock, net of costs
incurred............. -- -- 15 -- 15
Proceeds from debt.... 39,514 -- 150,000 -- 189,514
Payments of debt...... (113,404) -- -- -- (113,404)
Redemption of
preferred stock...... -- -- (13,324) -- (13,324)
Affiliate
transactions, net.... 79,957 17,283 (79,924) (17,316) --
Loan acquisition and
other costs.......... (1,307) (3,012) -- -- (4,319)
-------- ------- ------- ------- --------
Net cash provided by
financing activities... 4,760 14,271 56,767 (17,316) 58,482
Effect of exchange rate
changes on cash........ -- -- (3,359) -- (3,359)
-------- ------- ------- ------- --------
Net increase in cash and
equivalents............ 7,418 3,715 1 -- 11,134
Cash and equivalents at
beginning of year...... 2,694 -- -- -- 2,694
-------- ------- ------- ------- --------
Cash and equivalents at
end of year............ $ 10,112 $ 3,715 $ 1 $ -- $ 13,828
======== ======= ======= ======= ========
</TABLE>
F-23
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. INCOME TAXES
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1996 1995 1994
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal and state.................................. $ -- $1,461 $ (812)
Foreign............................................ 2,899 5,130 1,737
Deferred:
Federal and state.................................. 8,324 (826) 2,679
Foreign............................................ (493) (549) (251)
------- ------ -------
Income tax before extraordinary item................. 10,730 5,216 3,353
Income tax benefit from:
Extraordinary item, loss from early extinguishment
of debt........................................... (7,492) -- (1,846)
------- ------ -------
Total income tax expense............................. $ 3,238 $5,216 $ 1,507
======= ====== =======
</TABLE>
The Company's provision for income taxes in 1996 includes the benefit of
utilizing net operating loss carryforwards of approximately $4.9 million. At
December 28, 1996, the Company had: (i) operating loss carryforwards of
approximately $28.7 million for federal income tax purposes expiring in the
years 2007-2011; (ii) capital loss carryforwards of approximately $6.0 million
related to its Canadian operation; and (iii) operating loss carryforwards of
approximately $15.6 million which begin to expire in 2002 related to its
Mexican operation. No accounting recognition has been given to the potential
income tax benefit related to the Canadian and Mexican operating loss
carryforwards. The Company has not provided U.S. income taxes for
undistributed earnings of foreign subsidiaries which are considered to be
retained indefinitely for reinvestment. The distribution of these earnings
would result in additional foreign withholding taxes and additional U.S.
federal income taxes to the extent they are not offset by foreign tax credits,
but it is not practicable to estimate the total liability that would be
incurred upon such a distribution. However, in 1996, the Company provided
approximately $3.5 million for income taxes related to the distribution of
earnings from certain of its foreign operations which are not considered to be
retained indefinitely for reinvestment. Significant components of the
Company's deferred tax assets and liabilities as of December 28, 1996 and
December 30, 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Provision for restructuring.............................. $ 2,566 $ 3,341
U.S. net operating loss carryforward..................... 10,057 4,360
Foreign net operating and capital loss carryforward...... 6,821 9,660
Foreign tax credits...................................... 1,356 783
Other.................................................... 9,262 7,248
-------- --------
Total deferred tax assets.............................. 30,062 25,392
Valuation allowance for deferred tax assets................ (14,149) (11,792)
-------- --------
Net deferred tax assets.................................... 15,913 13,600
Deferred tax liabilities:
Depreciation and amortization............................ (22,159) (16,827)
Basis difference on fixed assets......................... (23,561) (27,795)
Provision for undistributed foreign earnings not
considered to be retained indefinitely for reinvestment. (3,301) --
Other, net............................................... (4,485) (2,326)
-------- --------
Total deferred tax liabilities......................... (53,506) (46,948)
-------- --------
Net deferred taxes..................................... $(37,593) $(33,348)
======== ========
</TABLE>
F-24
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Taxes on income are based on earnings (loss) before taxes as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------
1996 1995 1994
------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic............................................ $11,018 $ 1,611 $ 4,056
Foreign............................................. 14,534 (20,002) (19,041)
------- -------- --------
$25,552 $(18,391) $(14,985)
======= ======== ========
</TABLE>
The provision for income taxes at the Company's effective tax rate differed
from the provision for income taxes at the statutory rate as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax (benefit) expense at the statutory
rate............................................... $ 8,943 $(6,437) $(5,095)
Valuation allowance................................. 418 7,521 6,800
Withholding taxes................................... 964 1,244 720
Effect of foreign operations, net................... 347 2,375 239
Other, net.......................................... 58 513 689
------- ------- -------
Provision for income taxes before extraordinary
item............................................... 10,730 5,216 3,353
Income tax benefit related to extraordinary item.... (7,492) -- (1,846)
------- ------- -------
Provision for income taxes.......................... $ 3,238 $ 5,216 $ 1,507
======= ======= =======
</TABLE>
NOTE 11. STOCK OPTION PLAN
In connection with the Offering, the Company adopted the 1996 Key Employee
Stock Option Plan ("1996 Plan"). The 1996 Plan is administered by the Stock
Option Committee, which are non-management members of the Company's Board who
are appointed by the Board. Any person who is a full-time, salaried employee
of the Company (excluding non-management directors) is eligible to participate
in the 1996 Plan. The Stock Option Committee selects the participants and
determines the terms and conditions of the options. The 1996 Plan provides for
the issuance of options covering 1,500,000 shares of common stock, subject to
certain adjustments reflecting changes in the Company's capitalization.
Options granted under the 1996 Plan may be either incentive stock options
("ISOs") or such other forms of non-qualified stock options ("NQOs") as the
Stock Option Committee may determine. The 1996 Plan provides that the option
price shall not be less than the fair value of the shares at the date of grant
and that such options vest in equal 20% increments over five years. The
options expire three years after the date that such portion became vested and
exercisable. Option activity under the 1996 Plan is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR 1996
----------------------
NUMBER OF GRANT/OPTION
SHARES PRICE
--------- ------------
<S> <C> <C>
Shares under option at beginning of year................. -- --
Granted.................................................. 130,330 $18.00
Exercised................................................ -- --
Forfeited................................................ -- --
Expired/Canceled......................................... -- --
--------- ------
Shares under option at end of year....................... 130,330 $18.00
========= ======
Shares under option exercisable at end of year........... -- --
========= ======
Shares available for future grant........................ 1,369,670 --
========= ======
</TABLE>
F-25
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As disclosed in Note 1. Description of Business and Significant Accounting
Policies, the Company adopted the disclosure-only provisions of FAS 123.
Accordingly, no compensation cost has been recognized in the Company's audited
financial statements for the 1996 Plan. In accordance with FAS 123, the fair
value of each option grant was determined by using the Black-Scholes option-
pricing model with the following weighted average assumptions used for 1996:
dividend yield of 0.0%; expected volatility of 0.55; risk-free interest rate
of 6.1% and expected lives of 5 years. Had compensation cost for the Company's
1996 Plan been determined based on the fair value at the grant date for awards
in 1996 consistent with provisions of FAS 123, the Company's net loss
available to common shareholders and net loss per common share would not have
differed materially from those amounts reported in the consolidated statements
of operations; therefore, supplemental pro forma information has not been
separately disclosed, as permitted by FAS 123.
NOTE 12. SHAREHOLDER RIGHTS PLAN
In connection with the IPO, the Company adopted a rights plan ("Rights
Plan"). On April 15, 1996, the Company's Board of Directors declared a
dividend of one right for each share of common stock outstanding at the close
of business on June 3, 1996. The holders of additional common stock issued
subsequent to such date and before the occurrence of certain events are
entitled to one right for each such additional share. Each right entitles the
registered holder under certain circumstances to purchase from the Company
one-thousandth of a share of junior preferred stock (series A) at a price of
$80 per one-thousandth share of junior preferred stock, subject to adjustment.
The Company may redeem the rights at $.01 per right prior to earlier of the
stock acquisition date and the expiration date as defined in the Rights Plan.
Prior to exercise of a right, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends or distributions. In addition, the rights have
certain anti-takeover effects. The rights are not issued in separate form and
may not be traded other than with the shares to which they attach. If
unexercised, the rights expire on June 3, 2006.
NOTE 13. RETIREMENT PLANS
Defined Contribution Plans
FiberTech maintains a 401(k) Plan ("FiberTech 401(k) Plan"), a Money
Purchase Salary Plan ("FiberTech Money Purchase Salary Plan") and a Money
Purchase Hourly Plan ("FiberTech Money Purchase Hourly Plan") (collectively,
the "FiberTech Money Purchase Plans") covering all employees who meet certain
service requirements. Under the provisions of the FiberTech Money Purchase
Plans, the Company has established 401(h) accounts to fund covered medical
claims for early retirees up to age 65. Under the FiberTech 401(k) Plan,
employer contributions are defined as a matching of employee contributions
allowing for a maximum matching contribution of 3% of a participant's
earnings. Under the FiberTech Money Purchase Salary Plan, employer
contributions are defined as 6.5% of a participant's base salary with 5%
contributed to an employee's account and 1.5% allocated to fund the general
pool of the 401(h) account. Under the FiberTech Money Purchase Hourly Plan,
employer contributions are defined as 2.5% of a participant's base salary with
2% given to an employee's account and .5% allocated to fund the 401(h)
account. The 401(h) accounts can be terminated at the Company's discretion at
any time without notice. Participant contributions are not permitted under the
FiberTech Money Purchase Plans. The cost of the FiberTech plans was
approximately $0.7, $0.8 and $0.8 million for 1996, 1995 and 1994,
respectively. Chicopee maintains a 401(k) Retirement Savings Plan for non-
union employees ("Chicopee Non-Union 401(k) Plan") and a Money Purchase
Retirement Plan for non-union employees ("Chicopee Non-Union Money Purchase
F-26
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Plan"). Under the Chicopee Non-Union 401(k) Plan, employer contributions are
defined as a matching of employee contributions allowing for a maximum match
of 3%. Under the Chicopee Non-Union Money Purchase Plan, employer
contributions are defined as 3.5% of a participant's base salary. Participant
contributions are not permitted under the Chicopee Non-Union Money Purchase
Plan. Chicopee also maintains a 401(k) Retirement Savings Plan for union
employees whereby employer contributions are based on 25% of the first $.40
per hour deferred by the employee. The cost of the Chicopee plans was
approximately $1.0 and $0.8 million in 1996 and 1995, respectively. FNA
maintains a 401(k) Plan ("FNA 401(k) Plan") covering all employees who meet
certain requirements. Each plan year employer contributions are discretionary
and are based on employee pre-tax contributions. The cost of the FNA 401(k)
Plan was not material in 1996.
Defined Benefit Plans
The Company maintains defined benefit retirement plans covering employees at
certain of the Company's subsidiaries. The annual service costs are determined
on the basis of an actuarial valuation by using the projected benefit method.
Any realizable surpluses are amortized on a straight-line basis over the
expected average remaining service lives of the employees in the plan. It is
the Company's policy to fund such plans in accordance with applicable laws and
regulations. At December 28, 1996, the pension plan assets were primarily
invested in separate funds whose values are subject to fluctuation in interest
rates and equity/bond securities markets. The data presented in the following
tables illustrate components of pension expense, assumptions used in
accounting for the defined benefit retirement plans and the funded status for
such plans as of the respective periods. Information regarding the Company's
defined benefit retirement plan for its Mexican subsidiary is excluded from
the following disclosures as such amounts were not material during 1996, 1995
and 1994.
Pension expense included in the determination of net income for 1996, 1995
and 1994 is included in the following table:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------
1996 1995 1994
------- ------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Current service costs.................................. $ 1,523 $ 1,286 $ 96
Interest costs on projected benefit obligation......... 1,673 1,160 158
Return on plan assets.................................. (2,158) (1,400) (194)
Net amortization of transition obligation.............. (52) 5 (12)
------- ------- -----
Pension expense, net................................... $ 986 $ 1,051 $ 48
======= ======= =====
</TABLE>
F-27
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant assumptions used in accounting for the defined benefit
retirement plans are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------
1996 1995 1994
---------- --------- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Return on plan assets:
U.S. Plan.......................................... 9.0% 9.0% --
Non U.S. Plans..................................... 6.5%-13.0% 6.5%-8.0% 8.0%
Discount rate on projected benefit obligations:
U.S. Plan.......................................... 7.5% 7.5% --
Non U.S. Plans..................................... 6.0%-8.5% 6.0%-8.0% 8.0%
Salary and wage escalation rate:
U.S. Plan.......................................... -- -- --
Non U.S. Plans..................................... 3.0%-4.0% 3.0%-4.0% 4.0%
</TABLE>
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheet as of December 28, 1996 and December 30, 1995:
<TABLE>
<CAPTION>
1996 1995
----------------------- -----------------------
(NON U.S. (U.S. PLAN) (NON U.S. (U.S. PLAN)
PLANS) PLAN PLANS) PLAN
PLAN ASSETS LIABILITIES PLAN ASSETS LIABILITIES
EXCEED PLAN EXCEED PLAN EXCEED PLAN EXCEED PLAN
LIABILITIES ASSETS LIABILITIES ASSETS
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Accumulated benefit obligation:
Vested......................... $21,368 $ 231 $15,533 $ 153
Non-vested..................... 1,172 181 589 121
------- ----- ------- -----
22,540 412 16,122 274
Benefits attributable to future
salaries...................... 3,942 -- 3,005 --
------- ----- ------- -----
Projected benefit obligation... 26,482 412 19,127 274
Plan assets at fair value...... 34,036 175 23,509 15
------- ----- ------- -----
Excess (deficit) of plan assets
over projected benefit
obligation.................... 7,554 (237) 4,382 (259)
Unrecognized transition net
asset......................... (360) -- (412) --
Unrecognized net (gain) loss... (1,635) -- 353 --
------- ----- ------- -----
Prepaid pension cost (pension
liability).................... $ 5,559 $(237) $ 4,323 $(259)
======= ===== ======= =====
</TABLE>
NOTE 14. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In connection with the Chicopee Acquisition, the Company assumed obligations
under a defined benefit health care retirement plan for union employees at
Chicopee's North Little Rock, Arkansas manufacturing facility in addition to
certain other postretirement benefits for non-union employees. Accordingly,
the Company follows provisions of Statement of Financial Accounting Standards
No. 106, "Employers Accounting for Postretirement Benefits Other Than
Pensions" ("FAS 106"). FAS 106 requires that the accrual method of accounting
for postretirement benefits other than pensions be used and the accrual period
be based on the period that employees render the services necessary to earn
their postretirement benefits. The Company currently anticipates funding the
plans on a "pay-as-you-go" basis. The weighted average discount rate used in
the calculation of the accumulated postretirement benefit obligation and the
net postretirement benefit cost for the plans was 6.5% and 7.5%. The assumed
annual composite rate of increase in the per capita cost of Company provided
F-28
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
health care benefits begins at 9.0% for 1996, gradually decreases to 6.0% by
1999 and remains at that level thereafter. A 1% increase in these health care
cost trend rates would cause the accumulated obligation to increase by $0.7
million. The effect of such increase on the aggregate of the service and
interest components of the 1996 net postretirement benefit cost is not
significant. Net postretirement benefit cost included in the determination of
net income for 1996 and 1995 is included in the following table:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------
1996 1995
------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during period.......... $ 169 $ 109
Interest cost on accumulated postretirement benefit
obligation.......................................... 238 174
------- -------
Net postretirement benefit cost...................... $ 407 $ 283
======= =======
</TABLE>
The following table sets forth the funded status of the Company's obligation
under FAS 106 as of December 28, 1996 and December 30, 1995:
<TABLE>
<CAPTION>
1996 1995
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees......................................................... $ -- $ --
Fully eligible active plan participants.......................... 885 --
Other active plan participants................................... 3,016 3,493
------ ------
Accrued postretirement benefit obligation........................ $3,901 $3,493
====== ======
</TABLE>
NOTE 15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED DECEMBER 28, 1996
Net sales.............................. $122,715 $128,593 $135,042 $135,018
Gross profit........................... 29,395 32,265 33,834 36,861
Income (loss) before extraordinary
item.................................. (483) 2,598 5,531 7,176
Extraordinary item..................... -- (13,932) -- --
Net income (loss)...................... (483) (11,334) 5,531 7,176
Redeemable preferred stock dividends
and accretion......................... (2,104) (916) -- --
Net income (loss) attributable to
common stock.......................... (2,587) (12,250) 5,531 7,176
Net income (loss) attributable to
common stock per share before
extraordinary item.................... $ (.13) $ .06 $ .17 $ .22
Extraordinary item per common share.... -- (.53) -- --
Net income (loss) attributable to
common stock.......................... $ (.13) $ (.47) $ .17 $ .22
FISCAL YEAR ENDED DECEMBER 30, 1995
Net sales.............................. $ 66,012 $123,041 $122,521 $126,064
Gross profit........................... 15,999 30,856 29,101 28,076
Net income (loss)...................... (11,304) 6,774 (2,860) (16,217)
Redeemable preferred stock dividends
and accretion......................... (200) (1,398) (1,454) (1,787)
Net income (loss) attributable to
common stock.......................... $(11,504) $ 5,376 $ (4,314) $(18,004)
Net income (loss) attributable to
common stock per share................ $ (.56) $ .26 $ (.21) $ (.88)
</TABLE>
F-29
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Extraordinary Item
As discussed in Note 2. Initial Public Offering and Note 8. Long-Term Debt,
the Company entered into the Existing Credit Facility in connection with
consummation of the IPO. Accordingly, the Company recorded an extraordinary
item ($13.9 million, net of the related income tax benefit of $7.5 million) in
the second quarter of 1996 related to the write-off of previously capitalized
debt issue costs and prepayment costs associated with the repurchase of $50.0
million principal amount of the Senior Notes.
Other
In 1995, the Company incurred net foreign currency transaction losses of
approximately $22.8 million related primarily to United States dollar
intercompany indebtedness at the Company's Mexican operation ($24.3 million)
offset by net foreign currency gains within the Company's Canadian and
European operations ($1.6 million). In the fourth quarter of 1994, the Mexican
government discontinued monetary support for the nuevo peso allowing it to
float to market rates which has resulted in a significant devaluation of the
nuevo peso since the end of 1994. As part of the Recapitalization (see Note 2.
Initial Public Offering) in 1996, the majority of the Company's United States
dollar intercompany indebtedness at its Mexican, Canadian and German
operations was effectively converted to equity, thus mitigating the Company's
exposure to foreign currency fluctuations. Consequently, the Company's net
foreign currency transaction loss in 1996 approximated $3.0 million (primarily
related to United States dollar intercompany indebtedness), a decrease of
$19.8 million versus 1995. See Note 18. Subsequent Events for a discussion of
the Company's change in functional currency for its Mexican subsidiary from
the nuevo peso to the United States dollar.
NOTE 16. GEOGRAPHICAL INFORMATION
Geographic data for the Company's operations are presented in the following
table. Intercompany sales and expenses are eliminated in determining results
for each operation. Export sales from the Company's United States operations
to unaffiliated customers approximated $43.8, $16.1 and $8.1 million during
1996, 1995 and 1994, respectively.
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States................................... $312,000 $255,296 $108,356
Canada.......................................... 57,371 59,417 24,418
Europe.......................................... 108,563 99,180 21,347
Mexico.......................................... 43,434 23,745 11,212
-------- -------- --------
Total......................................... $521,368 $437,638 $165,333
======== ======== ========
Income from operations:
United States................................... $ 35,625 $ 16,918 $ 7,994
Canada.......................................... 9,045 13,485 5,746
Europe.......................................... 7,350 4,994 181
Mexico.......................................... 10,128 6,891 1,642
-------- -------- --------
Total......................................... 62,148 42,288 15,563
Other expense, net:
Interest expense................................ 33,641 37,868 13,216
Foreign currency transaction losses, net........ 2,955 22,811 17,332
-------- -------- --------
Income (loss) before income taxes and
extraordinary item............................... $ 25,552 $(18,391) $(14,985)
======== ======== ========
Identifiable assets:
United States................................... $388,240 $324,088 $104,792
Canada.......................................... 92,670 88,100 71,088
Europe.......................................... 171,676 180,978 29,020
Mexico.......................................... 55,529 44,815 36,529
-------- -------- --------
Total......................................... $708,115 $637,981 $241,429
======== ======== ========
</TABLE>
F-30
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 17. CERTAIN MATTERS
The Company's corporate headquarters are housed in space leased by a
shareholder of the Company from an affiliate of the shareholder. A portion of
the payments and other expenses, primarily insurance and allocated costs, are
charged to the Company. Such amounts approximated $2.1, $2.3 and $1.4 million
in 1996, 1995 and 1994, respectively. On September 1, 1993, an affiliated
entity of the Company acquired a manufacturing facility in Vineland, New
Jersey for the benefit of a wholly-owned subsidiary of the Company and entered
into a lease of the facility to the subsidiary at a base rate of $2.50 per
square foot, subject to adjustment to account for inflation, which is
comparable to similar properties in the area. The lease terminates on August
31, 2003 and is subject to a fair market value purchase option at termination.
Annual rental expense relating to this lease approximated $0.2 million in
1996, 1995 and 1994, respectively. On January 11, 1996, the Company issued
10,000 shares of 13% Cumulative Redeemable Preferred Stock, $.01 par value, to
an entity affiliated with the Company for $10.0 million. Such shares were
redeemed in connection with the IPO (see Note 2. Initial Public Offering).
NOTE 18. SUBSEQUENT EVENTS
Foreign Currency
Effective December 29, 1996, the Company changed the functional currency for
its Mexican subsidiary from the nuevo peso to the United States dollar due to
economic facts and circumstances including: (i) the cumulative inflation index
in Mexico has been approximately 100% over a three year period ended December
28,1996; (ii) an increase in the volume of transactions denominated in dollars
including dollar-indexed transactions; and (iii) the cash flows of the
Company's Mexican subsidiary are directly affected since a substantial portion
of transactions are dollar denominated or dollar-indexed. In accordance with
FAS 52, the dollar translated amounts of nonmonetary assets, primarily
property, plant and equipment and goodwill, at December 28, 1996, became the
accounting basis for those assets at December 29, 1996, and for subsequent
periods. Additionally, the Mexican-related cumulative translation adjustment
at December 28, 1996, accumulated in shareholders' equity prior to this change
in functional currency, remains as a separate component of shareholders'
equity.
Employee Stock Purchase Plan
On January 1, 1997, the Company adopted the Stock Purchase Plan for
Employees of Polymer Group, Inc. which allows employee participants to
purchase common stock of the Company through payroll deductions. The plan is
administered by a third party and all administrative costs of the plan are
covered by the Company. In accordance with the plan, share purchases by the
administrator are made at the fair value of the Company's common stock on the
date of purchase.
F-31
<PAGE>
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 28, DECEMBER 28,
ASSETS 1997 1996
------ ----------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents................................ $ 31,855 $ 37,587
Marketable securities............................... 12,677 10,892
Accounts receivable, net............................ 75,331 64,752
Inventories......................................... 61,322 55,637
Deferred income taxes and other..................... 17,906 15,559
-------- --------
Total current assets.............................. 199,091 184,427
Property, plant and equipment, net.................... 406,646 406,527
Intangibles, loan acquisition and organization costs,
net.................................................. 92,457 96,932
Deferred income taxes and other....................... 20,300 20,229
-------- --------
Total assets...................................... $718,494 $708,115
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable.................................... $ 32,469 $ 36,059
Accrued liabilities and other....................... 41,651 35,717
Current portion of long-term debt................... 86 19,497
-------- --------
Total current liabilities......................... 74,206 91,273
-------- --------
Long-term debt, less current portion.................. 390,113 362,745
Deferred income taxes................................. 49,257 52,115
Other noncurrent liabilities.......................... 5,347 6,064
Shareholders' equity:
Series preferred stock--$.01 par value, 10,000,000
shares authorized,
0 shares issued and outstanding.................... -- --
Common stock--$.01 par value, 100,000,000 shares
authorized, 32,000,000 shares issued and
outstanding........................................ 320 320
Non-voting common stock--$.01 par value, 3,000,000
shares authorized, 0 shares issued and outstanding. -- --
Additional paid-in capital.......................... 243,662 243,662
(Deficit)........................................... (43,809) (54,783)
Cumulative translation adjustment................... (1,238) 6,790
Unrealized holding gain (loss) on marketable
securities......................................... 636 (71)
-------- --------
199,571 195,918
-------- --------
Total liabilities and shareholders' equity........ $718,494 $708,115
======== ========
</TABLE>
See accompanying notes.
F-32
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- ------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1997 1996 1997 1996
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................ $ 131,508 $128,593 $260,455 $251,308
Cost of goods sold................... 96,792 96,328 193,154 189,648
--------- --------- -------- --------
Gross profit......................... 34,716 32,265 67,301 61,660
Selling, general and administrative
expenses............................ 19,037 16,480 37,693 34,591
--------- --------- -------- --------
Operating income..................... 15,679 15,785 29,608 27,069
Other (income) expenses:
Interest expense, net.............. 6,698 9,026 13,532 19,605
Foreign currency transaction
(gains) losses, net............... (5) 2,241 (325) 3,573
--------- --------- -------- --------
6,693 11,267 13,207 23,178
--------- --------- -------- --------
Income before income taxes and
extraordinary item.................. 8,986 4,518 16,401 3,891
Income taxes......................... 2,974 1,920 5,427 1,776
--------- --------- -------- --------
Income before extraordinary item..... 6,012 2,598 10,974 2,115
Extraordinary item, (loss) from
extinguishment of debt, net of
income tax benefit of $7,492........ -- (13,932) -- (13,932)
--------- --------- -------- --------
Net income (loss).................... 6,012 (11,334) 10,974 (11,817)
Redeemable preferred stock dividends
and accretion....................... -- (916) -- (3,020)
--------- --------- -------- --------
Net income (loss) applicable to
common stock........................ $ 6,012 $ (12,250) $ 10,974 $(14,837)
========= ========= ======== ========
Net income (loss) per common share:
Income (loss) before extraordinary
item.............................. $ .19 $ .06 $ .34 $ (.04)
Extraordinary item, (loss) from
extinguishment of debt, net of
income tax benefit................ -- (.53) -- (.60)
--------- --------- -------- --------
Net income (loss) applicable to
common stock........................ $ .19 $ (.47) $ .34 $ (.64)
========= ========= ======== ========
Weighted average number of shares
outstanding......................... 32,000 26,250 32,000 23,375
========= ========= ======== ========
</TABLE>
See accompanying notes.
F-33
<PAGE>
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------
JUNE 28, JUNE 29,
1997 1996
-------- --------
<S> <C> <C>
Operating activities
Net income (loss)........................................ $ 10,974 $(11,817)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item, loss from extinguishment of debt,
net of income tax benefit............................. -- 13,932
Depreciation and amortization expense.................. 20,008 18,266
Foreign currency transaction (gains) losses, net....... (325) 3,573
Provision for losses on accounts receivable and price
concessions........................................... 3,470 3,856
Changes in operating assets and liabilities:
Accounts receivable.................................... (14,049) (9,095)
Inventories............................................ (5,685) (3,501)
Accounts payable and accrued liabilities............... 1,627 2,399
Other, net............................................. 254 (1,408)
-------- --------
Net cash provided by operating activities............ 16,274 16,205
-------- --------
Investing activities
Purchases of property, plant and equipment............... (27,457) (10,973)
Purchases of marketable securities....................... (10,585) (15,452)
Proceeds from sales of marketable securities............. 9,591 8,100
Organization and other costs............................. (84) (49)
-------- --------
Net cash (used in) investing activities.............. (28,535) (18,374)
-------- --------
Financing activities
Issuance of common stock, net of costs incurred.......... -- 190,838
Proceeds from debt....................................... 27,093 235,400
Payments of debt......................................... (14,780) (363,905)
Redemption of preferred stock............................ -- (57,359)
Issuance of redeemable preferred stock................... -- 10,000
Loan acquisition and debt prepayment costs............... (113) (11,067)
-------- --------
Net cash provided by financing activities............ 12,200 3,907
-------- --------
Effect of exchange rate changes on cash.................... (5,671) (483)
-------- --------
Net increase (decrease) in cash and cash equivalents. (5,732) 1,255
Cash and equivalents at beginning of period.......... 37,587 18,088
-------- --------
Cash and equivalents at end of period................ $ 31,855 $ 19,343
======== ========
Noncash financing activities
Cumulative dividends on redeemable preferred stock....... $ -- $ 3,020
</TABLE>
See accompanying notes.
F-34
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Polymer Group, Inc. ("Polymer Group" or the "Company") is a world-wide
manufacturer of flexible nonwoven and woven polyolefin fabrics. The Company's
principal lines of business include hygiene, medical, wiping and industrial
and specialty products. The Company operates thirteen manufacturing facilities
located in the United States, Canada, Mexico, Germany and The Netherlands.
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the management of Polymer
Group, these unaudited consolidated financial statements contain all
adjustments of a normal recurring nature necessary for a fair presentation.
Operating results for the three and six months ended June 28, 1997, are not
necessarily indicative of the results that may be expected for fiscal 1997.
Certain amounts previously presented in the consolidated financial statements
for prior periods have been reclassified to conform to current classification.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost or market using the first-in,
first-out method of accounting and consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 28, DECEMBER 28,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Inventories:
Finished goods................................ $32,838 $26,809
Work in process and stores and maintenance
parts........................................ 3,840 3,328
Raw materials................................. 24,644 25,500
------- -------
Total....................................... $61,322 $55,637
======= =======
</TABLE>
NOTE 3. NET INCOME (LOSS) PER SHARE
Net income (loss) per common share is determined by dividing net income
(loss) applicable to common stock by the average number of shares outstanding
during the period.
NOTE 4. SELECTED FINANCIAL DATA OF GUARANTORS
Payment of the $100.0 million 12 1/4% Senior Notes, which were refinanced on
July 3, 1997 as discussed in "Note 7. Subsequent Event" of Notes to
Consolidated Financial Statements, is unconditionally guaranteed, jointly and
severally, on a senior basis by certain of the Company's wholly-owned
subsidiaries ("Guarantors"). Management has determined that separate complete
financial statements of the Guarantors would not be material to users of the
financial statements. The following sets forth selected financial data of the
Guarantors and Non-Guarantor subsidiaries (in thousands):
F-35
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF JUNE 28, 1997
<TABLE>
<CAPTION>
COMBINED COMBINED RECLASSIFI-
GUARANTOR NON-GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 52,392 $ 66,127 $ 6,244 $ 122 $124,885
Total assets............ 1,063,847 321,327 498,981 (1,165,661) 718,494
Total debt.............. 468,007 157,286 272,858 (507,952) 390,199
Shareholders' equity.... 533,129 115,242 207,487 (656,287) 199,571
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF DECEMBER 28, 1996
<CAPTION>
COMBINED COMBINED RECLASSIFI-
GUARANTOR NON-GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 38,097 $ 47,034 $ 7,904 $ 119 $ 93,154
Total assets............ 1,032,233 278,676 471,796 (1,074,590) 708,115
Total debt.............. 442,447 114,692 260,790 (435,687) 382,242
Shareholders' equity.... 527,475 110,238 195,918 (637,713) 195,918
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE SIX MONTHS ENDED JUNE 28, 1997
<CAPTION>
COMBINED COMBINED RECLASSIFI-
GUARANTOR NON-GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ 165,495 $ 99,174 $ -- $ (4,214) $260,455
Operating income........ 12,120 14,381 3,107 -- 29,608
Income (loss) before
income taxes........... 9,681 12,311 (5,591) -- 16,401
Income taxes (benefit).. (93) 1,510 4,010 -- 5,427
Equity in earnings of
subsidiaries........... -- -- 20,575 (20,575) --
Net income.............. 9,774 10,801 10,974 (20,575) 10,974
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE SIX MONTHS ENDED JUNE 29, 1996
<CAPTION>
COMBINED COMBINED RECLASSIFI-
GUARANTOR NON-GUARANTOR THE CATIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ 164,042 $ 87,905 $ -- $ (639) $251,308
Operating income (loss). 13,372 13,698 (15) 14 27,069
Income (loss) before
income taxes and
extraordinary item..... 3,405 2,911 (2,439) 14 3,891
Income taxes (benefit).. 1,514 (558) 820 -- 1,776
Income (loss) before
extraordinary item..... 1,891 3,469 (3,259) 14 2,115
Extraordinary Item...... (10,745) 793 (3,980) -- (13,932)
Equity in earnings
(loss) of subsidiaries. -- -- (4,922) 4,922 --
Net income (loss)....... (8,854) 4,262 (12,161) 4,936 (11,817)
</TABLE>
F-36
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
NOTE 5. FOREIGN CURRENCY
On December 29, 1996, the Company changed the functional currency for its
Mexican subsidiary from the nuevo peso to the United States dollar due to
economic facts and circumstances including: (i) the cumulative inflation index
in Mexico has approximated 100% over a three year period ended December 28,
1996; (ii) an increase in the volume of transactions denominated in dollars
including dollar-indexed transactions; and (iii) the cash flows of the
Company's Mexican subsidiary are directly affected since a substantial portion
of transactions are dollar denominated or dollar-indexed. In accordance with
FAS 52, the dollar translated amounts of nonmonetary assets, primarily
property, plant and equipment and goodwill, at December 28, 1996 became the
accounting basis for those assets at December 29, 1996 and for subsequent
periods. Additionally, the Mexican-related cumulative translation adjustment
at December 28, 1996 accumulated in shareholders' equity prior to this change
in functional currency remains as a separate component of shareholders'
equity.
NOTE 6. NEW ACCOUNTING STANDARD
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("FAS 128"), was issued. FAS 128 is designed to improve
the earnings per share information provided in financial statements by
simplifying the existing computational guidelines, revising the disclosure
requirements, and increasing the comparability of earnings per share data on
an international basis. FAS 128 is effective for financial statements issued
for periods ending after December 15, 1997, including interim periods. Earlier
application is not permitted. The Company will adopt FAS 128 on its effective
date. The Company does not currently anticipate that the effect of adoption
will have a material impact upon its current earnings per share computation.
NOTE 7. SUBSEQUENT EVENT
On July 3, 1997, the Company refinanced its outstanding indebtedness by: (i)
consummating the private placement and resale of $400.0 million 9% Senior
Subordinated Notes due 2007 pursuant to Rule 144A promulgated under the
Securities Act of 1933, and the tender offer and related consent solicitation
for its Senior Notes; and (ii) amending and restating its existing credit
facility (collectively, the "Refinancing"). In the tender offer and consent
solicitation, the Company purchased all of its outstanding Senior Notes for an
amount in cash equal to $1,103.64 per $1,000 aggregate amount, plus accrued
interest. The Company also solicited consents from tendering holders to amend
the indenture under which the Senior Notes were issued to eliminate
substantially all of the protective covenants contained therein, and paid a
separate consent fee to holders who tendered their notes and delivered
consents prior to the expiration of the consent solicitation. The Company
received consents relating to, and tenders of, all of the outstanding Senior
Notes. The amended credit facility provides for secured revolving credit
facilities with an aggregate commitment of up to $325.0 million and a term of
approximately six years. The Company's current portion of long-term debt that
was refinanced in connection with the Refinancing has been classified as long-
term debt in the Company's June 28, 1997 condensed consolidated balance sheet
in accordance with Statement of Financial Accounting Standards No. 6,
"Classification of Short-Term Obligations Expected to be Refinanced."
F-37
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary.................................................................... 1
Risk Factors............................................................... 13
The Refinancing............................................................ 21
Use of Proceeds............................................................ 22
Capitalization............................................................. 22
Selected Consolidated Financial Data....................................... 23
Unaudited Pro Forma Financial Information.................................. 25
Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 28
Business................................................................... 41
Management................................................................. 56
Certain Relationships and Related Transactions............................. 58
Security Ownership......................................................... 60
Description of Certain Indebtedness........................................ 62
Description of the Exchange Notes.......................................... 63
Registration Rights........................................................ 95
The Exchange Offer......................................................... 96
Certain Federal Income Tax Consequences.................................... 105
Plan of Distribution....................................................... 106
Legal Matters.............................................................. 107
Experts.................................................................... 107
Index to Financial Statements.............................................. F-1
</TABLE>
PROSPECTUS
$400,000,000
POLYMER GROUP, INC.
OFFER TO EXCHANGE ITS 9% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B, FOR ANY
AND ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2007
LOGO
September 3, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, PGI Polymer, FiberTech, FiberGol, Technetics, Chicopee Holdings,
Chicopee and Fabrene Corp.
The Company and each of PGI Polymer, FiberTech, FiberGol, Technetics,
Chicopee Holdings, Chicopee and Fabrene Corp. (the "Delaware Corporate
Guarantors") are incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of
the fact that such person is or was an officer, director, employee or agent of
such corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the corporation's best interests and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was
illegal. A Delaware corporation may indemnify any persons who are, or are
threatened to be made, a party to any threatened, pending or completed action
or suit by or in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorney's fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such action or
suit, provided such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the corporation's best interests except
that no indemnification is permitted without judicial approval if the officer
or director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director has actually and reasonably incurred.
The respective certificates of incorporation, as amended, of the Company and
each Delaware Corporate Guarantor provide that no director of the corporation
shall be liable to such corporation or its stockholders for monetary damages
arising from a breach of fiduciary duty owed to the corporation or its
stockholders. The certificate of incorporation, as amended, of Fabrene Corp.
excludes from such provision liabilities arising (i) from breach of the
director's duty of loyalty to Fabrene Corp. or its stockholders, (ii) from
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law, or (iv) from any transaction from which the director
derived an improper personal benefit.
The respective by-laws of the Company and each Delaware Corporate Guarantor
provide that the Company shall indemnify, to the fullest extent permitted by
the General Corporation Law of the State of Delaware, any person who was or is
a party or is threatened to be made a party to or is involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director or officer of such corporation or other entity, or is or
was serving at the request of such corporation as a director, officer or
member of another corporation, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding and that
such indemnification shall continue as to an indemnitee who has ceased to a be
II-1
<PAGE>
a director or officer and shall inure to the benefit of the indemnitee's
heirs, executors and administrators. The by-laws of the Company and each
Delaware Corporate Guarantor except Technetics and Fabrene Corp. further
provide that any employee or agent of such corporation, or any person serving
at the request of the Company or such respective Delaware Corporate Guarantor
as an employee or agent of another corporation, partnership, joint venture or
other enterprise shall be indemnified in the same manner as a director or
officer of such entity.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The respective by-laws of the Company and each Delaware Corporate Guarantor
except Technetics and Fabrene Corp. provide that each such corporation may
purchase and maintain insurance on its own behalf and on behalf of any person
who is or was a director, officer, employee, fiduciary, or agent of such
corporation or was serving at the request of that corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him or her
and incurred by him or her in any such capacity, whether or not the
corporation would have the power to indemnify such person against such
liability under its by-laws. Technetics and Fabrene Corp. extend such coverage
only to officers or directors of such corporations or serving in such
capacities at other entities at the request of such corporations.
All of the directors and officers of the Company and each Delaware Corporate
Guarantor are covered by insurance policies maintained and held in effect by
either the Company or such corporation against certain liabilities for actions
taken in such capacities, including liabilities under the Securities Act of
1933.
Fabrene L.L.C.
Fabrene L.L.C. is organized under the Delaware Limited Liability Company Act
(the "L.L.C. Act"). Under Section 18-108 of the L.L.C. Act, subject to such
standards and restrictions, if any, as are set forth in a limited liability
company's agreement, a limited liability company may indemnify and hold
harmless any member or manager or other person from and against any and all
claims and demands whatsoever.
The Limited Liability Company Agreement of Fabrene L.L.C. (the "L.L.C.
Agreement") provides that, to the fullest extent permitted by law, Fabrene
L.L.C. shall indemnify any person who was or is a party or is threatened to be
made a party to any proceeding, other than an action by or in the right of
Fabrene L.L.C., by reason of the fact that such person is or was a member, a
director of a member, or an officer of Fabrene L.L.C. or a member, or is or
was serving at the request of Fabrene L.L.C. as a director, officer, employee
or agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses (including but not limited
to attorneys' fees), judgment, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of Fabrene L.L.C., and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of Fabrene L.L.C., and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
The L.L.C. Agreement further provides that such persons shall be indemnified
in actions by Fabrene L.L.C. so long as such person acted in good faith and in
a manner he reasonably believed to
II-2
<PAGE>
be in or not opposed to the best interests of Fabrene L.L.C., except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to Fabrene L.L.C.
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
PNA and FNA
PNA and FNA are incorporated under the laws of the State of North Carolina.
Section 8.51 of the North Carolina Business Corporation Act (the "NCBCA")
provides that a corporation may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred in the
proceeding if (i) he conducted himself in good faith, (ii) he reasonably
believed (a) in the case of conduct in his official capacity with the
corporation, that his conduct was in its best interests, and (b) in all other
cases, that his conduct was at least not opposed to its best interests, and
(iii) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. Section 8.51 provides that the termination
of a proceeding by judgment, order, settlement, conviction, or upon a plea of
no contest or its equivalent is not, of itself, determinative that the
director did not meet the requisite standard of conduct. Section 8.51
prohibits indemnification of a director (i) in connection with a proceeding by
or in the right of the corporation in which the director was adjudged liable
to the corporation, and (ii) in connection with any other proceeding charging
improper personal benefit to him, whether or not involving action in his
official capacity, in which he was adjudged liable on the basis that personal
benefit was improperly received by him. Indemnification permitted under
Section 8.51 in connection with a proceeding by or in the right of the
corporation that is concluded without a final adjudication on the issue of
liability is limited to reasonable expenses incurred in connection with the
proceeding.
Section 8.52 of the NCBCA provides that, unless limited by its articles of
incorporation, a corporation shall mandatorily indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding. Section 8.56 of the NCBCA provides that an officer of the
corporation is entitled to mandatory indemnification under Section 8.52 to the
same extent as a director, and that the corporation may otherwise indemnify
and advance expenses to an officer, employee, or agent of the corporation to
the same extent as to a director. Section 8.57 of the NCBCA provides that, in
addition to and separate and apart from the indemnification provided under the
NCBCA, a corporation may in its articles of incorporation or bylaws or by
contract or resolution indemnify or agree to indemnify any one or more of its
directors, officers, employees, or agents against liability and expenses in
any proceeding (including without limitation a proceeding brought by or on
behalf of the corporation itself) arising out of their status as such or their
activities in any of the foregoing capacities; provided, however, that a
corporation may not indemnify or agree to indemnify a person against liability
or expenses he may incur on account of his activities which were at the time
taken known or believed by him to be clearly in conflict with the best
interests of the corporation. Section 8.57 also provides that any provision of
any articles of incorporation, by-law, contract, or resolution permitted under
such section may include provisions for recovery from the corporation of
reasonable costs, expenses, and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and may further
include provisions establishing reasonable procedures for determining and
enforcing the rights granted therein.
The articles of incorporation, as amended, of PNA provide that a director of
the corporation shall not be personally liable for monetary damages for breach
of any duty as a director except and only to the extent applicable law
restricts such indemnification. The by-laws of PNA provide that any person who
at any time serves as a director or officer of PNA, or in such capacity at the
request of PNA for
II-3
<PAGE>
any other corporation, partnership, joint venture, trust or other enterprise,
or as a trustee or administrator under an employee benefit plan, shall have a
right to be indemnified by PNA to the fullest extent permitted by law against
(a) reasonable expenses, including reasonable attorneys' fees, actually
incurred by him in connection with any threatened, pending or completed
action, suit or proceeding (and any appeal thereof), whether civil, criminal,
administrative, investigative or arbitrative, and whether or not brought by or
on behalf of PNA, seeking to hold him liable by reason of the fact that he is
or was acting in such capacity, and (b) reasonable payments made by him in
satisfaction of any judgment, money decree, fine (including, without
limitation, an excise tax assessed with respect to an employee benefit plan),
penalty or settlement for which he may have become liable in any such action,
suit or proceeding.
The by-laws of PNA provide that any person who at any time serves or has
served as a director or officer of PNA, or in such capacity at the request of
PNA for any other corporation, partnership, joint venture, trust or other
enterprise, or as a trustee or administrator under an employee benefit plan,
shall have a right to be indemnified by PNA to the fullest extent permitted by
law against (a) reasonable expenses, including reasonable attorneys' fees,
actually incurred by him in connection with any threatened, pending or
completed action, suit or proceeding (and any appeal thereof), whether civil,
criminal, administrative, investigative or arbitrative, and whether or not
brought by or on behalf of PNA, seeking to hold him liable by reason of the
fact that he is or was acting in such capacity, and (b) reasonable payments
made by him in satisfaction of any judgment, money decree, fine (including,
without limitation, any excise tax assessed with respect to an employee
benefit plan), penalty or settlement for which he may have become liable in
any such action, suit or proceeding.
The articles of incorporation, as amended, of FNA provide that no person who
is serving or who has served as a director of the corporation shall be
personally liable in any action for monetary damages for breach of his or her
duty as a director, whether such action is brought by or in the right of the
corporation or otherwise. The by-laws of FNA provide that any person who at
any time serves or has served as a director or officer of FNA or of any wholly
owned subsidiary of FNA, or in such capacity at the request of FNA for any
other foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, or as a trustee or administrator under any employee benefit
plan of FNA or of any wholly owned subsidiary thereof (a "Claimant"), shall
have the right to be indemnified and held harmless by FNA to the fullest
extent from time to time permitted by law against all liabilities and
litigation expenses (as hereinafter defined) in the event a claim shall be
made or threatened against that person in, or that person is made or
threatened to be made a party to, any proceeding, whether or not brought by or
on behalf of FNA, including all appeals therefrom, arising out of such
service, provided, that such indemnification shall not be effective with
respect to (a) that portion of any liabilities or litigation expenses with
respect to which the Claimant is entitled to receive payment under any
insurance policy or (b) any liabilities or litigation expenses incurred on
account of any of the Claimant's activities which were at the time taken known
or believed by the Claimant to be clearly in conflict with the best interests
of FNA.
The by-laws of FNA provide that any person who at any time serves or has
served as a director or officer of FNA, or of any wholly owned subsidiary of
FNA or in such capacity at the request of FNA for any other foreign or
domestic corporation, partnership, joint venture, trust or other enterprise,
or as a trustee or administrator under any employee benefit plan of FNA or of
any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be
indemnified and held harmless by FNA to the fullest extent from time to time
permitted by law against all liabilities and litigation expenses (as
hereinafter defined) in the event a claim shall be made or threatened against
that person in, or that person is made or threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative, and whether or not brought
by or on behalf of the corporation, including all appeals therefrom (a
"proceeding"), arising out of such service, provided, that such
indemnification shall not be effective with respect to (a) that portion of any
liabilities or
II-4
<PAGE>
litigation expenses with respect to which the Claimant is entitled to receive
payment under any insurance policy or (b) any liabilities or litigation
expenses incurred on account of any of the Claimant's activities which were at
the time taken known or believed by the Claimant to be clearly in conflict
with the best interests of FNA.
Fabrene Group, Inc.
Fabrene Group is incorporated under the laws of the province of Prince
Edward Island, Canada. Under the Companies Act, every director of a company,
and his heirs, executors and administrators, and estate and effects, may, with
the consent of the company given at any general meeting, be indemnified and
saved harmless out of the funds of the company from and against all costs,
charges and expenses which he shall or may sustain or incur in any action or
proceeding which is brought or prosecuted against him for or in respect of any
act, deed, matter or thing made, done or permitted by him in or about the
execution of the duties of his office, and also from and against all other
costs, charges and expenses which he shall sustain or incur in or about or in
relation to the affairs thereof, except such costs, charges and expenses as
are occasioned by his own wilful neglect or default.
Section 10 of Article III, By-Law No. 1, of Fabrene Group's by-laws provides
that no director or officer of Fabrene Group shall be liable for the acts,
receipts, neglects or defaults of any other director or officer, or for
joining in any receipts or other act for conformity, or for any loss or
expense happening to Fabrene Group through the insufficiency or deficiency of
title to any property acquired by the order of the Board for or on behalf of
Fabrene Group, or for the insufficiency or deficiency of any security in or
upon which any of the moneys arising from the bankruptcy, insolvency or
tortious act of any person with whom any loss occasioned by any error of
judgment or oversight on his part, or for any other loss, damage or misfortune
whatever which shall happen in the execution of the duties of his office or in
relation thereto unless the same shall happen through his own dishonesty.
Section 11 of Article III, By-Law No. 1, of Fabrene Group's by-laws provides
that every director or officer of Fabrene Group and his heirs, executors and
administrators and estate and effects respectively shall, from time to time,
and at all times, be indemnified and saved harmless from and against all
costs, charges and expenses whatsoever which such director or officer sustains
or incurs in or about any action, suit or proceeding which is brought,
commenced or prosecuted against him, for or in respect of any act, deed,
matter or thing whatsoever, made, done or permitted by him, in or about the
execution of the duties of his office, and all other costs, charges and
expenses which he sustains or incurs in or about or in relation to the affairs
thereof except such costs, charges or expenses as are occasioned by his own
willful neglect or default.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<C> <S> <C>
3.1(i) Form of Amended and Restated Certificate of Incorporation
of the Company.(1)
3.1(ii) Certificate of Designation of the Company.
3.2 Amended and Restated By-laws of the Company.(1)
3.3(i) Restated Certificate of Incorporation of Polymer Group,
Inc. (n/k/a PGI Polymer, Inc.)
3.3(ii) Certificate of Amendment to Certificate of Incorporation
of PGI Polymer, Inc.
3.3(iii) Certificate of Amendment to Certificate of Incorporation
of PGI Polymer, Inc.
3.3(iv) Certificate of Amendment to Certificate of Incorporation
of PGI Polymer, Inc.
3.4 Amended and Restated By-laws of PGI Polymer, Inc.
3.5 Certificate of Incorporation of FiberTech Group, Inc.
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S> <C>
3.6 By-laws of FiberTech Group, Inc.
3.7 Articles of Incorporation of FiberGol Corporation
3.8 By-laws of FiberGol Corporation
3.9 Certificate of Incorporation of Technetics Group, Inc.
3.10 By-laws of Technetics Group, Inc.
3.11 Certificate of Incorporation of Chicopee Holdings, Inc.
3.12 By-laws of Chicopee Holdings, Inc.
3.13(i) Restated Certificate of Incorporation of Chicopee, Inc.
3.13(ii) Certificate of Amendment to Certificate of Incorporation
of Chicopee, Inc.
3.14 By-laws of Chicopee, Inc.
3.15(i) Articles of Incorporation of Petropar North America Corp.
(k/n/a PNA Corp.)
3.15(ii) Articles of Amendment to Articles of Incorporation of
Petropar North America Corp. (k/n/a PNA Corp.)
3.16 By-laws of Petropar North America Corp. (k/n/a PNA Corp.)
3.17(i) Articles of Incorporation of Atlas Corp. (k/n/a FNA
Polymer Corp.)
3.17(ii) Articles of Amendment to Articles of Incorporation of
Atlas, Corp. (k/n/a FNA Polymer Corp.)
3.17(iii) Articles of Amendment to Articles of Incorporation of
Fitesa North America Corp. (k/n/a FNA Polymer Corp.)
3.18 By-laws of Atlas Corp. (k/n/a FNA Polymer Corp.)
3.19(i) Certificate of Incorporation of Fabrene Corp.
3.19(ii) Certificate of Renewal of Fabrene Corp.
3.19(iii) Certificate of Renewal of Fabrene Corp.
3.20 By-laws of Fabrene Corp.
3.21 Certificate of Limited Liability Company of Fabrene Group
L.L.C.
3.22 Limited Liability Company Agreement of Fabrene Group
L.L.C.
3.23 Letters Patent Incorporating of Fabrene Group, Inc.
3.24 By-laws of Fabrene Group, Inc.
4.1 Indenture dated as of July 1, 1997 among the Company, the
Guarantors and Harris Trust and Savings Bank, as trustee.
4.2 Forms of Series A and Series B 9% Senior Subordinated
Notes due 2007 (contained in Exhibit 4.1 as Exhibit A and
B thereto, respectively).
4.3 Form of Guarantee (contained in Exhibit 4.2).
4.4 Registration Rights Agreement dated as of July 3, 1997
among the Company, the Guarantors and Chase Securities
Inc.
4.5 Amended and Restated Credit Agreement dated July 3, 1997
by and among the Company, the Guarantors named therein,
the lenders named therein and The Chase Manhattan Bank,
as agent.
The Registrant will furnish to the Commission, upon
request, each instrument defining the rights of holders
of long-term debt of the Registrant and its subsidiaries
where the amount of such debt does not exceed 10 percent
of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
</TABLE>
II-6
<PAGE>
<TABLE>
<C> <S> <C>
5.1 Opinion and consent of Kirkland & Ellis.*
10.1 Management Agreement dated October 21, 1992 by and among
PGI, FiberTech, GTC Fund III and Jerry Zucker.(2)**
10.2 Amendment No. 1 to Management Agreement dated June 24,
1994 by and among PGI, FiberTech, GTC Fund III and Jerry
Zucker.(2)**
10.3 Management Agreement dated October 21, 1992 by and among
PGI, FiberTech, GTC Fund III and James G. Boyd.(2)**
10.4 Amendment No. 1 to Management Agreement dated June 24,
1994 by and among PGI, FiberTech, GTC Fund III and James
G. Boyd.(2)**
10.5 Agreement dated June 24, 1994 among the Company, Jerry
Zucker and James G. Boyd.(2)
10.6 Lease Agreement dated as of September 1, 1993 by and
between ConX, Inc. and Technetics Group, Inc.(2)
10.7 Amendment No. 2 to Management Agreement dated March 15,
1995 by and among PGI, FiberTech, GTC Fund III and Jerry
Zucker.(2)**
10.8 Amendment No. 2 to Management Agreement dated March 15,
1995 by and among PGI, FiberTech, GTC Fund III and James
G. Boyd.(2)**
10.9 Amended and Restated Registration Agreement made as of
March 15, 1995 by and among the Company, InterTech, GTC
Fund III, Jerry Zucker, James G. Boyd, FTG, CMIHI, Leeway
& Co. ("Leeway") and California Public Employees'
Retirement System ("CalPERS").(2)
10.10 Management Agreement made as of March 15, 1995 by and
among the Company, Chicopee, Inc. and Jerry Zucker.(2)**
10.11 Management Agreement made as of March 15, 1995 by and
among the Company, Chicopee, Inc. and James G. Boyd.(2)**
10.12 Roll-In Agreement entered into as of November 18, 1994 by
and among ZB Holdings, InterTech, FTG, the Company,
Polypore, CMIHI, Jerry Zucker, James G. Boyd and GTC Fund
III.(2)
10.13 Senior Notes Indenture dated as of June 24, 1994 among
the Company, PGI, FiberTech and its subsidiaries and the
Trustee.(2)
10.14 Amended and Restated Credit Agreement dated as of June
24, 1994 by and among FiberTech, the Company, PGI, the
Subsidiary Guarantors identified therein, the Banks
identified therein and The Chase Manhattan Bank (National
Association),
as agent.(2)
10.15 Amended and Restated Security Agreement dated as of June
24, 1994 by and among FiberTech, the Subsidiary
Guarantors identified therein and The Chase Manhattan
Bank (National Association), as agent.(2)
10.16 Pledge Agreement dated as of June 24, 1994 by and among
the Company, PGI and The Chase Manhattan Bank (National
Association), as agent.(2)
10.17 Amendment No. 1 dated as of September 30, 1994 by and
among FiberTech, the Subsidiary Guarantors identified
therein, the Lenders signatory thereto and the Chase
Manhattan Bank (National Association), as agent.(2)
10.18 Amendment No. 2 dated as of March 8, 1995 by and among
FiberTech, the Subsidiary Guarantors identified therein,
the Lenders signatory thereto and the Chase Manhattan
Bank (National Association), as agent.(2)
10.19 Amendment No. 3 dated as of June 27, 1995 by and among
FiberTech, the Subsidiary Guarantors identified therein,
the Lenders signatory thereto and the Chase Manhattan
Bank (National Association), as agent.(2)
</TABLE>
II-7
<PAGE>
<TABLE>
<C> <S> <C>
10.20 Amendment No. 4 dated as of December 22, 1995 by and among
FiberTech, the Subsidiary Guarantors and Parent Guarantors
identified therein, the Lenders signatory thereto and the
Chase Manhattan Bank (National Association), as agent.(1)
10.21 First Supplemental Indenture dated as of March 15, 1995
between the Company and the Trustees.(3)
10.22 Credit Agreement dated as of March 15, 1995 between
Chicopee, Chicopee Holdings B.V., Chicopee B.V., each of
the lenders party thereto, The Chase Manhattan Bank
(National Association), as administrative agent, and The
Chase Manhattan Bank (National Association), The Bank of
Nova Scotia and BHF-Bank, as co-agents.(3)
10.23 Second Supplemental Indenture dated as of September 14,
1995 among the Company, the Trustee and Harris Trust and
Savings Bank, as successor trustee.(2)
10.24 Supply Agreement dated as of March 15, 1995 between
Johnson & Johnson and Chicopee.(1)***
10.25 Stock Purchase Agreement dated as of January 10, 1996
between the Company and ConX II.(1)
10.26 1996 Key Employee Stock Option Plan of the Company.(1)
10.27 Form of Non-Qualified Stock Option Grant.(1)
10.28 Amendment No. 5 dated as of December 30, 1995 by and among
FiberTech, the Subsidiary Guarantors and Parent Guarantors
identified therein, the Lenders signatory thereto and the
Chase Manhattan Bank (National Association),
as agent.(1)
10.29 Form of Credit Agreement dated as of May 15, 1996 among
the Company, its subsidiaries, the financial institutions
named therein and the Chase Manhattan Bank as
administrative and operations agent.(1)
10.30 Form of Third Supplemental Indenture between the Company
and Harris Trust and Savings Bank, as successor trustee.(1)
10.31 Recapitalization Agreement, dated May 6, 1996, among GTC
Fund III, Zucker, Boyd, InterTech, FTG, CMIHI, Leeway and
CalPERS.
10.32 Voting Agreement, dated May 15, 1996, among the Company,
GTC Fund III, Zucker, Boyd, InterTech, FTG, CMIHI and
Leeway.
10.33 Amendment No. 1 to Management Agreement, dated May 15,
1996, by and between the Company, Chicopee and Zucker.**
10.34 Amendment No. 3 to Management Agreement, dated May 15,
1996, by and between PGI Polymer, GTC Fund III, FiberTech
and Zucker.**
10.35 Amendment No. 1 to Management Agreement, dated May 15,
1996, by and between the Company, Chicopee and Boyd.**
10.36 Amendment No. 3 to Management Agreement, dated May 15,
1996, between PGI Polymer, GTC Fund III, FiberTech and
Boyd.**
10.37 Amendment No. 1 to Roll-In Agreement, dated May 15, 1996,
by and among ZB Holdings, InterTech, the Company,
Polypore, CMIHI, Zucker, Boyd and GTC Fund III.
10.38 Indemnification Agreement, dated May 15, 1996, among the
Company, InterTech, GTC Fund III, GTCR, ConX, ConX II,
Zucker and Boyd.
10.39 Fourth Supplemental Indenture between the Company and
Harris Trust and Savings Bank, as successor trustee, dated
August 14, 1996.(4)
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S> <C>
10.40 Fifth Supplemental Indenture between the Company and
Harris Trust and Savings Bank, as successor trustee, dated
June 19, 1997.
10.41 Purchase Agreement, dated June 30, 1997, by and among the
Company, the Guarantors named therein and Chase Securities
Inc., as Initial Purchaser, with respect to the 9% Senior
Subordinated Notes due 2007.
11 Statement of Computation of Per Share Earnings.
12 Statement Regarding Computation of Ratios of Earnings to
Fixed Charges.
13.1 Annual Report on Form 10-K for the fiscal year ended
December 28, 1996 (incorporated by reference from such
filing).
13.2 Quarterly Report on Form 10-Q for the fiscal quarter ended
March 29, 1997 (incorporated by reference from such
filing).
13.3 Quarterly Report on Form 10-Q for the fiscal quarter ended
June 28, 1997 (incorporated by reference from such
filing).
21 Subsidiaries of the Company.
23.1 Consent of Ernst & Young.
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1).*
24 Powers of Attorney of Directors and Officers of the
Company and each Subsidiary Guarantor (contained in
signature pages).*
25 Statement of Eligibility of Trustee on Form T-1.
27 Financial Data Schedule.(5)(6)(7)
99.1 Offer to Purchase and Consent Solicitation Statement dated
June 5, 1997 to any and all holders of the 12-1/4% Senior
Notes due 2002, relating to the Tender Offer.(6)
99.2 Letter of Transmittal relating to the Tender Offer.(6)
99.3 Notice of Guaranteed Delivery relating to the Tender
Offer.(6)
99.4 Form of Letter of Transmittal relating to the Exchange
Offer.
99.5 Form of Notice of Guaranteed Delivery relating to the
Exchange Offer.
99.6 Form of Tender Instructions relating to the Exchange
Offer.
99.7 Press Release dated June 4, 1997 issued by Polymer Group,
Inc.(8)
99.8 Press Release dated June 18, 1997 issued by Polymer Group,
Inc.(8)
</TABLE>
- --------
* Previously filed.
** Management contract or compensatory plan or arrangement.
*** Certain portions of the Agreement have been omitted and filed separately
with the Commission pursuant to an Application for Confidential Treatment.
The Company agrees to furnish supplementally to the Commission a copy of
any omitted schedule or exhibit to the Agreement upon request by the
Commission.
(1) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-1 (Reg. No. 333-2424).
(2) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-4 (Reg. No. 33-81862).
(3) Incorporated by reference to the respective exhibit to the Company's
Current Report on Form 8-K regarding the acquisition of Chicopee Holdings,
Inc. and its subsidiaries, filed on March 30, 1995.
(4) Incorporated by reference to the respective exhibit to the Company's Form
8-K dated August 14, 1996.
II-9
<PAGE>
(5) Incorporated by reference to the respective exhibit to the Company's Form
10-K, dated March 28, 1997, for the fiscal year ended December 28, 1996.
(6) Incorporated by reference to the respective exhibit to the Company's Form
10-Q, dated August 12, 1997, for the fiscal quarter ended June 28, 1997.
(7) Incorporated by reference to the respective exhibit to the Company's Form
10-Q, dated August 13, 1996, for the fiscal quarter ended June 29, 1996.
(8) Incorporated by reference to the respective exhibit to the Company's Form
8-K, dated June 19, 1997.
(b) FINANCIAL STATEMENT SCHEDULES.
The information required of the Company by Schedule II--Condensed Valuation
and Qualifying Accounts for each of the three years in the period ended
December 28, 1996 is incorporated herein by reference to the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
fiscal year ended December 28, 1996.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-10
<PAGE>
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, POLYMER GROUP,
INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Polymer Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
* Director
___________________________________________
Bruce V. Rauner
* Director
___________________________________________
David A. Donnini
* Director
___________________________________________
Michael J. McGovern
* Director
___________________________________________
L. Glenn Orr
* Director
___________________________________________
John F. Ruffle
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PGI POLYMER,
INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
PGI Polymer, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director
(Principal Financial and Accounting
Officer)
* Director
___________________________________________
Bruce V. Rauner
* Director
___________________________________________
David A. Donnini
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FIBERTECH GROUP,
INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
FiberTech Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
* Director
___________________________________________
Bruce V. Rauner
* Director
___________________________________________
David A. Donnini
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FIBERGOL
CORPORATION HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
FiberGol Corporation
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
* Director
___________________________________________
Bruce V. Rauner
* Director
___________________________________________
David A. Donnini
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, TECHNETICS
GROUP, INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Technetics Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
* Director
___________________________________________
Bruce V. Rauner
* Director
___________________________________________
David A. Donnini
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CHICOPEE
HOLDINGS, INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Chicopee Holdings, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
</TABLE>
II-17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CHICOPEE, INC.
HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Chicopee, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
</TABLE>
II-18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PNA CORP. HAS
DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NORTH
CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
PNA Corp.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
</TABLE>
II-19
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FNA POLYMER
CORP. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
FNA Polymer Corp.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
</TABLE>
II-20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FABRENE CORP.
HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Fabrene Corp.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief Executive
___________________________________________ Officer, President and Director
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary and
James G. Boyd Director (Principal Financial and
Accounting Officer)
* Director
___________________________________________
Peter C. Bourgeois
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FABRENE GROUP
L.L.C. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Fabrene Group L.L.C.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chief Executive Officer and President
___________________________________________ (Principal Executive Officer)
Jerry Zucker
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer, Secretary
James G. Boyd (Principal Financial and Accounting
Officer)
Fabrene Corp. Member
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, President and Chief
Executive Officer
PGI Polymer, Inc. Member
/s/ James G. Boyd
By: _________________________________
James G. Boyd
Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
/s/ Jerry Zucker Director of Fabrene Corp. and PGI Polymer,
___________________________________________ Inc.
Jerry Zucker
* Director of Fabrene Corp.
___________________________________________
Peter C. Bourgeois
</TABLE>
II-22
<PAGE>
<TABLE>
<S> <C>
/s/ James G. Boyd Director of PGI Polymer, Inc.
___________________________________________
James G. Boyd
* Director of PGI Polymer, Inc.
___________________________________________
Bruce V. Rauner
* Director of PGI Polymer, Inc.
___________________________________________
David A. Donnini
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-23
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FABRENE GROUP,
INC. HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NORTH CHARLESTON, STATE OF SOUTH CAROLINA, ON SEPTEMBER 3, 1997.
Fabrene Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, Chief Executive Officer
and President
* * * * *
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDED
REGISTRATION STATEMENT ON FORM S-4 AND POWER OF ATTORNEY HAVE BEEN SIGNED ON
SEPTEMBER 3, 1997 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Jerry Zucker Chairman of the Board, Chief
___________________________________________ Executive Officer and President
Jerry Zucker (Principal Executive Officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer and Director
James G. Boyd (Principal Financial and Accounting
Officer, and Authorized U.S.
Representative)
* Director
___________________________________________
Peter C. Bourgeois
</TABLE>
- --------
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers
and directors of the Company pursuant to the Power of Attorney executed by
such officers and directors and filed with the Securities and Exchange
Commission.
/s/ Jerry Zucker
- -------------------------------------
Jerry Zucker
Attorney-in-fact
II-24
<PAGE>
EXHIBIT 3.1(ii)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
POLYMER GROUP, INC.
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, James G. Boyd, Executive Vice President, Treasurer, and Secretary of
Polymer Group, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Corporation, as amended, the Board
of Directors on April 15, 1996, adopted the following resolution creating a
series of 100,000 shares of Preferred Stock designated as Junior Participating
Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by ARTICLE IV
of the Restated Certificate of Incorporation, as amended, and in accordance with
ARTICLE IV of the Amended and Restated Certificate of Incorporation previously
adopted and approved by the Board of Directors and the stockholders of the
Corporation to be effective upon consummation of the Initial Public Offering,
upon consummation of the Recapitalization, the Stock Split and the Initial
Public Offering, a series of Preferred Stock of the Corporation shall be, and
upon such date hereby is, created and approved for issuance in accordance with
the Rights Agreement, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Stock, Series A" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
100,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
fifteenth day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in
an amount per share (rounded to
<PAGE>
the nearest cent) equal to the greater of (a) $25.00 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Series A Preferred Stock. The "Adjustment Number" shall initially be
1000. In the event the Corporation shall at any time after June 3, 1996 (i)
declare or pay any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock into a greater number of
shares or (iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of
$25.00 per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred
Stock, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared
-2-
<PAGE>
thereon, which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number (as adjusted
from time to time pursuant to Section 2(A) hereof) on all matters submitted
to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or by-laws, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period
(herein called a "default period") that shall extend until such time when
all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly period on all shares of Series A
Preferred Stock then outstanding shall have been declared and paid or set
apart for payment. During each default period, (1) the number of Directors
shall be increased by two, effective as of the time of election of such
Directors as herein provided, and (2) the holders of Series A Preferred
Stock and the holders of other Preferred Stock upon which these or like
voting rights have been conferred and are exercisable (the "Voting
Preferred Stock") with dividends in arrears equal to six quarterly
dividends thereon, voting as a class, irrespective of series, shall have
the right to elect such two Directors.
(ii) During any default period, such voting right of the holders
of Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the holders
of at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders
of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during
an existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the Chairman
-3-
<PAGE>
of the Board, the President, an Executive Vice President, a Vice President
or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Voting Preferred Stock are entitled to
vote pursuant to this paragraph (C)(iii) shall be given to each holder of
record of Voting Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 10 days and not later
than 60 days after such order or request or, in default of the calling of
such meeting within 60 days after such order or request, such meeting may
be called on similar notice by any stockholder or stockholders owning in
the aggregate not less than 10% of the total number of shares of Voting
Preferred Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and
(y) any vacancy in the Board of Directors may be filled by vote of a
majority of the remaining Directors theretofore elected by the holders of
the class or classes of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the holders
of Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Amended and
Restated Certificate of Incorporation or Amended and Restated By-Laws
irrespective of any increase made pursuant to the provisions of paragraph
(C) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Amended and Restated
Certificate of Incorporation or Amended and Restated By-Laws). Any
vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
-4-
<PAGE>
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled
-5-
<PAGE>
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of preferred stock and may be
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received the greater of (i) $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, and (ii) an aggregate amount per share, equal to the Adjustment
Number (as adjusted from time to time pursuant to Section 2(A) hereof) times the
aggregate amount to be distributed per share to holders of Common Stock, or (B)
to the holders of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Amendment. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.
-6-
<PAGE>
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 15th day of
May, 1996.
/s/ James G. Boyd
--------------------------------------
James G. Boyd
Executive Vice President and Secretary
-7-
<PAGE>
Exhibit 3.3(i)
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "POLYMER GROUP, INC.," FILED IN THIS OFFICE ON THE TWENTY-FIRST
DAY OF OCTOBER, A.D. 1992, AT 4:30 O'CLOCK P.M.
-------------------------------------
Edward J. Freel, Secretary of State
2311063 8100 AUTHENTICATION: 8530363
971210031
DATE: 06-25-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 10/21/1992
752295060 - 2311063
CERTIFICATE OF RESTATED CERTIFICATE OF INCORPORATION
OF
POLYMER GROUP, INC.
------------------------------
Jerry Zucker and James G. Boyd, being the duly elected President and
Secretary, respectively, of Polymer Group, Inc., a corporation organized and
existing under and by virtue, of the General Corporation Law of the State of
Delaware (the "Corporation"), do hereby certify as follows:
1. That the Corporation filed its original Certificate of Incorporation
with the Delaware Secretary of State on September 29, 1992 (the "Certificate").
2. That the board of directors of the Corporation, pursuant to unanimous
written consent, adopted resolutions authorizing the Corporation to amend,
integrate and restate the Corporation's certificate in its entirety in
accordance with sections 141(f), 241 and 245 of the General Corporation Law of
the State of Delaware to read as set forth in Exhibit A attached hereto and made
a part hereof (the "Restated Certificate").
3. The corporation has not received any payment for its stock.
IN WITNESS WHEREOF, the undersigned, being the President and Secretary
hereinabove named, for the purpose of amending and restating the Certificate of
Incorporation of the Corporation pursuant to the General Corporation Law of the
State of Delaware, under penalties of perjury do each hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true, and accordingly have hereunto signed this Certificate of Restated
Certificate of Incorporation this 21st day of October, 1992.
By: /s/ Jerry Zucker
-------------------------------
Jerry Zucker, President
ATTEST:
By: /s/ James G. Boyd
-------------------------------
James G. Boyd, Secretary
<PAGE>
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
POLYMER GROUP, INC.
-------------------------------------
ARTICLE ONE
-----------
The name of the corporation is Polymer Group, Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent
19901. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
A. AUTHORIZED SHARES
-----------------
The total number of shares of stock which the Corporation has authority to
issue is 2,420,000 shares, consisting of:
(1) 400,000 shares of 8% Senior Cumulative Redeemable Preferred Stock, par
value $.01 per share (the "Class A Preferred");
(2) 20,000 shares of 8% Junior Cumulative Convertible Preferred Stock, par
value $.01 per share (the "Class B Preferred"); and
<PAGE>
(3) 2,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock").
The Class A Preferred and the Class B Preferred are hereafter collectively
referred to as the "Preferred Stock."
B. PREFERRED STOCK
---------------
I. Terms Applicable to Both Class A Preferred and Class B Preferred.
----------------------------------------------------------------
Section 1. Dividends.
---------
1A. General Obligation. When and as declared by the Corporation's board of
directors and to the extent permitted under the General Corporation Law of
Delaware, the Corporation shall pay preferential dividends to the holders of the
Preferred Stock as provided in this Section 1. Except as otherwise provided
herein, dividends on each share of the Preferred Stock (a "Share") shall accrue
on a daily basis at the rate of 8% per annum of the sum of the Liquidation Value
thereof plus all accumulated and unpaid dividends thereon, from and including
the date of issuance of such Share to and including the date on which the
Liquidation Value of such Share (plus all accrued an unpaid dividends thereon)
is paid or in the case of Class B Preferred the date on which such Share is
converted into shares of Conversion Stock hereunder. Such dividends shall accrue
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Corporation legally available for the payment of
dividends. The date on which the Corporation initially issues any Share shall be
deemed to be its "date of issuance" regardless of the number of times transfer
of such Share is made on the stock records maintained by or for the Corporation
and regardless of the number of certificates which may be issued to evidence
such Share.
1B. Dividend Reference Dates. To the extent not paid on January 1, April
1, July 1, and October 1 of each year, beginning January 1, 1993 (the "Dividend
Reference Dates"), all dividends which have accrued on each Share outstanding
during the three-month period (or other period in the case of the initial
Dividend Reference Date) ending upon each such Dividend Reference Date shall be
accumulated and shall remain accumulated dividends with respect to such Share
until paid.
1C. Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to any class of Preferred Stock, such
payment shall be distributed ratably among the holders of such class based upon
the number of shares of such class held by each such holder.
Section 2. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation, each holder of Preferred Stock shall be entitled to be paid,
before any distribution or payment is made upon any Junior Securities, an amount
in cash equal to the aggregate Liquidation Value (plus all accrued and unpaid
dividends) of all Shares hold by such holder, and the holders of Preferred Stock
shall not be entitled to any further payment. Prior to the time of any
liquidation, dissolution or winding up of the Corporation, the Corporation shall
declare for payment all accrued and unpaid dividends with respect to the
Preferred Stock. The Corporation shall mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment date
stated therein, to each record holder of Preferred Stock. Neither the
consolidation or merger of the Corporation into or with any other entity or
entities, nor the sale or transfer
-2-
<PAGE>
by the corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this
Section 2.
Section 3. Priority of Preferred Stock. So long as any Preferred Stock
remains outstanding, neither the Corporation nor any Subsidiary shall redeem,
purchase or otherwise acquire directly or indirectly any Junior Securities, nor
shall the Corporation directly or indirectly pay or declare any dividend or make
any distribution upon any Junior Securities; provided that the Corporation may
purchase shares of Common Stock from present or former employees of the
Corporation and its Subsidiaries in accordance with the provisions of the
Management Agreements so long as no Event of Noncompliance is in existence at
the time of or immediately after such purchase.
Section 4. Redemptions.
4A. Redemption Payment. For each Share which is to be redeemed, the
Corporation shall be obligated on the Redemption Date to pay to the holder
thereof (upon surrender by such holder at the Corporation's principal office of
the certificate representing such share) an amount in immediately available
funds equal to the Liquidation Value of such Share (plus all accrued and unpaid
dividends thereon). If the funds of the Corporation legally available for
redemption of Shares on any Redemption Date are insufficient to redeem the total
number of Shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of shares ratably
among the holders of the Shares to be redeemed based upon the aggregate
Liquidation Value of such Shares (plus all accrued and unpaid dividends thereon)
hold by each such holder. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of Shares, such funds shall
immediately be used to redeem the balance of the Shares which the Corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed. Prior to the time of any redemption of Preferred Stock, the
Corporation shall declare for payment all accrued and unpaid dividends with
respect to the Shares which are to be redeemed.
4B. Notice of Redemption. The Corporation shall mail written notice of
each redemption of any class of Preferred Stock (other than a redemption at the
request of a holder or holders of such class of Preferred Stock) to each record
holder of such class not more than 60 nor less than 30 days prior to the date on
which such redemption is to be made. Upon mailing any notice of redemption which
relates to a redemption at the Corporation's option, the corporation shall
become obligated to redeem the total number of Shares specified in such notice
at the time of redemption specified therein. In case fewer than the total number
of Shares represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Shares shall be issued to the holder
thereof without cost to such holder within three business days after surrender
of the certificate representing the redeemed Shares.
4C. Determination of the Number of Each Holder's Shares to be Redeemed.
The number of Shares of a particular class of Preferred Stock to be redeemed
from each holder thereof in redemptions hereunder shall be the number of Shares
determined by multiplying the total number of Shares of such class to be
redeemed times a fraction, the numerator of which shall be the total number of
Shares of such class then held by such holder and the denominator of which shall
be the total number of Shares of such class then outstanding.
-3-
<PAGE>
4D. Dividends After Redemption Date. No Share is entitled to any
dividends accruing after the date on which the Liquidation Value of such Share
(plus all accrued and unpaid dividends thereon) is paid to the holder thereof.
On such date all rights of the holder of such Share shall cease, and such Share
shall not be deemed to be outstanding.
4E. Redeemed or Otherwise Acquired Shares. Any Shares which are redeemed
or otherwise acquired by the Corporation shall be cancelled and shall not be
reissued, sold or transferred.
4F. Other Redemptions or Acquisitions. Neither the Corporation nor any
Subsidiary shall redeem or otherwise acquire any Preferred Stock, except as
expressly authorized herein or pursuant to a purchase offer made pro-rata to all
holders of a particular class of Preferred Stock on the basis of the number of
Shares of such class owned by each such holder.
4G. Special Redemptions.
(i) If a Change in ownership has occurred or the Corporation obtains
knowledge that a Change in ownership is to occur, the Corporation shall give
prompt written notice of such Change in Ownership describing in reasonable
detail the definitive terms and date of consummation thereof to each holder of
Preferred Stock, but in any event such notice shall not be given later than five
days after the occurrence of such Change in Ownership. The holder or holders of
a majority of each class of the Preferred Stock then outstanding may require the
Corporation to redeem all or any portion of the Preferred Stock owned by such
holder or holders at a price per Share equal to the Liquidation Value thereof
(plus all accrued and unpaid dividends thereon) by giving written notice to the
Corporation of such election prior to the later of (a) 21 days after receipt of
the Corporation's notice and (b) five days prior to the consummation of the
Change in ownership (the "Expiration Date"). The Corporation shall give prompt
written notice of any such election to all other holders of Preferred Stock
within five days after the receipt thereof, and each such holder shall have
until the later of (a) the Expiration Date or (b) ten days after receipt of such
second notice to request redemption (by giving written notice to the
Corporation) of all or any portion of the Preferred Stock owned by such holder.
Upon receipt of such elections, the Corporation shall be obligated to redeem the
aggregate number of Shares specified therein on the later of (a) the occurrence
of the Change in Ownership or (b) five days after the Corporation's receipt of
such elections). If in any case a proposed Change in ownership does not occur,
all requests for redemption in connection therewith shall be automatically
rescinded. The term "Change in Ownership" means any sale or issuance or series
of sales and/or issuances of shares of the corporation's capital stock by the
Corporation or any holders thereof which results in any Person or group of
affiliated Persons (other than the owners of Common Stock or Class B Preferred
as of the date of the Purchase Agreement) owning capital stock of the
corporation possessing the voting power (under ordinary circumstances) to elect
a majority of the Corporation's board of directors. All Persons holding
Executive Stock (as such term is defined in the Management Agreements) shall be
deemed to be one Person for purposes of determining a "Change in Ownership"
under this paragraph.
(ii) If a Fundamental Change is proposed to occur, the Corporation shall
give written notice of such Fundamental Change describing in reasonable detail
the definitive terms and date of consummation thereof to each holder of
Preferred Stock not more than 45 days nor less than 20 days prior to the
consummation thereof. The holder or holders of a majority of each class of the
Preferred Stock then outstanding may require the Corporation to redeem all or
any portion of the Preferred Stock owned by such
-4-
<PAGE>
holder or holders at a price per share equal to the Liquidation value thereof
(plus all accrued and unpaid dividends thereon) by giving written notice to the
Corporation of such election prior to the later of (a) ten days prior to the
consummation of the Fundamental Change or (b) ten days after receipt of notice
from the Corporation. The Corporation shall give prompt written notice of such
election to all other holders of Preferred Stock (but in any event within five
days prior to the consummation of the Fundamental Change), and each such holder
shall have until two days after the receipt of such notice to request redemption
(by written notice given to the Corporation) of all or any portion of the
Preferred Stock owned by such holder. Upon receipt of such election(s), the
Corporation shall be obligated to redeem the aggregate number of Shares
specified therein upon the consummation of such Fundamental Change. If any
proposed Fundamental Change does not occur, all requests for redemption in
connection therewith shall be automatically rescinded. The term "Fundamental
Change" means (a) a sale or transfer of more than 30% of the assets of the
Corporation and its Subsidiaries on a consolidated basis (measured by either
book value in accordance with generally accepted accounting principles
consistently applied or fair market value determined in the reasonable good
faith judgment of the Corporation's board of directors) in any transaction or
series of transactions (other than sales in the ordinary course of business) and
(b) any merger or consolidation to which the corporation is a party, except for
a merger in which the Corporation is the surviving corporation and, after giving
effect to such merger, the holders of the Corporation's outstanding capital
stock possessing a majority of the voting power (under ordinary circumstances)
to elect a majority of the Corporation's board of directors immediately prior to
the merger shall own the Corporation's outstanding capital stock possessing the
voting power (under ordinary circumstances) to elect a majority of the
Corporation's board of directors.
(iii) Redemptions made pursuant to this paragraph 4G shall not relieve
the Corporation of its obligation to redeem Class A Preferred pursuant to
Subdivision III hereof.
(iv) The Corporation may redeem Shares of Class B Preferred pursuant to
this paragraph 4G only after all Shares of Class A Preferred for which requests
for redemption have been made hereunder have been redeemed in full.
Section 5. Events of Noncompliance.
5A. Definition. An Event of Noncompliance shall be deemed to have
occurred if:
(i) the Corporation fails to pay on any Dividend Reference Date the full
amount of dividends then accrued on the Preferred Stock, whether or not such
payment is legally permissible, except if the Bank Agreement prevents FiberTech
from distributing funds sufficient (together with funds available from the
Corporation's other Subsidiaries) to make such payment;
(ii) the Corporation fails to make any redemption payment with respect to
the Preferred Stock which it is obligated to make hereunder, whether or not such
payment is legally permissible, except if the Bank Agreement prevents FiberTech
from distributing funds sufficient (together with funds available from the
Corporation's other Subsidiaries) to make such payment;
(iii) a Termination Event (as defined in the Management Agreements)
occurs; or
-5-
<PAGE>
(iv) any representation or warranty contained in the Purchase Agreement
or, required to be furnished to any holder of Preferred Stock pursuant to the
Purchase Agreement, or any information contained in writing required to be
furnished by the Corporation or any Subsidiary to any holder of Preferred Stock,
is false or misleading in any material respect on the date made or furnished,
which has a material adverse effect on the Company's property, business,
operations, financial condition, prospects, or liabilities.
5B. Consequences of Certain Events of Noncompliance.
(i) If any Event of Noncompliance has occurred, the holder or holders of a
majority of each class of the Preferred Stock then outstanding may demand (by
written notice delivered to the Corporation) immediate redemption of all or any
portion of the Preferred Stock owned by such holder or holders at a price per
Share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon). The Corporation shall give prompt written notice of such
election to the other holders of Preferred Stock (but in any event within five
days after receipt of the initial demand for redemption), and each such other
holder may demand immediate redemption of all or any portion of. such holder's
Preferred Stock by giving written notice thereof to the Corporation within seven
days after receipt of the Corporation's notice. The Corporation shall redeem all
Preferred Stock as to which rights under this paragraph have been exercised
within 15 days after receipt of the initial demand for redemption; provided that
if holders of both Class A Preferred and Class B Preferred have exercised their
rights to demand redemption hereunder, the Corporation shall not redeem any
Class B Preferred unless all of the Class A Preferred with respect to which such
redemption rights have been exercised has been redeemed.
(ii) If any Event of Noncompliance has occurred, the number of directors
constituting the Corporation's board of directors will, at the request of the
holders of a majority of each class of the Preferred Stock then outstanding, be
increased by one member, and the holders of Preferred Stock will have the
special right, voting separately as a single class (with each Share being
entitled to one vote) and to the exclusion of all other classes of the
Corporation's stock, to elect an individual to fill such newly created
directorship, to fill any vacancy of such directorship and to remove any
individual elected to such directorship. The newly created directorship will
constitute a separate class of directors, and the director elected by the
holders of the Preferred Stock will be entitled to cast a number of votes on
each matter considered by the board of directors (including for purposes of
determining the existence of a quorum) equal to the sum of the number of votes
entitled to be cast by all of the other directors plus one. The special right of
the holders of Preferred Stock to elect a member of the board of directors may
be exercised at the special meeting called pursuant to this subparagraph (ii),
at any annual or other special meeting of stockholders and, to the extent and in
the manner permitted by applicable law, pursuant to a written consent in lieu of
a stockholders meeting. Such special right shall continue until such time as
there is no longer any Event of Noncompliance in existence, at which time such
special right shall terminate subject to revesting upon the occurrence and
continuation of any Event of Noncompliance which gives rise to such special
right hereunder.
At any time when such special right has vested in the holders of Preferred
Stock, a proper officer of the Corporation shall, upon the written request of
the holders of at least 25% of the Preferred Stock then outstanding, addressed
to the secretary of the Corporation, call a special meeting of the holders of
Preferred Stock for the purpose of electing a director pursuant to this
subparagraph. Such meeting shall be hold at the earliest legally permissible
date at the principal office of the Corporation, or at such other place
designated by the holders of at least 10% of the Preferred Stock then
outstanding. If such meeting has not been called
-6-
<PAGE>
by a proper officer of the Corporation within 10 days after personal service of
such written request upon the secretary of the corporation or within 20 days
after mailing the same to the secretary of the Corporation at its principal
office, then the holders of at least 25% of the Preferred Stock then outstanding
may designate in writing one of their number to call such meeting at the expense
of the Corporation, and such meeting may be called by such Person so designated
upon the notice required for annual meetings of stockholders and shall be held
at the Corporation's principal office, or at such other place designated by the
holders of at least 25% of the Preferred Stock then outstanding. Any holder of
Preferred Stock so designated shall be given access to the stock record books of
the Corporation for the purpose of causing a meeting of stockholders to be
called pursuant to this paragraph.
At any meeting or at any adjournment thereof at which the holders of
Preferred Stock have the special right to elect directors, the presence, in
person or by proxy, of the holders of a majority of the Preferred Stock then
outstanding shall be required to constitute a quorum for the election or removal
of any director by the holders of the Preferred Stock exercising such special
right. The vote of a majority of such quorum shall be required to elect or
remove any such director.
Any director so elected by the holders of Preferred Stock shall continue to
serve as a director until the expiration of the lesser of (a) a period of six
months following the date on which there is not longer any Event of
Noncompliance in existence or (b) the remaining period of the full term for
which such director has been elected. After the expiration of such six-month
period or when the full term for which such director has been elected ceases
(provided that the special right to elect directors has terminated), as the case
may be the number of directors constituting the board of directors of the
Corporation shall decrease to such number as constituted the whole board of
directors of the Corporation immediately prior to the occurrence of the Event or
Events of Noncompliance giving rise to the special right to elect directors.
(v) If any Event of Noncompliance exists, each holder of Preferred Stock
shall also have any other rights which such holder is entitled to under any
contract or agreement at any time and any other rights which such holder may
have pursuant to applicable law.
II. Priority of Class A Preferred over Class B Preferred.
Section 1. Priority in Liquidation.
Upon any liquidation, dissolution or winding up of the Corporation, if the
assets of the Corporation to be distributed among the holders of Preferred Stock
are insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid, then the assets of the Corporation to be
distributed to such holders shall be distributed (i) first, to the holders of
Class A Preferred, until such holders have been paid the aggregate amount which
they are entitled to be paid, or, if the assets to be distributed are
insufficient for such purpose, the entire assets to be distributed shall be
distributed ratably among such holders based upon the aggregate Liquidation
Value (plus all accrued and unpaid dividends) of the Class A Preferred held by
each such holder, and (ii) second, the balance (if any) shall be distributed
ratably among the holders of Class B Preferred based upon the aggregate
Liquidation Value (plus all accrued and unpaid dividends) of the Class B
Preferred held by each such holder.
-7-
<PAGE>
Section 2. Priority on Dividends, Redemptions, etc.
----------------------------------------
So long as any Class A Preferred remains outstanding, neither the
Corporation nor any Subsidiary shall redeem, purchase or otherwise acquire any
Class B Preferred, nor shall the Corporation declare or pay any dividend or make
any distribution upon any Class B Preferred, if immediately after such
redemption, purchase, acquisition, dividend or distribution any Event of
Noncompliance of the type described in subparagraph 5A(i) or (ii) would exist
with respect to the Class A Preferred.
III. Terms Applicable Only to Class A Preferred.
------------------------------------------
Section 1. Redemptions.
-----------
1A. Optional Redemptions. The Corporation may at any time redeem all or
any portion of the Class A Preferred then outstanding. On any such redemption,
the Corporation shall pay a price per Share equal to the Liquidation Value
thereof plus all accrued and unpaid dividends thereon. No redemption pursuant
to this paragraph may be made for less than 1000 Shares (or such lesser number
of Shares then outstanding), and redemptions made pursuant to this paragraph
shall not relieve the Corporation of its obligation to redeem Shares on the
Scheduled Redemption Dates.
1B. Redemption After Public Offering. The Corporation shall, at the
request (by written notice given to the Corporation) of the holders of the Class
A Preferred, apply at least 80% of the net cash proceeds from any Public
Offering remaining after deduction of all discounts, underwriters' commissions
and other reasonable expenses, and application in accordance with Section
2.10(c) of the Bank Agreement, to redeem Shares of Class A Preferred at a price
per Share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon). Such redemption shall take place on a date fixed by the
Corporation, which date shall be not more than five days after the Corporation's
receipt of such proceeds. Notwithstanding the foregoing, if the Corporation
shall furnish to the holders requesting redemption pursuant to this paragraph 1B
a certificate signed by the President of the Corporation stating that in the
good faith judgment of the board of directors of the Corporation such redemption
would not be in the best interests of the Corporation, the Corporation shall not
be required to effect such redemption.
Section 2. Voting Rights. Except as otherwise provided herein and as
otherwise required by law, the Class A Preferred shall have no voting rights;
provided that each holder of Class A Preferred shall be entitled to notice of
all stockholders meetings at the same time and in the same manner as notice is
given to the stockholders entitled to vote at such meeting.
IV. Terms Applicable Only to Class B Preferred.
------------------------------------------
Section 1. Conversion.
----------
1A. Conversion Procedure.
--------------------
(i) Upon the occurrence (or the expected occurrence as described in (iii)
below) of any Conversion Event (as defined in paragraph (ii) below), each holder
of Class B Preferred shall be entitled to convert all or any portion of the
Class B Preferred (including any fraction of a Share) held by such holder
-8-
<PAGE>
into a number of shares of Conversion Stock computed by multiplying the number
of Shares to be converted by $100 and dividing the result by the Conversion
Price then in effect; provided that all of such shares of Conversion Stock are
(or are expected to be) distributed, disposed of or sold in connection with such
Conversion Event.
(ii) For purposes of this paragraph 1A, a "Conversion Event" shall
mean (a) the occurrence of an Event of Noncompliance, (b) an exchange by Golder,
Thoma, Cressey Fund III Limited Partnership of its partnership interest in ZBG
Partners, a Delaware general partnership, for securities of the Corporation
pursuant to Section 5.8 of the Partnership Agreement, (c) any liquidation,
dissolution or winding up of the Corporation, (d) any public offering or public
sale of securities of the Corporation (including a public offering registered
under the Securities Act of 1933 and a public sale pursuant to Rule 144 of the
Securities and Exchange commission or any similar rule then in force), (e) any
sale of securities of the Corporation to a person or group of persons (within
the meaning of the Securities and Exchange Act of 1934, as amended (the "1934
Act")) if, after such sale, such person or group of persons in the aggregate
would own or control securities of the Corporation which possess in the
aggregate the ordinary voting power to elect a majority of the Corporation's
directors, and (f) a merger, consolidation or similar transaction involving the
Corporation if, after such transaction, a person or group of persons (within the
meaning of the 1934 Act) in the aggregate would own or control securities which
possess in the aggregate the ordinary voting power to elect a majority of the
surviving corporation's directors.
(iii) Each holder of Class B Preferred shall be entitled to convert Shares
of Class B Preferred in connection with any Conversion Event if such holder
reasonably believes that such Conversion Event shall be consummated, and a
written request for conversion from any holder of Class B Preferred to the
Corporation stating such holder's reasonable belief that a Conversion Event
shall occur shall be conclusive and shall obligate the Corporation to effect
such conversion in a timely manner so as to enable each such holder to
participate in such Conversion Event. The Corporation shall not cancel the
shares of Class B Preferred so converted before the tenth day following such
Conversion Event and shall reserve such shares until such tenth day for
reissuance in compliance with the next sentence. If any shares of Class B
Preferred are converted into shares of Conversion Stock in connection with a
Conversion Event and such shares of Conversion Stock are not actually
distributed, disposed of or sold pursuant to such Conversion Event, such shares
of Conversion Stock shall be promptly converted back into the same number of
shares of Class B Preferred.
(iv) Except as otherwise provided herein, each conversion of Class B
Preferred shall be deemed to have been effected as of the close of business on
the date on which the certificate or certificates representing the Class B
Preferred to be converted have been surrendered at the principal office of the
Corporation. At such time as such conversion has been effected, the rights of
the holder of such Class B Preferred as such holder shall cease and the Person
or Persons in whose name or names any certificate or certificates for shares of
Conversion Stock are to be issued upon such conversion shall be deemed to have
become the holder or holders of record of the shares of Conversion Stock
represented thereby.
(v) The conversion rights of any Share subject to redemption hereunder
shall terminate on the Redemption Date for such Share unless the Corporation has
failed to pay to the holder thereof the Liquidation value thereof (plus all
accrued and unpaid dividends thereon).
-9-
<PAGE>
(vi) Notwithstanding any other provision hereof, if a conversion of Class
B Preferred is to be made in connection with a Public Offering, the conversion
of any Shares of Class B Preferred may, at the election of the holder of such
Shares, be conditioned upon the consummation of the Public Offering in which
case such conversion shall not be deemed to be effective until the consummation
of the Public Offering.
(vii) As soon as possible after a conversion has been effected (but in any
event within five business days in the case of subparagraph (a) below), the
Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of shares
of Conversion Stock issuable by reason of such conversion in such name or
names and such denomination or denominations as the converting holder has
specified;
(b) payment in an amount equal to all accrued dividends with respect
to each Share converted, which have not been paid prior thereto, plus the
amount payable under subparagraph (ix) below with respect to such
conversion; and
(c) a certificate representing any Shares of Class B Preferred which
were represented by the certificate or certificates delivered to the
corporation in connection with such conversion but which were not
converted.
(viii) If the Corporation is not permitted under applicable law to pay
any portion of the accrued dividends on the Class B Preferred being converted,
the Corporation shall pay such dividends to the converting holder as soon
thereafter as funds of the Corporation are legally available for such payment.
At the request of any such converting holder, the Corporation shall provide such
holder with written evidence of its obligation to such holder.
(ix) The issuance of certificates for shares of Conversion Stock upon
conversion of Class B Preferred shall be made without charge to the holders of
such Class B Preferred for any issuance tax in respect thereof or other cost
incurred by the corporation in connection with such conversion and the related
issuance of shares of Conversion Stock. Upon conversion of each Share of Class
B Preferred, the Corporation shall take all such actions as are necessary in
order to insure that the Conversion Stock issuable with respect to such
conversion shall be validly issued, fully paid and nonassessable.
(x) The Corporation shall not close its books against the transfer of
Class B Preferred or of Conversion Stock issued or issuable upon conversion of
Class B Preferred in any manner which interferes with the timely conversion of
Class B Preferred. The Corporation shall assist and cooperate with any holder of
Shares required to make any governmental filings or obtain any governmental
approval prior to or in connection with any conversion of Shares hereunder
(including, without limitation, making any filings required to be made by the
Corporation).
(xi) If any fractional interest in a share of Conversion Stock would,
except for the provisions of this subparagraph (ix), be deliverable upon any
conversion of the Class B Preferred, the corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
-10-
<PAGE>
(xii) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the conversion of the Class B Preferred, such number of shares of
Conversion Stock issuable upon the conversion of all outstanding Class B
Preferred. All shares of Conversion Stock which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation shall take all such actions as
may be necessary to assure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Conversion
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Corporation upon each such issuance).
1B. Conversion Price.
----------------
(i) The initial conversion Price shall be $1.00. In order to prevent
dilution of the conversion rights granted under this subdivision, the Conversion
Price shall be subject to adjustment from time to time pursuant to this Section
1.
(ii) If and whenever on or after the original date of issuance of the Class
B Preferred the Corporation issues or sells, or in accordance with paragraph 1C
is deemed to have issued or sold, any shares of its Common Stock for a
consideration per share less than the Conversion Price in effect immediately
prior to the time of such issue or sale, then forthwith upon such issue or sale
the Conversion Price shall be reduced to the Conversion Price determined by
dividing (a) the sum of (1) the product derived by multiplying the Conversion
Price in effect immediately prior to such issue or sale times the number of
shares of Common Stock Deemed Outstanding immediately prior to such issue or
sale, plus (2) the consideration, if any, received by the Corporation upon such
issue or sale, by (b) the number of shares of Common Stock Deemed Outstanding
immediately after such issue or sale. Notwithstanding anything to the contrary
contained in this Article Four, there shall be no adjustment in the Conversion
Price for any shares issued (x) to shareholders of Fabrene Inc., an Ontario
corporation ("Fabrene") in exchange for the Fabrene securities held by such
shareholders, (y) in connection with the issuance of shares pursuant to Section
6 of the Purchase Agreement or (z) pursuant to the Management Agreements.
1C. Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under paragraph 1B, the following
shall be applicable:
(i) Issuance of Rights. If the Corporation in any manner grants any
rights or options to subscribe for or to purchase Common Stock or any stock or
other securities convertible into or exchangeable for Common Stock (such rights
or options being herein called "Options" and such convertible or exchangeable
stock or securities being herein called "Convertible Securities") and the price
per share for which Common Stock is issuable upon the exercise of such Options
or upon conversion or exchange of such Convertible Securities is less than the
Conversion Price in effect immediately prior to the time of the granting of such
Options then the total maximum number of shares of Common Stock issuable upon
the exercise of such options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such Options
shall be deemed to be outstanding and to have been issued and sold by the
Corporation at the time of the granting of such Options for such price per
share. For purposes of this paragraph, the "price per share for which Common
Stock is issuable" shall be determined by dividing (A) the total amount, if any,
received or receivable by the Corporation as consideration for the
-11-
<PAGE>
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon exercise of all such Options, plus
in the case of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable to the Corporation
upon the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such options or upon the conversion or exchange of
all such Convertible Securities issuable upon the exercise of such Options. No
further adjustment of the Conversion Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when Common
Stock is actually issued upon the exercise of such options or the conversion or
exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in any manner
issues or sells any Convertible Securities and the price per share for which
Common Stock in issuable upon such conversion or exchange is less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the corporation at the time of the issuance or sale
of such Convertible Securities for such price per share. For the purposes of
this paragraph, the "price per share for which Common Stock is issuable" shall
be determined by dividing (A) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (B)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. So further adjustment of the
Conversion Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any options for
which adjustments of the conversion Price had been or are to be made pursuant to
other provisions of this Section 1, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any option referred to in subparagraph 1C(i), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 1C(i) or (ii), or the rate at
which any Convertible Securities referred to in subparagraph 1C(i) or (ii) are
convertible into or exchangeable for Common Stock, shall change at any time
(other than under or by reason of provisions designed to protect against
dilution of the type set forth in this paragraph 1C or paragraph 1D), the
Conversion Price in effect at the time of such change shall forthwith the
adjusted to the Conversion Price which would have been in effect at such time
had such option or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold. If the purchase price
provided for in any Option referred to in subparagraph 1C(i), or the rate at
which any Convertible Securities referred to in subparagraph 1C(i) or (ii) are
convertible into or exchangeable for Common Stock, shall be reduced at any time
under or by reason of provisions which respect thereto designed to protect
against dilution of the type set forth in this paragraph 1C or paragraph 1D,
then in case of the delivery of Common Stock upon the exercise of any such
Option or upon conversion or exchange of any such Convertible Security, the
Conversion Price then in effect hereunder shall forthwith be adjusted to such
respective amount as would have been obtained had such Option or Convertible
Security never been issued as to such Common Stock and had adjustments been made
upon the issuance of the shares
-12-
<PAGE>
of Common Stock delivered as aforesaid, but only if as a result of such
adjustment the Conversion Price then in effect hereunder would be reduced.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
Upon the expiration of any Option or the termination of any right to convert or
exchange any Convertible Security without the exercise of any such Option or
right, the Conversion Price then in effect hereunder shall be adjusted to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued; provided that if such expiration or termination would result in an
increase in the Conversion Price then in effect, such increase shall not be
effective until 30 days after written notice thereof has been given to all
holders of the Class B Preferred.
(v) Calculation of Consideration Received. If any Common Stock, Option
or Convertible Security is issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor shall be deemed to be the net
amount received by the Corporation therefor. In case any Common Stock, Options
or Convertible Securities are issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Corporation shall be the Market Price thereof as of the date of
receipt. If any Common stock, Option or Convertible Security is issued to the
owners of the non-surviving entity in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such Common Stock,
Options or Convertible securities, as the case nay be. The fair value of any
consideration other than cash and securities shall be determined jointly by the
Corporation and the holders of a majority of the outstanding Class B Preferred.
If such parties are unable to reach agreement within a reasonable period of
time, the fair value of such consideration shall be determined by an independent
appraiser experienced in valuing such type of consideration jointly selected by
the Corporation and the holders of a majority of the outstanding Class B
Preferred. The determination of such appraiser shall be final and binding upon
the parties, and the fees and expenses of such appraiser shall be borne by the
Corporation.
(vi) Integrated Transactions. In case any option is issued in connection
with the issue or sale of other securities of the corporation, together
comprising one integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option shall be deemed to
have been issued for a consideration of $.0l.
(vii) Treasury Shares. The number of shares of Common Stock outstanding
at any given time does not include shares owned or held by or for the account of
the Corporation or any Subsidiary, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation takes a record of the holders of
Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
-13-
<PAGE>
1D. Subdivision or Combination of Common Stock. If the corporation at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
1E. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Corporation's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Corporation shall make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Class B Preferred
then outstanding) to insure that each of the holders of Class B Preferred shall
thereafter have the right to acquire and receive, in lieu of or in addition to
(as the case may be) the shares of Conversion Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's Class B
Preferred, such shares of stock, securities or assets as such holder would have
received in connection with such organic Change if such holder had converted its
Class B Preferred immediately prior to such Organic Change. In each such case,
the Corporation shall also make appropriate provisions (in form and substance
satisfactory to the holders of a majority of the Class B Preferred then
outstanding) to insure that the provisions of this Section 1 and Sections 2 and
3 hereof shall thereafter be applicable to the Class B Preferred (including, in
the case of any such consolidation, merger or sale in which the successor entity
or purchasing entity is other than the Corporation, an immediate adjustment of
the Conversion Price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Conversion Stock acquirable and receivable upon
conversion of Class B Preferred, if the value so reflected is less than the
Conversion Price in effect immediately prior to such consolidation, merger or
sale). The Corporation shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor corporation (if other
than the Corporation) resulting from consolidation or merger or the date as of
which the record holders of Common Stock entitled to such dividends are to be
determined.
Section 2. Purchase Rights. If at any time the Corporation grants, issues
or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then each holder of Class B
Preferred shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Conversion Stock
acquirable upon conversion of such holder's Class B Preferred immediately before
the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.
Section 3. Voting Rights. The holders of the Class B Preferred shall be
entitled to notice of all stockholders meetings in accordance with the
Corporation's bylaws, and except as otherwise required by law, prior to the
occurrence of a Conversion Event, shall have no voting rights. After the
occurrence of a
-14-
<PAGE>
Conversion Event, the holders of the Class B Preferred shall be entitled to vote
on all matters submitted to the stockholders for a vote together with the
holders of the Common Stock voting together as a single class with each share of
Common Stock entitled to one vote per share and each Share of Class B Preferred
entitled to one vote for each share of Common Stock issuable upon conversion of
the Class B Preferred at the time the vote is taken.
V. Miscellaneous.
-------------
Section 1. Registration of Transfer. The Corporation shall keep at its
principal office a register for the registration of Preferred Stock. Upon the
surrender of any certificate representing Preferred Stock at such place, the
Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
Shares represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of Shares as is
requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Preferred Stock represented by such new certificate from the
date to which dividends have been fully paid on such Preferred Stock represented
by the surrendered certificate.
Section 2. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder shall be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing Shares of any class of Preferred Stock, and in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such lost, stolen, destroyed or mutilated certificate.
Section 3. Definitions.
-----------
"Bank Agreement" means the Credit Agreement dated as of October 21, 1992 by
and among FiberTech Group, Inc. ("FiberTech"), The Chase Manhattan Bank
(National Association) and certain other lenders, together with all Exhibits
thereto.
"Common Stock" means the Corporation's Common Stock and any capital stock
of any class of the Corporation hereafter authorized which is not limited to a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Corporation.
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Subparagraphs 1C(i)
and 1C(ii) of subdivision IV whether or not the Options or
-15-
<PAGE>
Convertible Securities are actually exercisable at such time, but excluding any
shares of Common Stock issuable upon conversion of the Class B Preferred.
"Conversion Stock" means shares of the Corporation's Common Stock; provided
----------------
that if there is a change such that the Securities issuable upon conversion of
the Class B Preferred are issued by an entity other than the Corporation or
there is a change in the class of securities so issuable, then the term
"Conversion Stock" shall mean one share of the security issuable upon conversion
of the Class B Preferred if such security is issuable in shares, or shall mean
the smallest unit in which such security is issuable if such security in not
issuable in shares.
"Junior Securities" means any of the Corporation's equity securities other
-----------------
than the Preferred Stock.
"Liquidation Value" of any Share as of any particular date shall be equal
-----------------
to $100.
"Management Agreements" means the Management Agreements as defined in the
---------------------
Purchase Agreement.
"Partnership Agreement" means the Agreement of Partnership of ZBG Partners,
----------------------
dated as of October 21, 1992, by and between Golder, Thoma, Cressey Fund III
Limited Partnership and The InterTech Group, Inc.
"Person" means an individual, a partnership, a corporation, an association,
------
a joint stock company, a trust, a joint venture, an unincorporated organization
and a governmental entity or any department, agency or political subdivision
thereof.
"Public Offering" means any offering by the Corporation of its equity
---------------
securities to the public pursuant to an effective registration statement under
the Securities Act of 1933, as then in effect, or any comparable statement under
any similar federal statute then in force; provided that for purposes of
paragraph 1B of subdivision III or paragraph 1H of subdivision IV, a Public
Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Purchase Agreement" means the Purchase and Exchange Agreement, dated as of
-------------------
October 21, 1992, by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"Registration Agreement" means the Registration Agreement as defined in the
----------------------
Purchase Agreement.
"Redemption Date" as to any Share means the date specified in the notice of
---------------
any redemption at the Corporation's option or at the holder's option or the
applicable date specified herein in the case of any other redemption; provided
that no such date shall be a Redemption Date unless the Liquidation Value of
such Share (plus all accrued and unpaid dividends thereon) is actually paid in
full on such date, and if not so paid in full, the Redemption Date shall be the
date on which such amount is fully paid.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled
-16-
<PAGE>
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing general partner of such partnership, association or other
business entity.
Section 4. Amendment and Waiver. No amendment, modification or waiver
shall be binding or effective with respect to any provision of (i) subdivision I
or V without the prior written consent of the holders of at least 75% of the
Preferred Stock outstanding at the time such action is taken, (ii) subdivision
II or III without the prior written consent of the holders of at least 75% of
the Class A Preferred outstanding at the time such action is taken, or (iii)
subdivision IV without the prior written consent of the holders of at least 75%
of the Class B Preferred outstanding at the time such action is taken; provided
that no such action shall change (a) the rate at which or the manner in which
dividends on the Preferred Stock accrue or the times at which such dividends
become payable or the amount payable on redemption of the Preferred Stock or the
times at which redemption of Preferred stock is to occur, without the prior
written consent of the holders of at least 90% of the Preferred Stock then
outstanding, (b) the Conversion Price of the Class B Preferred or the number of
shares or class of stock into which the Class B Preferred is convertible,
without the prior written consent of the holder of at least 90% of the Class B
Preferred then outstanding or (c) the percentage required to approve any change
described in clauses (a) and (b) above, without the prior written consent of the
holders of at least 90% of the Preferred Stock (in the case of (a)) or Class B
Preferred (in the case of (b)) then outstanding; and provided further that no
change in the terms hereof may be accomplished by merger or consolidation of the
Corporation with another corporation or entity unless the Corporation has
obtained the prior written consent of the holders of the applicable percentage
of the class or classes of the Preferred Stock then outstanding.
Section 5. Notices. Except as otherwise expressly provided hereunder, all
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the Corporation (unless otherwise indicated by
any such holder).
C. COMMON STOCK
------------
Section 1. Voting Rights. Except as otherwise required by applicable law,
the holders of Common Stock shall be entitled to one vote per share on all
matters to be voted on by the Corporation's stockholders.
Section 2. Dividends. As and when dividends are declared or paid thereon,
whether in cash, property or securities of the Corporation, the holders of
common Stock shall be entitled to participate in such
-17-
<PAGE>
dividends ratably on a per share basis. The rights of the holders of Common
Stock to receive dividends are subject to the provisions of the Preferred Stock.
Section 3. Liquidation. Subject to the provisions of the Preferred Stock,
the holders of Common Stock shall be entitled to participate ratably on a per
share basis in all distributions to the holders of the Common Stock in any
liquidation, dissolution or winding up of the Corporation.
Section 4. Registration of Transfer. The Corporation shall keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender
of any certificate representing shares of any class of Common Stock at such
place, the Corporation shall, at the request of the registered holder of such
certificate, execute and deliver a now certificate or certificates in exchange
therefor representing in the aggregate the number of shares of such class
represented by the surrendered certificate, and the Corporation forthwith shall
cancel such surrendered certificate. Each such now certificate will be
registered in such name and will represent such number of shares of such class
as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate. The issuance of
new certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such issuance.
Section 5. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder will be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing one or more shares of any class of Common Stock, and in
the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 6. Notices. All notices referred to herein shall be in writing,
shall be delivered personally or by first class mail, postage prepaid, and shall
be deemed to have been given when so delivered or mailed to the Corporation at
its principal executive offices and to any stockholder at such holder's address
as it appears in the stock records of the Corporation (unless otherwise
specified in a written notice to the Corporation by such holder).
Section 7. Amendment and Waiver. No amendment or waiver of any provision
of this Section C shall be effective without the prior approval of the holders
of a majority of the then outstanding Common Stock.
ARTICLE FIVE
------------
The corporation is to have perpetual existence.
-18-
<PAGE>
ARTICLE SIX
-----------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE SEVEN
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE EIGHT
-------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE NINE
------------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE TEN
-----------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
-19-
<PAGE>
Exhibit 3.3(ii)
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF AMENDMENT OF "POLYMER GROUP, INC.", CHANGING ITS NAME FROM "POLYMER
GROUP, INC." TO "PGI POLYMER, INC.", FILED IN THIS OFFICE ON THE SIXTEENTH
DAY OF JUNE, A.D. 1994, AT 3 O'CLOCK P.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530364
Date: 06-25-97
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
POLYMER GROUP, INC.
* * * * * * *
Adopted in accordance with the
provisions of (S)242 of the
General Corporation Law of the
State of Delaware
* * * * * * *
James G. Boyd and Charlotte Crosby, being the Executive Vice President
and Assistant Secretary, respectively, of Polymer Group, Inc., a corporation
duly organized and existing under and by virtue of the General Corporation Law
of the State of Delaware (the "Corporation"), DO HEREBY CERTIFY as follows:
FIRST: The Board of Directors of the Corporation adopted the
resolution set forth below proposing the amendment to the Certificate of
Incorporation (the "Amendment") and directed that the Amendment be submitted to
the holders of the issued and outstanding shares of Common Stock of the
Corporation entitled to vote thereon for its consideration and approval:
RESOLVED, that the board of directors of the Corporation deem it
advisable and in its best interest to amend its Certificate of
Incorporation of the Corporation by deleting ARTICLE ONE in its
entirety and inserting in its place a new ARTICLE ONE to read as
follows:
ARTICLE ONE
-----------
The name of the corporation is PGI Polymer, Inc.
SECOND: The Amendment as duly adopted in accordance with (S)228 and
(S)242 of the General Corporation Law of the State of Delaware by the holders of
the issued and outstanding shares of the Common Stock of the Corporation
entitled to vote thereon.
* * * * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned, do hereby certify under penalties
of perjury that this Certificate of Amendment is the act and deed of the
undersigned and the facts stated herein are true and accordingly have hereunto
set their hands this 16th day of June, 1994.
POLYMER GROUP, INC.,
a Delaware corporation
By: /s/ James G. Boyd
-----------------------------
James G. Boyd
Executive Vice President
ATTEST:
By: /s/ Charlotte Crosby
------------------------
Assistant Secretary
<PAGE>
Exhibit 3.3(iii)
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF AMENDMENT OF "PGI POLYMER, INC.", FILED IN THIS OFFICE ON THE TWENTY-
FOURTH DAY OF JUNE, A.D. 1994, AT 1:45 O'CLOCK P.M.
___________________________________
Edward J. Freel, Secretary of State
Authentication: 8530365
Date: 06-25-97
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
PGI POLYMER, INC.
* * * * * * *
Adopted in accordance with the
provisions of Section 242 of the
General Corporation Law of the
State of Delaware
* * * * * * *
S. Grant Reeves and James G. Boyd, being the Vice President and
Secretary, respectively, of PGI Polymer, Inc., a corporation organized and
existing under and by virtue of the laws of the State of Delaware (the
"Corporation"), do hereby certify as follows:
FIRST: The Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") is hereby amended by deleting ARTICLE FOUR in
its entirety and inserting in its place a new ARTICLE FOUR to read as follows:
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has
authority to issue is one thousand (1,000) shares of Common Stock,
with a part value of one dollar ($.01) per share.
SECOND: The Board of Directors of the Corporation approved the
Amendment pursuant to the provisions of Sections 141(f) and 242 of the General
Corporation Law of the State of Delaware and directed that the Amendment be
submitted to the sole stockholder of the Corporation for its consideration and
approval.
THIRD: The sole holder of the issued and outstanding shares of the
Corporation's Common Stock approved the Amendment pursuant to the provisions of
Sections 228(c) and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the Vice President and
Secretary hereinabove named, for the purpose of amending the Certificate of
Incorporation of the Corporation pursuant to the General Corporation Law of the
State of Delaware, under penalties of perjury do each hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true and accordingly have hereunto signed this
<PAGE>
Certificate of Amendment of Certificate of Incorporation this 24th day of June,
1994.
PGI POLYMER, INC.
/s/ S. Grant Reeves
-----------------------------------
S. Grant Reeves, Vice President
ATTEST:
/s/ James G. Boyd
- ---------------------------
James G. Boyd, Secretary
<PAGE>
Exhibit 3.3(iv)
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF AMENDMENT OF "PGI POLYMER, INC.", FILED IN THIS OFFICE ON THE FIFTEENTH
DAY OF MAY, A.D. 1996, AT 10 O'CLOCK P.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530366
Date: 06-25-97
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
PGI POLYMER, INC.
* * * * * * *
Adopted in accordance with the
provisions of Section 242 of the
General Corporation Law of the
State of Delaware
* * * * * * *
Jerry Zucker, being the Chief Executive Officer and President of PGI
Polymer, Inc., a corporation organized and existing under and by virtue of the
laws of the State of Delaware (the "Corporation"), do hereby certify as follows:
FIRST: The Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") is hereby amended by deleting ARTICLE FOUR in
its entirety and inserting in its place a new ARTICLE FOUR to read as follows:
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has
authority to issue is two thousand (2,000) shares of Common Stock,
with a part value of one dollar ($.01) per share.
SECOND: The Board of Directors of the Corporation approved the
Amendment pursuant to the provisions of Sections 141(f) and 242 of the General
Corporation Law of the State of Delaware and directed that the Amendment be
submitted to the sole stockholder of the Corporation for its consideration and
approval.
THIRD: The sole holder of the issued and outstanding shares of the
Corporation's Common Stock approved the Amendment pursuant to the provisions of
Sections 228(c) and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer
and President hereinabove named, for the purpose of amending the Certificate of
Incorporation of the Corporation pursuant to the General Corporation Law of the
State of Delaware, under penalties of perjury do each hereby declare and certify
that this is the act and deed of the Corporation and the facts stated herein are
true and accordingly have hereunto
<PAGE>
signed this Certificate of Amendment of Certificate of Incorporation this 14th
day of May, 1996.
PGI POLYMER, INC.
/s/ Jerry Zucker
--------------------------------
Jerry Zucker, Chief Executive
Officer and President
ATTEST:
/s/ James G. Boyd
- ---------------------------
James G. Boyd, Secretary
<PAGE>
EXHIBIT 3.4
AMENDED AND RESTATED BY-LAWS
----------------------------
OF
--
PGI POLYMER, INC.
-----------------
(as of October 1, 1994)
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the corporation's registered agent
at such address shall be The Prentice-Hall Corporation System, Inc. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
<PAGE>
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or
-2-
<PAGE>
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the question is one upon which by
express provisions of an applicable law or of the certificate of incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the
-3-
<PAGE>
stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be five (5). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, as specified in the
Stockholders Agreement. Any director may resign at any time upon written notice
to the corporation.
Section 4. Vacancies. Vacancies shall be filled as provided in the
Stockholders Agreement. Newly created directorships resulting from any
increase in the authorized number of directors shall be filled by a majority of
the directors then in office. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph.
-4-
<PAGE>
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
-5-
<PAGE>
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chief executive officer, a
president, a vice president, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary or desirable by
the board of directors. Any number of offices may be held by the same person.
In its discretion, the board of directors may choose not to fill any office for
any period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the
-6-
<PAGE>
unexpired portion of the term by the board of directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chief Executive Officer. The chief executive officer shall be
the chief executive officer of the corporation, and shall have the powers and
perform the duties incident to that position. Subject to the board of
directors, he shall be in general and active charge of the entire business and
all the affairs of the corporation, and shall be its chief policy-making
officer. He shall have such other powers and perform such other duties as may
be prescribed by the board of directors or provided in the by-laws. Whenever
the president is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and functions and
exercise all the powers of the president.
Section 7. President. The president, subject to the powers of the board
of directors, shall have general charge of the business, affairs and property of
the corporation, and control over its officers, agents and employees; and shall
see that all orders and resolutions of the board of directors are carried into
effect. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors
shall, in the absence or disability of the president, act with all of the powers
and be subject to all the restrictions of the president. The vice-presidents
shall also perform such other duties and have such other powers as the board of
directors, the president, the chief executive officer or these by-laws may, from
time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have
-7-
<PAGE>
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so af fixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors or
president may, from time to time, prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
-8-
<PAGE>
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be
a contract right and, subject to Sections 2 and 5 hereof, shall include the
right to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee,
-9-
<PAGE>
fiduciary or agent. If a determination (as defined in the General Corporation
Law of the State of Delaware) by the corporation that the director, officer,
employee, fiduciary or agent is entitled to indemnification pursuant to this
Article V is required, and the corporation fails to respond within sixty days to
a written request for indemnity, the corporation shall be deemed to have
approved the request. If the corporation denies a written request for
indemnification or advancing of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article V shall be enforceable by
the director, officer, employee, fiduciary or agent in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the
-10-
<PAGE>
power to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
-11-
<PAGE>
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman, president, or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman, president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for such shares endorsed by the appropriate person or persons, with
such evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition
-12-
<PAGE>
precedent to the issuance thereof, require the owner of such lost, stolen, or
destroyed certificate or certificates, or his or her legal representative, to
give the corporation a bond sufficient to indemnify the corporation against any
claim that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close
-13-
<PAGE>
of business on the day on which the board of directors adopts the resolution
taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property
-14-
<PAGE>
of the corporation, or any other purpose and the directors may modify or abolish
any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
-15-
<PAGE>
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
------------
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
-16-
<PAGE>
Exhibit 3.5
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF INCORPORATION OF "FIBERTECH GROUP, INC.", FILED IN THIS OFFICE ON THE
TWENTY-NINTH DAY OF SEPTEMBER, A.D. 1992, AT 4:30 O'CLOCK P.M.
___________________________________
Edward J. Freel, Secretary of State
Authentication: 8530362
Date: 06-25-97
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FIBERTECH GROUP, INC.
ARTICLE ONE
-----------
The name of the corporation is FiberTech Group, Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent
19901. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has authority to
issue is 1,000 shares of Common Stock, with a par value of $.01 per share.
ARTICLE FIVE
------------
The names and mailing address of the sole incorporation is as follows:
NAME MAILING ADDRESS
---- ---------------
Marci Shaffer 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
-----------
The corporation is to have perpetual existence.
ARTICLE SEVEN
-------------
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make, alter
or repeal the by-laws of the corporation.
<PAGE>
ARTICLE EIGHT
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
-----------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
--------------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 29th day of September, 1992.
/s/ Marci Shaffer
---------------------------------
Marci Shaffer, Sole Incorporator
<PAGE>
Exhibit 3.6
BY-LAWS
OF
FIBERTECH GROUP, INC.
---------------------
A Delaware Corporation
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the corporation's registered agent
at such address shall be The Prentice-Hall Corporation System, Inc. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper-business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of holders of shares entitled to cast not less than a
majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any
<PAGE>
special meeting called by the board of directors. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
'meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the
-2-
<PAGE>
stockholders be entitled to one vote in person or by proxy for each share of
common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act f or him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be five (5). Thereafter the number
of directors shall be established from time to time pursuant to the provisions
of the Stockholders Agreement dated as of October 21, 1992 by and among the
corporation and certain of its stockholders (the "Stockholders Agreement"). The
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in
-3-
<PAGE>
Section 4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, as specified in the
Stockholders Agreement. Any director may resign at any time upon written notice
to the corporation.
Section 4. Vacancies. Vacancies shall be filled as provided in the
Stockholders Agreement. Newly created directorships resulting from any increase
in the authorized number of directors shall be filled by a majority of the
directors then in office. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
-4-
<PAGE>
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chief executive officer, a
president, a vice president, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary or desirable by
the board of directors. Any number of offices may be held by the same person.
In its discretion, the board of directors may choose not to fill any office for
any period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and
-5-
<PAGE>
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chief Executive Officer. The chief executive officer shall be
the chief executive officer of the corporation, and shall have the powers and
perform the duties incident to that position. Subject to the board of
directors, he shall be in general and active charge of the entire business and
all the affairs of the corporation, and shall be its chief policy-making
officer. He shall have such other powers and perform such other duties as may
be prescribed by the board of directors or provided in the by-laws. Whenever
the president is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and functions and
exercise all the powers of the president.
Section 7. President. The president, subject to the powers of the board
of directors, shall have general charge of the business, affairs and property of
the corporation, and control over its officers, agents and employees; and shall
see that all orders and resolutions of the board of directors are carried into
effect. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors
shall, in the absence or disability of the president, act with all of the powers
and be subject to all the restrictions of the president. The vice-presidents
shall also perform such other duties and have such other powers as the board of
directors, the president, the chief executive officer or these by-laws may, from
time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that
-6-
<PAGE>
purpose. Under the president's supervision, the secretary shall give, or cause
to be given, all notices required to be given by these by-laws or by law; shall
have such powers and perform such duties-as the board of directors, the
president or these by-laws may, from time to time, prescribe; and shall have
custody of the corporate seal of the corporation. The secretary, or an
assistant secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature. The
assistant secretary, or if there be more than one, the assistant secretaries in
the order determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors or president may, from time to time, prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time, be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
-7-
<PAGE>
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be
a contract right and, subject to Sections 2 and 5 hereof, shall include the
right to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee, fiduciary or
agent. If a determination (as defined in the General Corporation Law of the
State of Delaware) by the corporation that the director, officer, employee,
fiduciary or agent is entitled to indemnification pursuant to this Article V is
required, and the corporation fails to respond within sixty days to a written
request f or indemnity, the corporation shall be deemed to have approved the
request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article V shall be enforceable by the director,
officer, employee, fiduciary or agent in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall
-8-
<PAGE>
be on the corporation. Neither the failure of the corporation (including its
board of directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the corporation (including its
board of directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation. such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation
-9-
<PAGE>
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this Article V with respect to the resulting or
surviving corporation as he or she would have with respect to such constituent
corporation if its separate existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman, president, or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman, president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for such shares endorsed by the appropriate person or persons, with
such evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue
-10-
<PAGE>
of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his or
her legal representative, to give the corporation a bond sufficient to indemnify
the corporation against any claim that may be made against the corporation on
account of the loss, theft or destruction of any such certificate or the
issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any
-11-
<PAGE>
such purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or, a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including
-12-
<PAGE>
any officer or employee who is a director of the corporation or its subsidiary,
whenever, in the judgment of the directors, such loan, guaranty or assistance
may reasonably be expected to benefit the corporation. The loan, guaranty or
other assistance may be with or without interest, and may be unsecured, or
secured in such manner as the board of directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation. Nothing in
this section contained shall be deemed to deny, limit or restrict the powers of
guaranty or warranty of the corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are for.
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
-13-
<PAGE>
ARTICLE VIII
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-14-
<PAGE>
Exhibit 3.7
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF INCORPORATION OF "FIBERGOL CORPORATION", FILED IN THIS OFFICE ON THE
TWENTY-NINTH DAY OF SEPTEMBER, A.D. 1992, AT 4:30 O'CLOCK P.M.
___________________________________
Edward J. Freel, Secretary of State
Authentication: 8530367
Date: 06-25-97
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FIBERGOL CORPORATION
ARTICLE ONE
-----------
The name of the corporation is FiberGol Corporation.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent
19901. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has authority to
issue is 1,000 shares of Common Stock, with a par value of $.01 per share.
ARTICLE FIVE
------------
The names and mailing address of the sole incorporation is as follows:
NAME MAILING ADDRESS
---- ---------------
Marci Shaffer 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
-----------
The corporation is to have perpetual existence.
ARTICLE SEVEN
-------------
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make, alter
or repeal the by-laws of the corporation.
<PAGE>
ARTICLE EIGHT
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
-----------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
--------------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 29th day of September, 1992.
/s/ Marci Shaffer
---------------------------------
Marci Shaffer, Sole Incorporator
<PAGE>
Exhibit 3.8
BY-LAWS
OF
FIBERGOL CORPORATION
--------------------
A Delaware Corporation
ARTICLE I
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the corporation's registered agent
at such address shall be The Prentice-Hall Corporation System, Inc. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors or the president and shall be called by the president
upon the written request of the holders of shares entitled to cast not less than
a majority of the votes at the meeting, such written request shall state the
purpose or purposes of the meeting and shall be delivered to the president.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any
<PAGE>
special meeting called by the board of directors. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be-given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the
-2-
<PAGE>
stockholders be entitled to one vote in person or by proxy for each share of
common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors.
which shall constitute the first board shall be five (5). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold
-3-
<PAGE>
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number. of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
-4-
<PAGE>
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chief executive officer, a
president, a vice president, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary or desirable by
the board of directors. Any number of offices may be held by the same person.
In its discretion, the board of directors may choose not to fill any office for
any period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
-5-
<PAGE>
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chief Executive Officer. The chief executive officer shall be
the chief executive officer of the corporation, and shall have the powers and
perform the duties incident to that position. Subject to the board of
directors, he shall be in general and active charge of the entire business and
all the affairs of the corporation, and shall be its chief policy-making
officer. He shall have such other powers and perform such other duties as may
be prescribed by the board of directors or provided in the by-laws. Whenever
the president is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and functions and
exercise all the powers of the president.
Section 7. President. The president, subject to the powers of the board
of directors, shall have general charge of the business, affairs and property of
the corporation, and control over its officers, agents and employees; and shall
see that all orders and resolutions of the board of directors are carried into
effect. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. The president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors
shall, in the absence or disability of the president, act with all of the powers
and be subject to all the restrictions of the president. The vice-presidents
shall also perform such other duties and have such other powers as the board of
directors, the president or these by-laws may, from time to time, prescribe.
-6-
<PAGE>
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these by-
laws may, from time to time, prescribe; and shall have custody of the corporate
seal of the corporation. The secretary, or an assistant secretary, shall have
authority to affix the corporate seal to any instrument requiring it and when so
affixed, it may be attested by his or her signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his or her signature. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors or president may, from time to
time, prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the
-7-
<PAGE>
powers and duties of such officer to any other officer or to any director, or to
any other person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be
a contract right and, subject to Sections 2 and 5 hereof, shall include the
right to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee, fiduciary or
agent. If a determination (as defined in the General corporation Law of the
State of Delaware) by the corporation that the director, officer, employee,
fiduciary or agent is entitled to indemnification pursuant to this Article V is
required, and the corporation fails to respond within sixty days to a written
request for indemnity, the corporation shall be deemed to have approved the
request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article V shall be enforceable by the director,
officer, employee, fiduciary or agent in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the corporation. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred
-8-
<PAGE>
in defending any proceeding in advance of its final disposition where the
required undertaking, if any, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the corporation. Neither the failure of the corporation (including
its board of directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
-9-
<PAGE>
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman, president, or a vice-president and the secretary or an assistant
secretary of the corporation, certifying the number of shares owned by such
holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman, president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for such shares endorsed by the appropriate person or persons, with
such evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
-10-
<PAGE>
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of
-11-
<PAGE>
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If no record date
is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided f or in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
f or the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
-12-
<PAGE>
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
-13-
<PAGE>
ARTICLE VIII
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or. repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-14-
<PAGE>
Exhibit 3.9
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF INCORPORATION OF "TECHNETICS GROUP, INC.", FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF JULY, A.D. 1993, AT 9 O'CLOCK A.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530357
Date: 06-25-97
<PAGE>
CERTIFICATE OF INCORPORATION
OF
TECHNETICS GROUP, INC.
ARTICLE ONE
-----------
The name of the corporation is Technetics Group, Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of Delaware
is 32 Loockerman Square, Suite L-100, in the City of Dover, County of Kent
19901. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has authority to
issue is 1,000 shares of Common Stock, with a par value of $.01 per share.
ARTICLE FIVE
------------
The names and mailing address of the sole incorporation is as follows:
NAME MAILING ADDRESS
---- ---------------
Charlotte Crosby 4838 Jenkins Avenue
North Charleston, SC 29406
ARTICLE SIX
-----------
The corporation is to have perpetual existence.
ARTICLE SEVEN
-------------
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make, alter
or repeal the by-laws of the corporation.
<PAGE>
ARTICLE EIGHT
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
-----------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
--------------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 20th day of July, 1993.
/s/ Charlotte Crosby
----------------------------------
Charlotte Crosby
Sole Incorporator
<PAGE>
Exhibit 3.10
BY-LAWS
OF
TECHNETICS GROUP, INC.
ARTICLE 1.
OFFICES AND REGISTERED AGENT
Section 1.1 Principal Office. The Corporation shall maintain its
Principal Office in the State of New Jersey, Vineland Industrial Park, 3663
North Mill Road, Vineland, Cumberland County, New Jersey 08360.
Section 1.2 Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 32 Loockerman Square, Suite L-1090,
in the City of Dover, County of Kent, Delaware. The name of the corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the Board of Directors.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
Section 2.1 Annual Meetings. An annual meeting of the Corporation's
Shareholders shall be held once each calendar year for the purpose of electing
Directors and for the transaction of such other business as may properly come
before the meeting. The annual meeting shall be held at the time and place
designated by the Board of Directors from time to time. In the absence of any
such designation, the annual meeting shall be held at the hour of ten o'clock in
the morning on the second Tuesday of the third month following the Corporation's
fiscal year-end; but if that day shall be a legal holiday, then such annual
meeting shall be held on the next succeeding business day.
Section 2.2 Special Meetings. Special meetings of the Corporation's
Shareholders may be called for any one or more lawful purposes by the
Corporation's President, the Chairman of the Board of Directors, a majority of
the Board of Directors, or the written request describing the purpose for which
the meeting is to be held filed by holders of record of not less than ten
percent of the Corporation's outstanding shares entitled to be cast on any issue
to be considered at the proposed special meeting. Special meetings of the
Shareholders shall be held at the
<PAGE>
Corporation's Registered Office at the time designated in the notice of the
meeting in accordance with Section 2.3; provided, however, that such meetings
called by a majority of the Board of Directors may be held at such places as the
Board of Directors may determine.
Section 2.3 Notice of Meetings, Waiver or Notice. Written or printed
notice of all meetings of Shareholders shall be delivered not less than five (5)
nor more than fifty (30) days before the meeting date, either personally or by
registered or certified mail, to all Shareholders of record entitled to vote at
such meeting. If mailed, the notice shall be deemed to be delivered when
deposited with postage thereon prepaid in the United States mail, addressed to
the shareholder at the shareholder's address as it appears on the Corporation's
records, or if a Shareholder shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address, then directed to him at that other address. The notice shall state the
date, time, and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which such meeting was called. At the written request,
delivered personally or by registered or certified mail, of the person or
persons calling a special meeting of Shareholders, the President or Secretary of
the Corporation shall fix the date and time of the meeting and provide notice
thereof to the Shareholders as required above; provided, however, that the date
of the meeting shall in no event be fixed less than five (5) or more than sixty
(60) days from the date the request was received. If the notice of the meeting
is not given within fifteen (15) days after the request is made to the President
or Secretary, the person or persons calling the meeting may fix the date and
time of the meeting and give or cause to be given the required notice. Notice
of a meeting of Shareholders need not be given to any Shareholder who, in person
or by proxy, signs a waiver of notice either before or after the meeting. To be
effective the waiver shall contain recitals sufficient to identify beyond
reasonable doubt the meeting to which it applies. Such recitals may, but need
not necessarily, include reference to the date and purpose of the meeting and
the business transacted thereat. Recital of the proper date of a meeting shall
be conclusive identification of the meeting to which a waiver of notice applies
unless the waiver contains additional recitals creating a patent ambiguity as to
its proper application.
Section 2.4 Quorum. Except as may otherwise be required by law or the
Corporation's Articles of Incorporation, at any meeting of Shareholders the
presence, in person or by proxy, of the holders of a majority of the outstanding
shares entitled to vote thereat shall constitute a quorum for the transaction of
any business properly before the meeting. Shares entitled to vote as a separate
voting group on a matter may take action at a meeting only if a quorum of the
shares in the separate voting group are present in person or by proxy at the
meeting. In the absence of a quorum a meeting may be adjourned from time to
time, in accordance with the provisions concerning adjournments contained
elsewhere in these Bylaws, by the holders of a majority of the shares
represented at the meeting in person or in proxy. At such adjourned meeting a
quorum of Shareholders may transact any business as might have been properly
transacted at the original meeting.
-2-
<PAGE>
Section 2.5 Transaction of Business. Business transacted at an annual
meeting of Shareholders may include all such business as may properly come
before the meeting. Business transacted at a special meeting of Shareholders
shall be limited to the purposes stated in the notice of the meeting.
Section 2.6 Shareholders of Record. For the purpose of determining
Shareholders entitled to vote at any meeting of Shareholders, or entitled to
receive dividends or other distributions, or in connection with any other proper
purpose requiring a determination of Shareholders, the Board of Directors shall
by resolution fix a record date for such determination. The date shall be not
more than fifty (50) and not less than five (5) days prior to the date on which
the activity requiring the determination is to occur. The Shareholders of record
appearing in the stock transfer books of the Corporation at the close of
business on the record date so fixed shall constitute the Shareholders of right
in respect of the activity in question. In the absence of action by the Board of
Directors to fix a record date, the record date shall be ten (10) days prior to
the date on which the activity requiring a determination of Shareholders is to
occur.
Section 2.7 Voting. Except as may otherwise be required by law or the
Corporation's Articles of Incorporation, and subject to the provisions
concerning Shareholders of record contained elsewhere in these Bylaws, a person
(or his proxy) present at a meeting of Shareholders shall be entitled to one
vote for each share of voting stock as to which such person is the Shareholder
of Record. For each meeting of Shareholders an odd number of persons may be
appointed to serve as voting inspectors, either by the Board of Directors prior
to the meeting or by the presiding officer at the meeting. The voting
inspectors shall by majority decision resolve all disputes which may arise
concerning the qualification of voters, the validity of proxies, the existence
of a quorum, and the acceptance, rejection, and tabulation of votes.
Section 2.8 Adjournments. A majority of the voting shares held by
Shareholders of record present in person or by proxy at a meeting of
Shareholders may adjourn a meeting from time to time to a date, time, and placed
fixed by notice as provided for above or, if such date is less than thirty days
from the date of adjournment, to a date, time, and place fixed by the majority
and announced at the original meeting prior to adjournment.
Section 2.9 Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Shareholders may be taken without a meeting if a
consent in writing, setting forth the action taken, shall be signed by all of
the Shareholders entitled to vote with respect to the subject matter thereof.
Section 2.10 Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the
-3-
<PAGE>
meeting. No proxy shall be valid after eleven months from the date of its
execution unless it qualifies as an irrevocable proxy under the Act.
Section 2.11 Action. Approval of actions by Shareholders shall be in
accordance with the requirements of the Act, except to the extent otherwise
provided by the Articles of Incorporation.
Section 2.12 Order of Business. The order of business at the annual
meeting, and so far as practicable at all other meetings of Shareholders, shall
be as follows:
(1) Proof of notice of the meeting
(2) Determination of a quorum
(3) Reading and disposal of unapproved minutes
(4) Reports of officers and committees
(5) Election of directors
(6) Unfinished business
(7) New business
(8) Adjournment
Except with respect to a specific rule to the contrary in these Bylaws or
the Act, Robert's Rules of Order shall be used to resolve any procedural
disputes that might arise in a Shareholders' meeting.
ARTICLE 3.
DIRECTORS
Section 3.1 Authority. Except as otherwise provided in the Corporation's
Articles of Incorporation, the Board of Directors shall have ultimate authority
over the conduct and management of the business and affairs of the Corporation.
Section 3.2 Number. The Corporation shall have five (5) Directors.
Section 3.3 Tenure. Each Director shall hold office from the date of his
election and qualification until his successor shall have been duly elected and
qualified, or until his earlier removal, resignation, death, or incapacity. An
election of all Directors by the Shareholders shall be held at each annual
meeting of the Corporation's Shareholders. A Director need not be a
Shareholder. Cumulative voting shall be allowed, as provided in the
Corporation's Articles of Incorporation.
-4-
<PAGE>
Section 3.4 Removal. Any Director may be removed from office, with or
without cause, by a vote of the holders of a majority of the shares of the
Corporation's voting stock. Any Director may be removed from office with cause
by a majority vote of the Board of Directors at a meeting at which only the
removal and replacement of the Director or Directors in question shall be
considered.
Section 3.5 Vacancies. The Shareholders shall elect a new Director to
fill any vacancy on the Board of Directors in the same manner and subject to the
same restrictions and voting rights as apply to the election of the Director
whose removal, resignation, death, or newly created directorship created the
vacancy.
Section 3.6 Regular Meetings. A regular meeting of the Board of Directors
shall be held without notice other than this Bylaw immediately after, and at the
same place as, the annual meeting of Shareholders. The Board of Directors may
by resolution provide for the holding of additional regular meetings without
notice other than such resolution; provided, however, the resolution shall fix
the date, time, and place (which may be anywhere within or without the State of
the Corporation's Principal Office) for these regular meetings.
Section 3.7 Special Meetings; Notice of Special Meeting. Special meetings
of the Board of Directors may be called for any lawful purpose or purposes by
any Director or the President of the Corporation. The person calling a special
meeting shall give, or cause to be given, to each Director at his business
address, notice of the date, time and place of the meeting by any normal means
of communication not less than twenty-four (24) hours nor more than sixty (60)
days prior thereto. The notices may, but need not, describe the purpose of the
meeting. If mailed, the notice shall be deemed to be delivered when deposited
in the United States mail at the Director's business address, with postage
thereon prepaid. If notice is given by telegram, the notice shall be deemed
delivered when the telegram is delivered to the telegraph company. Any time or
place fixed for a special meeting must permit participation in the meeting by
means of telecommunications as authorized below.
Section 3.8 Waiver of Notice of Special Meetings. Notice of a special
meeting need not be given to any Director who signs a waiver of notice either
before or after the meeting. To be effective the waiver shall contain recitals
sufficient to identify beyond reasonable doubt the meeting to which it applies.
The recitals may, but need not necessarily, include reference to the date and
purpose of the meeting and the business transacted thereat. Recital of the
proper date of a meeting shall be conclusive identification of the meeting to
which a waiver of notice applies unless the waiver contains additional recitals
creating a patent ambiguity as to its proper application. The attendance of a
Director at a special Directors meeting shall constitute a waiver of notice of
that meeting, except where the Director attends the meeting for the sole and
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
-5-
<PAGE>
Section 3.9 Participation by Telecommunications. Any Director may
participate in, and be regarded as present at, any meeting of the Board of
Directors by means of conference telephone or any other means of communication
by which all persons participating in the meeting can hear each other at the
same time.
Section 3.10 Quorum. A majority of Directors in office shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors.
Section 3.11 Action. The Board of Directors shall take action pursuant to
resolutions adopted by the affirmative vote of a majority of the Directors
participating in a meeting at which a quorum is present, or the affirmative vote
of a greater number of Directors where required by the Corporation's Articles of
Incorporation or otherwise by law.
Section 3.12 Action Without Meeting. Any action required or permitted to
be taken by the Board of Directors at an annual, regular, or special meeting may
be taken without a meeting if a consent in writing, setting forth the action
taken, shall be signed by all of the Directors.
Section 3.13 Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting, or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward his dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. The right to dissent shall not apply to a Director
who voted in favor of such action.
Section 3.14 Committees. The Board of Directors may by resolution
designate and delegate authority to an Executive Committee and other committees
with such authority as may be permitted by the Act. Special meetings of any
committee may be called at any time by any Director who is a member of the
committee or by any person entitled to call a special meeting of the full Board
of Directors. Except as otherwise provided in the section, the conduct of all
meetings of any committee, including notice thereof, shall be governed by
Sections 3.6 through 3.13 of this Article.
Section 3.15 Order of Business. The order of business at all meetings of
the Board of Directors shall be:
(1) Determination of a quorum
(2) Reading and disposal of all unapproved minutes
(3) Reports of officers and committees
(4) Unfinished business
(5) New business
-6-
<PAGE>
(6) Adjournment
Except with respect to a specific rule to the contrary in these Bylaws or
the Act, Roberts Rules of Order shall be used to resolve any procedural dispute
that might arise in a Board of Directors' meeting.
ARTICLE 4.
OFFICERS
Section 4.1 In General. The officers of the Corporation shall consist of
a President, a Vice President, a Secretary and a Treasurer and such additional
vice presidents, assistant secretaries, assistant treasurers and other officers
and agents as the Board of Directors deems advisable from time to time. All
officers shall be appointed by the Board of Directors to serve at its pleasure.
Except as may otherwise be provided by law or in the Articles of Incorporation,
any officer may be removed by the Board of Directors at any time, with or
without cause. Any vacancy, however occurring, in any office may be filled by
the Board of Directors for the unexpired term. One person may hold two or more
offices. Each officer shall exercise the authority and perform the duties as may
be set forth in these Bylaws and any additional authority and duties as the
Board of Directors shall determine from time to time.
Section 4.2 President. The President shall be the chief executive officer
of the Corporation and, subject to the authority of the Board of Directors,
shall manage the business and affairs of the Corporation. The President shall
preside at all meetings of the Shareholders and all meetings of the Board of
Directors, and shall see that the resolutions of the Board of Directors are put
into effect. The President shall have full authority to execute on the
Corporation's behalf any and all contracts, agreements, notes, bonds, deeds,
mortgages, certificates, instruments, and other documents except as may be
specifically limited by resolution of the Board of Directors.
Section 4.3 Vice President. The Vice President shall serve under the
direction of the President. In the absence, incapacity, or inability or refusal
of the President to act, the Vice President shall assume the authority and
perform the duties of the President. If the Board of Directors appoints more
than one Vice President, the seniority of the Vice Presidents shall be
determined from their dates of appointment unless the Board of Directors shall
otherwise specify.
Section 4.4 Secretary. Except as otherwise provided by these Bylaws or
determined by the Board of Directors, the Secretary shall serve under the
direction of the President. The Secretary shall attend all meetings of the
Shareholders and the Board of Directors and record the proceedings thereof. The
Secretary shall give, or cause to be given, all notices in connection
-7-
<PAGE>
with such meetings. The Secretary shall be the custodian of the Corporate seal
and affix the seal to any document requiring it.
Section 4.5 Treasurer. Except as otherwise provided by these Bylaws or
determined by the Board of Directors, the Treasurer shall serve under the
direction of the President. The Treasurer shall, under the direction of the
President, keep safe custody of the Corporation's funds and maintain complete
and accurate books and records of account. The Treasurer shall upon request
report to the Board of Directors on the financial condition of the Corporation.
Section 4.6 Assistant Officers. Except as otherwise provided by these
Bylaws or determined by the Board of Directors, the Assistant Secretaries and
Assistant Treasurers, if any, shall serve under the immediate direction of the
Secretary and the Treasurer, respectively, and under the ultimate direction of
the President. The Assistant Officers shall assume the authority and perform the
duties of their respective immediate superior officer as may be necessary in the
absence, incapacity, or inability or refusal of such immediate superior officer
to act. The seniority of Assistant Officers shall be determined from their dates
of appointment unless the Board of Directors shall otherwise specify.
ARTICLE 5.
INDEMNIFICATION
Section 5.1 Scope. Every person who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any action, suit,
or proceeding, whether civil, criminal, administrative, or investigative, by
reason of the fact that he or a person of whom he is the legal representative is
or was a Director or Officer of the Corporation or is or was serving at the
request of the Corporation or for its benefit as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under and pursuant to the Act, against all
expenses, liabilities, and losses (including without limitation attorneys fees,
judgments, fines, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith. Such right of
indemnification shall be a contract right that may be enforced in any manner
desired by such person. Such right of indemnification shall not be exclusive of
any other right which such Directors, Officers, or representatives may have or
hereafter acquire and, without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any bylaw,
agreement, vote of Shareholders, insurance, provision of law, or otherwise, as
well as their rights under this Article.
Section 5.2 Indemnification Plan. The Board of Directors may from time to
time adopt an Indemnification Plan implementing the rights granted in Section
5.1. This
-8-
<PAGE>
Indemnification Plan shall set forth in detail the mechanics of how the
indemnification rights granted in Section 5.1 shall be exercised.
Section 5.3 Insurance. The Board of Directors may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was a
Director or Officer of the Corporation, or is or was serving at the request of
the Corporation as a Director or Officer of another corporation, or as its
representative in a partnership, joint venture, trust, or other enterprise,
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the Corporation would
have the power to indemnify such person.
ARTICLE 6.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 6.2 Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors, and such authority may be
general or confined to specific instances.
Section 6.3 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by the officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 6.4 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE 7.
MISCELLANEOUS
Section 7.1 Certificates for Shares. Certificates representing shares of
capital stock of the Corporation shall state upon the face thereof the name of
the person to whom issued, the number of shares, the par value per share and the
fact that the Corporation is organized under the laws of the State of Delaware.
Each certificate shall be signed by the President or a Vice
-9-
<PAGE>
President and by the Secretary or an Assistant Secretary. All certificates for
shares shall be consecutively numbered. The name and address of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issuance, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed or mutilated certificate a new one may be
issued therefor upon the making of an affidavit by the holder of record of the
shares re presented by such certificate setting forth the facts concerning the
loss, theft or mutilation thereof and upon such bond or indemnity to the
Corporation as the Board of Directors may prescribe. A new certificate may be
issued without requiring any bond when, in the judgment of the Board of
Directors, it is not imprudent to do so.
Section 7.2 Transfer of Shares. Subject to the provisions of the Act and
to any transfer restrictions binding on the Corporation, transfer of shares of
the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his agent, attorney-in-fact or
other legal representative, who shall furnish proper evidence of authority to
transfer, upon surrender for cancellation of the certificate for such shares.
The person in whose name shares stand on the stock transfer books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
Section 7.3 Voting of Shares in Other Corporations Owned By The
Corporation. Subject always to the specific directions of the Board of
Directors, any share or shares of stock issued by any other corporation and
owned or controlled by the Corporation may be voted at any shareholders' meeting
of the other corporation by the President of the Corporation if he be present,
or in his absence by any Vice President of the Corporation who may be present.
Whenever, in the judgment of the President, or, in his absence, of any Vice
President, it is desirable for the Corporation to execute a proxy or give a
shareholders' consent in respect to any share or shares of stock issued by any
other corporation and owned or controlled by the Corporation, the proxy or
consent shall be executed in the name of the Corporation by the President or one
of the Vice Presidents of the Corporation without necessity of any authorization
by the Board of Directors. Any person or persons designated in the manner above
stated as the proxy or proxies of the Corporation shall have full right power
and authority to vote the share or shares of stock issued by the other
corporation.
Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be
established, and may be altered, by resolution of the Board of Directors from
time to time as the Board deems advisable.
Section 7.5 Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions as the Board of Directors deems
advisable and as permitted by law.
-10-
<PAGE>
Section 7.6 Seal. The seal of the Corporation shall be circular in form
and shall have inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Technetics Group, Inc."
Section 7.7 Amendments. These Bylaws may be altered, amended, or repealed
and new Bylaws may be adopted by the Directors, subject to the right of the
shareholders to alter, adopt, amend, or repeal Bylaws as provided in the Act and
the Corporation's Articles of Incorporation.
Section 7.8 Severability. Any provision of these Bylaws, or any
amendment or alteration thereof, which is determined to be in violation of the
Act shall not in any way render any of the remaining provisions invalid.
Section 7.9 References to Gender and Number Terms. In construing these
Bylaws, feminine or neuter pronouns shall be substituted for those masculine in
form and vice versa, and plural terms shall be substituted for singular and
singular for plural in any place in which the context so requires.
Section 7.10 Headings. The Article and Section headings in these Bylaws
are inserted for convenience only and are not part of the Bylaws.
Section 7.11 Inspection of Records by Shareholders. A shareholder is
entitled to inspect and copy, during regular business hours at the Corporation's
principal office, any of the following records of the Corporation, if he gives
the Corporation written notice of his demand at least five (5) business days
before the date on which he wishes to inspect and copy:
(1) its Articles of Incorporation or Restated Articles of Incorporation
and all amendments to them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to them currently in
effect;
(3) resolutions adopted by its Board of Directors creating one or more
classes or series of shares, and fixing their relative rights,
preferences, and limitations, if shares issued pursuant to those
resolutions are outstanding;
(4) the minutes of all Shareholders' meetings, and records of all action
taken by Shareholders without a meeting, for the past three years;
(5) all written communications to Shareholders, generally, within the past
three years, including the financial statements furnished for the past
three years;
-11-
<PAGE>
(6) a list of the names and business addresses of its current Directors
and Officers;
(7) its most recent Annual Report delivered to the Secretary of State; and
(8) all contracts or other written agreements between the Corporation and
any of its Shareholders and all contracts or other written agreements
between two or more of the Shareholders.
A Shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the Corporation, any of the
following records of the corporation if the Shareholder: gives the Corporation
written notice of his demand at least five (5) business days before the date on
which he wishes to inspect and copy, and his demand is made in good faith and
for a proper purpose; he describes with reasonable particularity his purpose and
the records he desires to inspect; and the records are directly connected with
his purpose:
(1) excerpts from minutes of any meeting of the Board of Directors,
records of any action of a committee of the Board of Directors while
acting in place of the Board of Directors on behalf of the
Corporation, minutes of any meeting of the Shareholders, and records
of action taken by the Shareholders or Board of Directors without a
meeting, to the extent not otherwise subject to inspection under this
section of the Bylaws;
(2) account records of the Corporation; and
(3) the record of Shareholders.
A Shareholder's agent or attorney has the same inspection and copying
rights as the shareholder he represents. The right to copy records under this
section includes, if reasonable, the right to receive copies made by
photographic, xerographic, or other means. The Corporation may impose a
reasonable charge, covering the costs of labor and material, for copies of any
documents provided to the shareholder. The charge may not exceed the estimated
cost of production or reproduction of the records.
-12-
<PAGE>
EXHIBIT 3.11
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
CHICOPEE HOLDINGS, INC.
-----------------------
ARTICLE ONE
-----------
The name of the corporation is Chicopee Holdings, Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent 19904. The name of its registered agent at such address is The Prentice-
Hall Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
The total number of shares of stock which the corporation has
authority to issue is one thousand (1,000) shares of Common Stock, with a par
value of one cent ($.01) per share.
ARTICLE FIVE
------------
The name and mailing address of the sole incorporator are as follows:
Name Mailing Address
---- ---------------
Marci Shaffer 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
ARTICLE SIX
-----------
The corporation is to have perpetual existence.
<PAGE>
ARTICLE SEVEN
-------------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may here after be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
-----------
The corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
--------------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator herein before named,
for the purpose of forming a corporation pursuant to
-2-
<PAGE>
the General Corporation Law of the State of Delaware, do make this certificate,
hereby declaring and certifying that this is my act and deed and the facts
stated herein are true, and accordingly have hereunto set my hand on the 10th
day of March, 1995.
/s/ Marci Shaffer
---------------------------------
Marci Shaffer, Sole Incorporator
-3-
<PAGE>
EXHIBIT 3.12
BY-LAWS
-------
OF
--
CHICOPEE HOLDINGS, INC.
-----------------------
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the corporation's registered agent
at such address shall be The Prentice-Hall Corporation System, Inc. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called,
<PAGE>
the place of meeting shall be the principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or repre sented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
-2-
<PAGE>
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
-3-
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
Section 2. Number, Election and Term of Office. The number of
directors which shall constitute the first board shall be two (2). Thereafter,
the number of directors shall be established from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board
of directors may be removed at any time, with or with out cause, by the holders
of a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least 24 hours notice to each
-4-
<PAGE>
director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have
-5-
<PAGE>
waived notice of such meeting except when such member attends for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened. Such member
shall be conclusively presumed to have assented to any action taken unless his
or her dissent shall be entered in the minutes of the meeting or unless his or
her written dissent to such action shall be filed with the person acting as the
secretary of the meeting before the adjournment thereof or shall be forwarded by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to any member
who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted
by the certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected
by the board of directors and shall consist of a chief executive officer, a
president, a vice president, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary or desirable by
the board of directors. Any number of offices may be held by the same person.
In its discretion, the board of directors may choose not to fill any office for
any period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until
a successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
-6-
<PAGE>
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chief Executive Officer. The chief executive officer
shall be the chief executive officer of the corporation, and shall have the
powers and perform the duties incident to that position. Subject to the board
of directors, he shall be in general and active charge of the entire business
and all the affairs of the corporation, and shall be its chief policy-making
officer. He shall have such other powers and perform such other duties as may
be prescribed by the board of directors or provided in the by-laws. Whenever
the president is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and functions and
exercise all the powers of the president.
Section 7. President. The president, subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The vice-
presidents shall also perform such other duties and have such other powers as
the board of directors, the president, the chief executive officer or these by-
laws may, from time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a
-7-
<PAGE>
book or books to be kept for that purpose. Under the president's supervision,
the secretary shall give, or cause to be given, all notices required to be given
by these by-laws or by law; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe; and shall have custody of the corporate seal of the corporation. The
secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors or president may, from time to time,
prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other
-8-
<PAGE>
than those whose duties are provided for in these by-laws, shall have such
authority and perform such duties as may from time to time be prescribed by
resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a
party or is threatened to be made a party to or is in volved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be
a contract right and, subject to Sections 2 and 5 hereof, shall include the
right to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers.
Any indemnification of a director, officer,
-9-
<PAGE>
employee, fiduciary or agent of the corporation under Section 1 of this Article
V or advance of expenses under Section 5 of this Article V shall be made
promptly, and in any event within 30 days, upon the written request of the
director, officer, employee, fiduciary or agent. If a determination (as defined
in the General Corporation Law of the State of Delaware) by the corporation that
the director, officer, employee, fiduciary or agent is entitled to
indemnification pursuant to this Article V is required, and the corporation
fails to respond within sixty days to a written request for indemnity, the
corporation shall be deemed to have approved the request. If the corporation
denies a written request for indemnification or advancing of expenses, in whole
or in part, or if payment in full pursuant to such request is not made within 30
days, the right to indemnification or advances as granted by this Article V
shall be enforceable by the director, officer, employee, fiduciary or agent in
any court of competent jurisdiction. Such person's costs and expenses incurred
in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as
-10-
<PAGE>
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, whether or not the
corporation would have the power to indemnify such person against such liability
under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall
be deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
-11-
<PAGE>
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president, or a vice-president and the secretary or any assistant secretary
of the corporation, certifying the number of shares owned by such holder in the
corporation. If such a certificate is countersigned (1) by a transfer agent or
an assistant transfer agent other than the corporation or its employee or (2) by
a registrar, other than the corporation or its employee, the signature of the
president, any vice-president, secretary, or any assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to issue
a new certificate to the person entitled thereto, cancel the old certificate or
certificates, and record the transaction on its books. The board of directors
may appoint a bank or trust company organized under the laws of the United
States or any state thereof to act as its transfer agent or registrar, or both
in connection with the transfer of any class or series of securities of the
corporation.
Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corpo ration alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition
-12-
<PAGE>
precedent to the issuance thereof, require the owner of such lost, stolen, or
destroyed certificate or certificates, or his or her legal representative, to
give the corporation a bond sufficient to indemnify the corporation against any
claim that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the
-13-
<PAGE>
day on which the board of directors adopts the resolution taking such prior
action.
Section 5. Fixing a Record Date for Other Purposes. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of direc tors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property
-14-
<PAGE>
of the corporation, or any other purpose and the directors may modify or abolish
any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
-15-
<PAGE>
Section 8. Inspection of Books and Records. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean any purpose reasonably related
to such person's interest as a stockholder. In every instance where an attorney
or other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
------------
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
-16-
<PAGE>
EXHIBIT 3.13(i)
CERTIFICATE OF RESTATED
CERTIFICATE OF INCORPORATION
OF
CHICOPEE, INC.
--------------
James G. Boyd, being the duly elected Executive Vice President of
Chicopee, Inc., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify as follows:
1. That the Corporation filed its original Certificate of
Incorporation with the Delaware Secretary of State on December 9, 1994 (the
"Certificate").
2. That the board of directors of the Corporation, pursuant to
unanimous written consent, adopted resolutions authorizing the Corporation to
amend, integrate and restate the Corporation's Certificate in its entirety in
accordance with Sections 141(f), 241 and 245 of the General Corporation Law of
the State of Delaware to read as set forth in Exhibit A attached hereto and made
a part hereof (the "Restated Certificate").
3. The Corporation has not received any payment for its stock.
IN WITNESS WHEREOF, the undersigned, being the Executive Vice
President hereinabove named, for the purpose of amending and restating the
Certificate of Incorporation of the Corporation pursuant to the General
Corporation Law of the State of Delaware, under penalties of perjury does hereby
declare and certify that this is the act and deed of the Corporation and the
facts stated herein are true, and accordingly has hereunto signed this
certificate of Restated Certificate of Incorporation this 15th day of March,
1995.
CHICOPEE, INC.
By: /s/ James G. Boyd
---------------------------------
James G. Boyd
Executive Vice President
<PAGE>
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
CHICOPEE, INC.
--------------
ARTICLE ONE
-----------
The name of the corporation is Chicopee, Inc. (the "Corporation").
ARTICLE TWO
-----------
The address of the Corporation's registered office in the State of
Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County of
Kent 19904. The name of the Corporation's registered agent at such address is
The Prentice-Hall Corporation System, Inc.
ARTICLE THREE
-------------
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
------------
4. CAPITAL STOCK. A statement of the designations, numbers, relative rights,
preferences and limitations of the capital stock of the Corporation and of
certain other matters is as follows:
4.1. Authorized Shares. The total number of shares of capital stock which
the Corporation has authority to issue shall be Forty-One Thousand (41,000)
shares, consisting of:
(a) One Thousand (1,000) shares of Common Stock, par value $0.01 per
share ("Common Stock"); and
(b) Forty Thousand (40,000) shares of Redeemable Cumulative Preferred
Stock, par value $0.01 per ("Preferred Stock").
The shares of Common Stock and Preferred Stock shall have the rights,
preferences, privileges and limitations set forth below.
<PAGE>
4.2. Definitions. As used in this Article 4, the following terms have
the following definitions:
4.2.1 "Board of Directors" shall mean the Board of Directors of
the Corporation.
4.2.2 "Closing Date" shall mean the first date on which the
Corporation issues any shares of Preferred Stock.
4.2.3 "Distributions" shall mean all distributions made by the
Corporation in cash, securities or property to holders of Common Stock, whether
by dividend, repurchase of shares of Common Stock, in connection with a merger
or consolidation, or otherwise.
4.2.4 "Person" shall mean any individual, partnership,
corporation, association, trust, joint venture, unincorporated organization or
other entity.
4.3. Voting.
4.3.1 General Voting Rights of Common Stock. Except as otherwise
expressly provided in this Certificate of Incorporation or as required by
applicable law which cannot be superseded by the provisions of this Certificate
of Incorporation, the holders of the outstanding shares of Common Stock shall
possess voting power for the election of directors and for all other purposes,
each holder of record of shares of Common Stock being entitled to one vote for
each share of Common Stock standing in his name on the books of the Corporation.
4.3.2 Voting Rights of Preferred Stock. Except as otherwise
expressly provided in this Certificate of Incorporation or as required by
applicable law which cannot be superseded by the provisions of this Certificate
of Incorporation, the holders of the outstanding shares of Preferred Stock shall
possess no voting power whatsoever, either general or specific.
4.3.2.1. So long as any shares of Preferred Stock shall be
outstanding, the holders of the Preferred Stock shall be entitled to
vote together as a single class on any amendments to the terms of the
Preferred Stock, and such terms shall not be amended without the
affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of Preferred Stock.
-2-
<PAGE>
4.4. Dividends.
4.4.1 Dividends on Preferred Stock.
4.4.1.1. Dividends shall accrue, whether or not declared, on
each share of Preferred Stock on a daily basis and at the Dividend
Rate (as defined herein) from time to time in effect, beginning on the
Closing Date (regardless of the date of issuance of the share of
Preferred Stock on which a dividend is being paid). The holders of
shares of the Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors, dividends payable on March 31,
June 30, September 30 and December 31 in each year (each such date
being a "Dividend Payment Date"), in an amount equal to all accrued
and unpaid dividends on the Preferred Stock; provided, however, that
if and to the extent that the holder of a share of the Preferred Stock
does not receive on any given Dividend Payment Date payment of the
accrued and unpaid dividend on such share of the Preferred Stock or
any previously cumulated dividend for the period ending on such
Dividend Payment Date and beginning on the immediately preceding
Dividend Payment Date (or, with respect to the Dividend Payment Date
occurring on March 31, 1995 beginning on the Closing Date), such
dividend shall be cumulative and shall itself accrue dividends,
whether or not declared, from and after such date on a daily basis and
at an annual rate equal to the Dividend Rate from time to time in
effect divided by $1,000 and expressed as a percentage.
4.4.1.2. As used herein, the term "Dividend Rate" shall mean
$130 per share per annum; provided, however, that with respect to any
Dividend Payment Date occurring on and after March 31, 2000, if the
full amount of the accrued dividend payable on such date is not paid
in full in cash the term "Dividend Rate" shall mean $150 per share per
annum, which rate shall remain in effect until all accrued but unpaid
dividends due and payable on Dividend Payment Dates occurring on and
after March 31, 2000 have been paid in full in cash.
4.4.1.3. Dividends may be paid on the Preferred Stock, from time
to time at the option of the Board of Directors, (a) in cash, (b) in
shares of Preferred Stock, each share valued at $1,000, having an
aggregate value equal to the amount of such dividends
-3-
<PAGE>
which may be accrued until paid in full, or (c) in any combination of
the forms described in the immediately preceding clauses (a) and (b).
4.4.2 Limitation on Dividend Rights of Common Stock. No dividends or
Distributions shall be declared or paid on any other shares of capital stock of
the Corporation while any shares of Preferred Stock remain outstanding.
4.5. Redemptions of Preferred Stock.
4.5.1 Preferred Redemption Price. The Preferred Stock shall be
redeemable as hereinafter set forth upon payment in cash in respect of
each share redeemed of the Basic Redemption Price (as defined herein)
or the Preferred Redemption Price (as defined herein), as the case may
be. The "Basic Redemption Price" of a share of Preferred Stock shall
mean the Liquidation Price (as defined herein) as of the date of
redemption plus an amount equal to dividends accrued but unpaid on
such share for the period ending on the date of redemption and
beginning on the immediately preceding Dividend Payment Date. The
"Preferred Redemption Price" of a share of Preferred Stock shall mean
the sum of the Liquidation Price as of the date of redemption plus the
Call Premium as of such date plus an amount equal to dividends accrued
but unpaid on such share for the period ending on the date of
redemption and beginning on the immediately preceding Dividend Payment
Date. The "Liquidation Price" as of any date shall mean the sum of
$1,000 plus an amount equal to dividends accrued but unpaid as of the
immediately preceding Dividend Payment Date. Subject to the provisions
hereof, the Board of Directors shall have authority to prescribe the
manner in which the Preferred Stock shall be redeemed from time to
time; provided, however, that in the case of the redemption of only a
part of the outstanding shares thereof, there shall be so redeemed
from each record holder thereof in whole shares of Preferred Stock, as
nearly as practicable to the nearest whole share, the proportion of
all of the shares of Preferred Stock to be redeemed which the number
of shares of Preferred Stock held of record by such holder bears to
the total number of shares of Preferred Stock then outstanding.
4.5.2 Mandatory Redemption of Preferred Stock. The Corporation
shall, on the earlier of (i) last business day of March, 2004, and
(ii) the date on which
-4-
<PAGE>
a Triggering Event (as defined herein) occurs, redeem out of funds
legally available therefor under the General Corporation Law of the
State of Delaware, at the Preferred Redemption Price, payable in cash,
all of the shares of Preferred Stock then outstanding. If on such
date, the Corporation does not have funds legally available to redeem
all of the shares required to be redeemed on such date, the
Corporation will on such date, and quarterly thereafter until all of
such shares are redeemed, redeem the maximum number of such shares for
which it then has funds legally available. The term "Triggering Event"
shall mean the earlier to occur of the following: (i) the Corporation
no longer being an indirectly wholly-owned subsidiary of Polymer
Group, Inc., a Delaware corporation ("Polymer"), or (ii) the date on
which the Corporation consummates a sale of all or substantially all
of the assets of the Corporation.
4.5.3 Optional Redemption by the Holders. Upon the occurrence of
a Polymer Change of Control (as defined herein) the holders of the
Preferred Stock shall have the right, at their option exercised within
90 days after receipt of notice of the occurrence of such Polymer
Change of Control, to send a written put notice (the "Put Notice") to
the Corporation instructing the Corporation to redeem all of the
outstanding shares of Preferred Stock. Upon receipt by the Corporation
of a Put Notice, the Corporation shall, within 30 days of the receipt
by the Corporation of the Put Notice, redeem out of funds legally
available therefor under the General Corporation Law of the State of
Delaware, at the Basic Redemption Price plus 1% of the Liquidation
Price, payable in cash, all of the shares of Preferred Stock. If on
such date, the Corporation does not have funds legally available to
redeem all of the shares required to be redeemed on such date, the
Corporation will on such date, and quarterly thereafter until all of
such shares are redeemed, redeem the maximum number of such shares for
which it then has funds legally available. The term "Polymer Change of
Control" shall mean any sale of stock, merger, consolidation or other
event as a result of which the stockholders of Polymer as of the
Closing Date cease to own, in the aggregate, (a) at least 35% of the
outstanding voting power of Polymer or the surviving corporation, as
the case may be, if Polymer or such surviving corporation then has its
voting common stock publicly traded on a recognized exchange or
automated quotations system or (b) at least 50% of
-5-
<PAGE>
the outstanding voting power of Polymer or the surviving corporation,
as the case may be, if Polymer or such surviving corporation does not
have its voting common stock publicly traded on a recognized exchange
or automated quotations system. Upon the occurrence of a Polymer
Change of Control, the Corporation shall notify in writing the holders
of Preferred Stock of such occurrence.
4.5.4 Optional Redemption by the Corporation. At any time and
from time to time, the Corporation may at its option by resolution of
its Board of Directors redeem, at the Preferred Redemption Price, all
or any part of the shares of the Preferred Stock then outstanding;
provided, however, that in the case of any redemption under this
Article 4.5.4 of only a part of the outstanding shares of Preferred
Stock, there shall be so redeemed from each record holder thereof in
whole shares of Preferred Stock, as nearly as possible to the nearest
whole share, the proportion of all shares of Preferred Stock to be
redeemed which the number of shares of Preferred Stock held of record
as of the record date for such redemption by such holder bears to the
total number of shares of Preferred Stock of record outstanding as of
such date. Not fewer than 5 nor more than 60 days' prior written
notice shall be given by certified mail, postage prepaid, to each
holder of record of the shares of Preferred Stock to be redeemed
pursuant to this Article 4.5.4, at such holder's post office address
as shown in the records of the Corporation, and said notice shall
specify the amount to be paid per share upon such redemption, the
place and the date, which date shall not be a legal holiday, on which
the shares called for redemption will be redeemed.
4.5.5 Call Premium. The term "Call Premium" shall mean, as of
any date, with respect to each share of Preferred Stock, an amount
equal to the Liquidation Price in effect on such date multiplied by
the percentage applicable to such date set forth below.
Period Percentage
------ ----------
Closing Date through March 31, 1996 113%
April 1, 1996 through March 31, 1997 112%
April 1, 1997 through March 31, 1998 111%
April 1, 1998 through March 31, 1999 109%
April 1, 1999 through March 31, 2000 107%
April 1, 2000 through March 31, 2001 105%
-6-
<PAGE>
April 1, 2001 through March 31, 2002 102%
April 1, 2002 and thereafter 100%
Notwithstanding the foregoing, if any share of Preferred Stock is redeemed
contemporaneously with the consummation of a Qualified IPO (as defined
herein) the term "Call Premium" shall mean with respect to each such share
of Preferred Stock, in lieu of the amounts set forth above, an amount equal
to the Liquidation Price in effect on the date of such redemption
multiplied by the percentage applicable to such date set forth below:
Period Percentage
------ ----------
Closing Date through March 31, 1998 100%
April 1, 1998 through March 31, 1999 104.5%
April 1, 1999 through March 31, 2000 103.5%
April 1, 2000 through March 31, 2001 105%
April 1, 2001 through March 31, 2002 102%
April 1, 2002 and thereafter 100%
4.5.6 Qualified IPO. The term "Qualified IPO" shall mean a firm
underwritten bona fide public offering with a nationally recognized
underwriting firm of securities of Polymer which results in the
receipt by Polymer of at least $40,000,000 (net of underwriting
discounts and commissions).
4.5.7 Payment of Redemption Price. The redemption price of
shares of Preferred Stock shall be paid in cash.
4.5.8 Retirement of Shares. Any shares of the Preferred Stock
redeemed pursuant to the foregoing provisions of this Article 4.5 or
otherwise acquired by the Corporation in any manner whatsoever shall
be permanently retired and shall not under any circumstances be
reissued.
4.6. Preference Rights of Preferred Stock. Upon any liquidation,
dissolution or winding up of the Corporation, in a voluntary or involuntary
bankruptcy proceeding, the holders of the shares of the Preferred Stock shall be
entitled, before any Distribution is made upon any share of the Common Stock, to
be paid in cash an amount equal to the Basic Redemption Price for each such
share to and including the date full payment shall be tendered to the holders of
Preferred Stock with respect to such liquidation, dissolution or winding up.
Upon any other liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary,
-7-
<PAGE>
the holders of the shares of the Preferred Stock shall be entitled, before any
Distribution is made upon any share of the Common Stock, to be paid in cash an
amount equal to the Preferred Redemption Price for each such share to and
including the date full payment shall be tendered to the holders of Preferred
Stock with respect to such liquidation, dissolution or winding up. If, upon any
such liquidation, dissolution or winding up, the assets to be distributed among
the holders of the shares of Preferred Stock shall be insufficient to permit
payment to said holders of the Basic Redemption Price or the Preferred
Redemption Price, as the case may be, then all of the assets of the Corporation
then remaining shall be distributed ratably among the holders of the shares of
Preferred Stock in proportion to the aggregate redemption price owed to such
holders.
ARTICLE FIVE
------------
The Corporation is to have perpetual existence.
ARTICLE SIX
-----------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the By-laws of the Corporation.
ARTICLE SEVEN
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the By-laws
of the Corporation. Election of directors need not be by written ballot unless
the By-laws of the Corporation so provide.
ARTICLE EIGHT
-------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Any modification or repeal of this Article Eight shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such modification or repeal.
-8-
<PAGE>
ARTICLE NINE
------------
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE TEN
-----------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
* * * * *
-9-
<PAGE>
3.13(ii)
CERTIFICATE OF AMENDMENT OF
---------------------------
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
CHICOPEE, INC.
--------------
Chicopee, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That the directors the Company adopted a resolution amending
Article Four, Section 4.5.5 of the Certificate of Incorporation of the Company
to read in its entirety as follows:
Article Four, Section 4.5.5
---------------------------
4.5.5 Call Premium. The term "Call Premium" shall mean, as of any
date, with respect to each share of Preferred Stock, an amount equal to the
Liquidation Price in effect on such date multiplied by the percentage
applicable to such date set forth below.
Period Percentage
------ ----------
Closing Date through March 31, 1996 13%
April 1, 1996 through March 31, 1997 12%
April 1, 1997 through March 31, 1998 11%
April 1, 1998 through March 31, 1999 9%
April 1, 1999 through March 31, 2000 7%
April 1, 2000 through March 31, 2001 5%
April 1, 2001 through March 31, 2002 2%
April 1, 2002 and thereafter 0%
Notwithstanding the foregoing, if any share of Preferred Stock is redeemed
contemporaneously with the consummation of a Qualified IPO (as defined
herein) the term "Call Premium" shall mean with respect to each such share
of Preferred Stock, in lieu of the amounts set forth above, an amount equal
to the Liquidation Price in effect on the date of such redemption
multiplied by the percentage applicable to such date set forth below:
<PAGE>
Period Percentage
------ ----------
Closing Date through March 31, 1998 0%
April 1, 1998 through March 31, 1999 4.5%
April 1, 1999 through March 31, 2000 3.5%
April 1, 2000 through March 31, 2001 5%
April 1, 2001 through March 31, 2002 2%
April 1, 2002 and thereafter 0%
SECOND: That thereafter, pursuant to said resolution, the amendment was
submitted for approval to the holders of the outstanding shares of the Company
entitled to vote thereon, which approval was given by written consent pursuant
to Section 228 of the General Corporation Law of the State of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, Chicopee, Inc. has caused this certificate to be signed
by its Executive Vice President this 29th day of March, 1996.
CHICOPEE, INC.
By: /s/ JAMES G. BOYD
----------------------------------
James G. Boyd
Its: Executive Vice President,
Secretary & Chief Financial Officer
<PAGE>
EXHIBIT 3.14
BY-LAWS
-------
OF
--
CHICOPEE, INC.
--------------
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 32 Loockerman Square, Suite L-100,
Dover, Delaware, County of Kent. The name of the corporation's registered agent
at such address shall be The Prentice-Hall Corporation System, Inc. The
registered office and/or registered agent of the corporation may be changed from
time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called,
<PAGE>
the place of meeting shall be the principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
-2-
<PAGE>
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken by
the stockholders at a meeting thereof.
-3-
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
Section 2. Number, Election and Term of Office. The number of
directors which shall constitute the first board shall be two (2). Thereafter,
the number of directors shall be established from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board
of directors may be removed at any time, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than
the annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the president on at least 24 hours notice to each
-4-
<PAGE>
director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for
-5-
<PAGE>
the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened. Such member shall be conclusively presumed to have assented to any
action taken unless his or her dissent shall be entered in the minutes of the
meeting or unless his or her written dissent to such action shall be filed with
the person acting as the secretary of the meeting before the adjournment thereof
or shall be forwarded by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted
by the certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected
by the board of directors and shall consist of a chief executive officer, a
president, a vice president, a secretary, a chief financial officer and such
other officers and assistant officers as may be deemed necessary or desirable by
the board of directors. Any number of offices may be held by the same person.
In its discretion, the board of directors may choose not to fill any office for
any period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until
a successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or
-6-
<PAGE>
otherwise, may be filled by the board of directors for the unexpired portion of
the term by the board of directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chief Executive Officer. The chief executive officer
shall be the chief executive officer of the corporation, and shall have the
powers and perform the duties incident to that position. Subject to the board
of directors, he shall be in general and active charge of the entire business
and all the affairs of the corporation, and shall be its chief policy-making
officer. He shall have such other powers and perform such other duties as may
be prescribed by the board of directors or provided in the by-laws. Whenever
the president is unable to serve, by reason of sickness, absence or otherwise,
the chief executive officer shall perform all the duties and functions and
exercise all the powers of the president.
Section 7. President. The president, subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
Section 8. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The vice-
presidents shall also perform such other duties and have such other powers as
the board of directors, the president, the chief executive officer or these by-
laws may, from time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
-7-
<PAGE>
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors or
president may, from time to time, prescribe.
Section 10. The Chief Financial Officer and Assistant Treasurer. The
chief financial officer shall have the custody of the corporate funds and
securities; shall keep full and accurate accounts of receipts and disbursements
in books belonging to the corporation; shall deposit all monies and other
valuable effects in the name and to the credit of the corporation as may be
ordered by the board of directors; shall cause the funds of the corporation to
be disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the chief financial officer
shall give the corporation a bond (which shall be rendered every six years) in
such sums and with such surety or sureties as shall be satisfactory to the board
of directors for the faithful performance of the duties of the office of chief
financial officer and for the restoration to the corporation, in case of death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money, and other property of whatever kind in the possession or under the
control of the chief financial officer belonging to the corporation. The
assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the board of directors, shall in the
absence or disability of the chief financial officer, perform the duties and
exercise the powers of the chief financial officer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors or the president may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
-8-
<PAGE>
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of his
or her heirs, executors and administrators; provided, however, that, except as
provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be
a contract right and, subject to Sections 2 and 5 hereof, shall include the
right to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers.
Any indemnification of a director, officer, employee, fiduciary or agent of the
corporation under Section 1 of this Article V or advance of expenses under
Section 5 of this Article V shall be made promptly, and in any event within 30
days, upon the written request of the director, officer, employee, fiduciary or
agent. If a determination (as defined in the General
-9-
<PAGE>
Corporation Law of the State of Delaware) by the corporation that the director,
officer, employee, fiduciary or agent is entitled to indemnification pursuant to
this Article V is required, and the corporation fails to respond within sixty
days to a written request for indemnity, the corporation shall be deemed to have
approved the request. If the corporation denies a written request for
indemnification or advancing of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article V shall be enforceable by
the director, officer, employee, fiduciary or agent in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the corporation would have the power
to indemnify such person against such liability under this Article V.
-10-
<PAGE>
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall
be deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president, or a vice-president and the secretary or any assistant secretary
of the
-11-
<PAGE>
corporation, certifying the number of shares owned by such holder in the
corporation. If such a certificate is countersigned (1) by a transfer agent or
an assistant transfer agent other than the corporation or its employee or (2) by
a registrar, other than the corporation or its employee, the signature of the
president, any vice-president, secretary, or any assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred on the books of the corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate or certificates, and record the transaction on its books. The board
of directors may appoint a bank or trust company organized under the laws of the
United States or any state thereof to act as its transfer agent or registrar, or
both in connection with the transfer of any class or series of securities of the
corporation.
Section 2. Lost Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corpo ration alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
-12-
<PAGE>
Section 3. Fixing a Record Date for Stockholder Meetings. In order
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which record date shall not
-13-
<PAGE>
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of any
funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
-14-
<PAGE>
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee
any obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
in any other corporation held by the corporation shall be voted by the
president, unless the board of directors specifically confers authority to vote
with respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean any purpose reasonably related
to such person's interest as a stockholder. In every instance where an attorney
or other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the
-15-
<PAGE>
corporation at its registered office in the State of Delaware or at its
principal place of business.
Section 9. Section Headings. Section headings in these by-laws are
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
-16-
<PAGE>
Exhibit 3.15(i)
STATE OF NORTH CAROLINA
Department of the Secretary of State
To all whom these presents shall come, Greetings:
I, ELAINE F. MARSHALL, Secretary of State of the State of North Carolina,
do hereby certify the following and hereto attached to be a true copy of
ARTICLES OF INCORPORATION
OF
PNA CORP.
the original of which is now on file in a matter of record in this office.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed my official seal at
the City of Raleigh, this 26th day of
June, 1997.
SEAL
/s/ Elaine F. Marshall
-----------------------------
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
PETROPAR NORTH AMERICA CORP.
The undersigned adopts these Articles of Incorporation for the purpose of
forming a business corporation under and by virtue of the laws of the State of
North Carolina.
1. The name of the corporation shall be Petropar North America Corp.
2. The corporation shall have authority to issue One Thousand (1,000)
shares of Common Stock having a par value of $1.00 per share.
3. The street address and county of the initial registered office of the
corporation in North Carolina are 100 N. Tryon Street, Suite 2900, Mecklenberg
County, Charlotte, North Carolina 28202; its mailing address is 100 N. Tryon
Street, Suite 2900, Charlotte, North Carolina 28202-4011; and the name of the
initial registered agent at such address is Bernard B. Clark.
4. The name and address of the incorporator are:
Name Address
---- -------
Bernard B. Clark Fennebresque, Clark, Swindell & Hay
100 N. Tryon Street, Suite 2900
Charlotte, North Carolina 28202
5. A director of the corporation shall not be personally liable for
monetary damages for breach of any duty as a director except and only to the
extent applicable law restricts the effectiveness of this provision. Any repeal
or modification of this article shall be prospective only and shall not diminish
the rights or expand the personal liability of a director of the corporation
with respect to any act or omission occurring prior to the time of such repeal
or modification.
6. The North Carolina Shareholder Protection Act shall not be applicable
to the corporation.
7. The North Carolina Control Share Acquisition Act shall not be
applicable to the corporation.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation this the 10th day of August, 1994.
/s/ Bernard B. Clark
-----------------------------------
Bernard B. Clark, Incorporator
<PAGE>
Exhibit 3.15(ii)
ARTICLES OF AMENDMENT TO
------------------------
ARTICLES OF INCORPORATION
-------------------------
OF
--
PETROPAR NORTH AMERICA CORP.
----------------------------
Petropar North America Corp., a corporation organized and existing under
and by virtue of the Business Corporation Act of the State of North Carolina
(the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation adopted a resolution
amending Article One of the Articles of Incorporation of the Corporation to read
in its entirety as follows:
ARTICLE ONE
-----------
The name of the corporation is PNA Corp.
SECOND: That thereafter, pursuant to said resolution, the amendment was
submitted for approval to the holders of the outstanding shares of the
Corporation entitled to vote thereon, which approval was given by written
consent pursuant to Section 55-7-04 of the North Carolina Business Corporation
Act.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 55-10-06 of the North Carolina Business Corporation Act.
IN WITNESS WHEREOF, Petropar North America Corp. has caused this
certificate to be signed this 15th day of August, 1996.
PETROPAR NORTH AMERICA CORP.
/s/ Jerry Zucker
--------------------------------------
By: Jerry Zucker
Its: President
<PAGE>
Exhibit 3.16
================================================================================
BYLAWS
OF
PETROPAR NORTH AMERICA CORP.
================================================================================
Effective as of August 11, 1994
<PAGE>
INDEX OF BYLAWS
OF
PETROPAR NORTH AMERICA CORP.
ARTICLE I - OFFICES
Section 1. Principal Office
Section 2. Registered Office
Section 3. Other Offices
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting
Section 2. Substitute Annual Meeting
Section 3. Special Meetings
Section 4. Place of Meeting
Section 5. Notice of Meeting
Section 6. Waiver of Notice
Section 7. Closing of Transfer Books or Fixing of Record Date
Section 8. Voting Lists
Section 9. Voting Groups
Section 10. Quorum
Section 11. Proxies
Section 12. Voting of Shares
Section 13. Votes Required
Section 14. Action of Shareholders Without Meeting
ARTICLE III - BOARD OF DIRECTORS
Section 1. General Powers
Section 2. Number, Tenure and Qualifications
Section 3. Vacancies
Section 4. Removal
Section 5. Compensation
ARTICLE IV - MEETINGS OF DIRECTORS
Section 1. Regular Meetings
Section 2. Special Meetings
Section 3. Notice
Section 4. Waiver of Notice
Section 5. Quorum
Section 6. Manner of Acting
Section 7. Presumption of Assent
Section 8. Action by Directors Without Meeting
Section 9. Meetings by Conference Telephone
-ii-
<PAGE>
ARTICLE V - COMMITTEES OF THE BOARD
Section 1. Executive Committee
Section 2. Other Committees
Section 3. Vacancy
Section 4. Removal
Section 5. Minutes
Section 6. Responsibility of Directors
ARTICLE VI - OFFICERS
Section 1. Officers of the Corporation
Section 2. Appointment and Term
Section 3. Compensation of Officers
Section 4. Removal of Officers
Section 5. Bonds
Section 6. President
Section 7. Vice Presidents
Section 8. Secretary
Section 9. Assistant Secretaries
Section 10. Treasurer
Section 11. Assistant Treasurers
ARTICLE VII - CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts
Section 2. Loans
Section 3. Checks and Drafts
Section 4. Deposits
ARTICLE VIII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares
Section 2. Transfer of Shares
Section 3. Lost Certificates
Section 4. Holder of Record
ARTICLE IX - GENERAL PROVISIONS
Section 1. Distributions
Section 2. Seal
Section 3. Fiscal Year
Section 4. Pronouns
Section 5. Amendments
ARTICLE X - INDEMNIFICATION
Section 1. Coverage
Section 2. Payment
Section 3. Evaluation
-iii-
<PAGE>
Section 4. Consideration
Section 5. Definitions
-iv-
<PAGE>
BYLAWS
OF
PETROPAR NORTH AMERICAN CORP.
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be located in Iredell County, Mooresville, North Carolina, or at such
other place as the Board of Directors shall determine.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of North Carolina may be, but need
not be, identical to the principal office. The address of the registered office
may be changed from time to time by the Board of Directors.
Section 3. Other Offices. The corporation may, from time to time, have
offices at such places, either within or without the State of North Carolina, as
the Board of Directors may designate or as the business of the corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
shall be held on the Second Tuesday in the month of September in each year,
beginning with the year 1995, at the hour of ten o'clock a.m. or such other time
on such day designated in the notice of meeting, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday in
the State of North Carolina, such meeting shall be held on the next succeeding
business day.
Section 2. Substitute Annual Meeting. If the annual meeting shall not
be held on the day designated by these Bylaws for the annual meeting of
shareholders, or at any adjournment thereof, then a substitute annual meeting
may be called in accordance with Section 3 of this Article and the meeting so
called may be designated and treated for all purposes as the annual meeting.
Section 3. Special Meetings. Special meetings of the shareholders may
be called by the President or by the Board of Directors or shall be called by
the Secretary within thirty (30) days after the delivery to the Secretary of the
written request of the holder or holders of not less than one-tenth of all
shares entitled to vote at the meeting. Such request must be signed, dated and
delivered to the Secretary and must describe the purpose or purposes for which
the meeting is to be held.
Section 4. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of North Carolina, as the place of
meeting for any annual meeting or for
<PAGE>
any special meeting called by the Board of Directors. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or without the State of North Carolina, as the place for the
holding of such meeting. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal office of the
corporation.
Section 5. Notice of Meeting. Written or printed notice stating the
time and place of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60), or in case of a special meeting called at the
request of the shareholders, not more than thirty (30), days before the date of
the meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the record of
shareholders of the corporation, with postage thereon prepaid. In addition to
the foregoing, notice of a substitute annual meeting shall state that the annual
meeting was not held on the day designated by these Bylaws and that such
substitute annual meeting is being held in lieu of and is designated as such
annual meeting.
If a meeting of shareholders is adjourned to a different date, time or
place, notice need not be given of the new date, time or place if the new date,
time or place is announced at the meeting before adjournment. If a new record
date for the adjourned meeting is fixed, however, notice of the adjourned
meeting must be given to persons who are shareholders as of the new record date.
Section 6. Waiver of Notice.
(a) A shareholder may waive any notice required by law, the Articles of
Incorporation, or these Bylaws before or after the date and time stated in the
notice. The waiver must be in writing, be signed by the shareholder entitled to
the notice, and be delivered to the corporation for inclusion in the minutes or
filing with the corporate records.
(b) A shareholder's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in the meeting
notice, unless the shareholder objects to considering the matter before it
is voted upon.
Section 7. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, seventy (70) days. If the stock transfer books shall be
closed for the purpose of determining
-2-
<PAGE>
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten (10) days immediately preceding such
meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than seventy (70) days and, in the case of
a meeting of shareholders, not less then ten (10) full days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken.
If the stock transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of closing
has expired, and except where the Board of Directors fixes a new record date,
which it must do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
Section 8. Voting Lists. After fixing a record date for a meeting, the
Secretary of the corporation shall prepare an alphabetical list of the named of
all its shareholders who are entitled to notice of a shareholders' meeting. The
list shall be arranged by voting group (and within each voting group by class or
series of shares) and show the address of and number of shares held by each
shareholder. The shareholders' list shall be available for inspection by any
shareholder, beginning two (2) business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting, at the
corporation's principal office or at a place identified in the meeting notice in
the city where the meeting will be held. A shareholder, or his agent or
attorney, is entitled on written demand to inspect and, subject to the
requirements of N.C. Gen. Stat. (S)55-16-02(c), as may be hereafter amended, to
copy the list, during regular business hours and at his expense, during the
period it is available for inspection. The Secretary of the corporation shall
make the shareholders' list available at the meeting, and any shareholder or his
agent or attorney is entitled to inspect the list at any time during the meeting
or any adjournment.
Section 9. Voting Groups. All shares of one or more classes or series
that under the Articles of Incorporation or the North Carolina Business
Corporation Act are entitled to vote and be counted together collectively on a
matter at a meeting of shareholders constitute a voting group. All shares
entitled by the Articles of Incorporation or the North Carolina Business
Corporation Act to vote generally on a matter are for that purpose a single
voting group. Classes or series of shares shall not be entitled to vote
separately by voting group unless expressly authorized by the Articles of
Incorporation or specifically required by law.
-3-
<PAGE>
Section 10. Quorum. Shares entitled to vote as a separate voting group
may take action on a matter at the meeting only if a quorum of those shares
exists. A majority of the votes entitled to be cast on the matter by the voting
group constitutes a quorum of that voting group for action on that matter.
The shareholders at a meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of shareholders,
such meeting may be adjourned from time to time by a vote of the majority of the
shares voting on the motion to adjourn; and at any adjourned meeting at which a
quorum is present, any business may be transacted which might have been
transacted at the original meeting.
Section 11. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written proxy executed by the shareholder or by his
duly authorized attorney in fact.
An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes. An appointment is valid for
eleven (11) months unless a different period is expressly provided in the
appointment form.
Section 12. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
Except as otherwise provided by law, the Articles of Incorporation or these
Bylaws, if a quorum exists, action on a matter by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes cast
opposing the action.
Shares of its own stock owned by the corporation directly, or indirectly
through a corporation in which it owns, directly or indirectly, a majority of
the sham entitled to vote for directors, shall not be voted at any meeting and
shall not be counted in determining total number of outstanding shares at a
given time entitled to vote; provided that this provision does not limit the
power of the corporation to vote its own shares held by it in a fiduciary
capacity.
Section 13. Votes Required. The vote of a majority of the shares voted
at a meeting of shareholders, duly held at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting except as otherwise provided by law, by the Articles of
Incorporation or by these Bylaws. Any provision in these Bylaws prescribing the
vote required for any purpose as permitted by law may not itself be amended by a
vote less than the vote prescribed therein.
Section 14. Action of Shareholders Without Meeting. Any action which may
be taken at a meeting of the shareholders may be taken without a meeting if the
action is taken by all the shareholders entitled to vote on the action. The
action must be evidenced by one or more written consents signed by all the
shareholders before or after such action, describing the action taken and
delivered to the corporation for inclusion in the minutes or filing with the
corporate records. A
-4-
<PAGE>
consent signed under this Section has the effect of a meeting vote and may be
described as such in any document.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the corporation
managed under the direction of, the Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors
of the corporation shall be not less than two (2) nor more than four (4) as
shall be determined from time to time by the directors.
The directors shall be elected at the annual meeting of the shareholders
(except as herein otherwise provided for the filling of vacancies) and each
director shall hold office until his death, resignation, retirement, removal,
disqualification, or his successor is elected and qualified. Those persons who
receive the highest number of votes at a meeting at which quorum is present
shall be deemed to have been elected.
Directors need not be residents of the State if North Carolina or
shareholders of the corporation.
Section 3. Vacancies. Except as otherwise provided by law or the
Articles of Incorporation, any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of a majority of the remaining directors even
though less than a quorum or by the sole remaining director.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected.
At a special meeting of shareholders the shareholders may elect a director
to fill any vacancy not filled by the directors.
Section 4. Removal. Any director may be removed at any time with or
without cause by a vote of the shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors. If cumulative
voting is authorized, a director may not be removed if the number of votes
sufficient to elect him under cumulative voting is voted against his removal.
A director may not be removed by the shareholders at a meeting unless the
notice of the meeting states that the purpose, or one of the purposes, of the
meeting is removal of the director.
-5-
<PAGE>
Section 5. Compensation. The Board of Directors may compensate
directors for their services as such and may provide for the payment of all
expenses incurred by directors in attending meetings of the Board.
ARTICLE IV
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of North Carolina for the holding of additional regular
meetings without other notice than such resolution.
Section 2. Special Meetings. Special meetings of the Board of
Directors may be called by the President or any two directors. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of North Carolina, as the place
for holding any special meeting of the Board of Directors called by them.
Section 3. Notice. The person calling the meeting shall give or cause
to be given oral or written notice of special meetings of the Board of Directors
to each director not less than three (3) days before the date of the meeting.
Neither the business transacted at, nor the purposes of, any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
Section 4. Waiver of Notice.
(a) A director may waive any notice required by law, the Articles of
Incorporation, or these Bylaws before or after the date and time stated in the
notice. Except as provided by subsection (b), the waiver must be in writing,
signed by the director entitled to the notice, and delivered to the corporation
for filing with the minutes or corporate records.
(b) A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting (or promptly upon his arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
Section 5. Quorum. Except as otherwise provided by law, the Articles
of Incorporation or these Bylaws, a majority of the directors fixed by these
Bylaws shall constitute a quorum for the transaction of business.
-6-
<PAGE>
Section 6. Manner of Acting. If a quorum is present when a vote is
taken, the affirmative act of the majority of the directors present is the act
of the Board of Directors, except as otherwise provided in these Bylaws.
Section 7. Presumption of Assent. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors when
corporate action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly upon his
arrival) to holding it or transacting business at the meeting;
(b) His dissent or abstention from the action taken is entered in the
minutes of the meeting; or
(c) He files written notice of his dissent or abstention with the
presiding officer of the meeting before its adjournment or with the corporation
immediately after adjournment of the meeting. The right of dissent or abstention
is not available to a director who votes in favor of the action taken.
Section 8. Action by Directors Without Meeting. Action required or
permitted by law to be taken at a Board of Directors' meeting may be taken
without a meeting if the action is taken by all members of the Board. The action
must be evidenced by one or more written consents signed by each director before
or after such action, describing the action taken, and included in the minutes
or filed with the corporate records. Action taken under this Section is
effective when the last director signs the consent unless the consent specifies
a different effective date. A consent signed under this Section has the effect
of a meeting vote and may be described as such in any document.
Section 9. Meetings by Conference Telephone. Any one or more directors
may participate in a meeting of the Board or a committee by means of a
conference telephone or similar communications device by which all directors
participating may simultaneously hear each other during the meeting, and such
participation in a meeting shall be deemed presence in person at such meeting.
ARTICLE V
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed by these Bylaws, may
designate two or more directors to constitute an Executive Committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors to the extent permitted
by applicable law.
-7-
<PAGE>
Section 2. Other Committees. The Board of Directors may create one or
more other committees and appoint members of the Board of Directors to serve on
them. Each committee must have two or more members, who serve at the pleasure of
the Board of Directors. The creation of a committee and appointment of members
to it must be approved by the greater of:
(a) A majority of all the directors in office when the action is taken; or
(b) The number of directors constituting a quorum under the Articles of
Incorporation or these Bylaws.
Section 3. Vacancy. Any vacancy occurring in any committee shall be
filled by a majority of the number of directors fixed by these Bylaws at a
regular or special meeting of the Board of Directors.
Section 4. Removal. Any member of a committee may be removed at any
time with or without cause by a majority of the number of directors fixed by
these Bylaws.
Section 5. Minutes. Each committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
Section 6. Responsibility of Directors. The designation of a committee
and the delegation thereto of authority shall not operate to relieve the Board
of Directors, or any member thereof, of any responsibility or liability imposed
upon it or him by law.
Any resolutions adopted or other action taken by a committee within the
scope of the authority delegated to it by the Board of Directors shall be deemed
for all purposes to be adopted or taken by the Board of Directors.
If action taken by a committee is not thereafter formally considered by the
Board, a director may dissent from such action by filing his written objection
with the Secretary with reasonable promptness after learning of such action.
ARTICLE VI
OFFICERS
Section 1. Officers of the Corporation. The officers of the
corporation shall consist of a President, a Secretary, a Treasurer and such Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers as
the Board of Directors may from time to time appoint. The same individual may
simultaneously hold more than one office in the corporation, but no individual
may act in more than one capacity where action of two or more officers is
required.
-8-
<PAGE>
Section 2. Appointment and Term. The officers of the corporation shall
be appointed by the Board of Directors and each officer shall hold office until
his death, resignation, retirement, removal, disqualification or his successor
shall have been appointed.
Section 3. Compensation of Officers. The compensation of all officers
of the corporation shall be fixed by the Board of Directors and no officer shall
serve the corporation in any other capacity and receive compensation therefor
unless such additional compensation be authorized by the Board of Directors. The
appointment of an officer does not itself create contract rights.
Section 4. Removal of Officers. The Board of Directors may remove any
officer at any time with or without cause, but such removal shall not itself
affect the officer's contract rights, if any, with the corporation.
Section 5. Bonds. The Board of Directors may by resolution require any
officer, agent, or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of his respective office or position, and to comply with such other
conditions as may from time to time be required by the Board of Directors.
Section 6. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders.
He shall sign any deeds, mortgages, bonds, contracts or other instruments
which the Board of Directors has authorized to be executed, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
Section 7. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice President, in the
order of the seniority of their titles or if they shall all be the same level of
Vice President in the order of their length of uninterrupted service at such
level of Vice President, unless otherwise determined by the Board of Directors,
shall perform the duties of the President, and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice
President shall perform such other duties as from time to time be assigned to
him by the President or Board of Directors.
Section 8. Secretary. The Secretary shall: (a) attend all meetings of
the shareholders and of the Board of Directors, keep the minutes of such
meetings in one or more books provided for that purpose, and perform like duties
for the standing committees when required; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents, the execution
of which on behalf of the corporation under
-9-
<PAGE>
its seal is duly authorized; (d) keep a register of the post office address of
each shareholder which shall be furnished to the Secretary by such shareholder;
(e) have general charge of the stock transfer books of the corporation; and (f)
in general perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him by the Board of Directors or
by the President, under whose supervision he shall be.
The Secretary shall keep or cause to be kept at the corporation's principal
office a record of the corporation's shareholders, giving the names and
addresses of all shareholders and the number and class of shares held by each,
and such other records as are required to be kept at the corporation's principal
office by N.C. Gen. Stat. (S)55-16-01 and any successor to such statute.
Section 9. Assistant Secretaries. In the absence of the Secretary or
in the event of his death, inability or refusal to act, any Assistant Secretary,
unless otherwise determined by the Board of Directors, shall perform the duties
of the Secretary, and when so acting shall have all the powers of and be subject
to all the restrictions upon the Secretary. They shall perform such other duties
as may be assigned to them by the Secretary, by the President or by the Board of
Directors.
Section 10. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; receive
and give receipts for money due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the provisions of Article
VII, Section 4 of these Bylaws; and (b) in general perform all of the duties
incident to the office of Treasurer, including preparing, or causing to be
prepared, all financial statements required by law, and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors.
Section 11. Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the Assistant Treasurers in
the order of their length of service as Assistant Treasurer, unless otherwise
determined by the Board of Directors, shall perform the duties of the Treasurer,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the Treasurer. They shall perform such other duties as may be
assigned to them by the Treasurer, by the President or by the Board of
Directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
-10-
<PAGE>
Section 3. Checks and Drafts. All checks, drafts or other orders for
the payment of money, issued in the name of the corporation, shall be signed by
such officer or officers, agent or agents of the corporation and in such manner
as shall from time to time be determined by resolution of the Board of
Directors.
Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such depositories as the Board of Directors may select.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. The Board of Directors may
authorize the issuance of some or all of the shares of the corporation's classes
or series without issuing certificates to represent such shares. If shares are
represented by certificates, the certificates shall be in such form as shall be
determined by the Board of Directors. Certificates shall be signed by the
President or a Vice President and by the Secretary or an Assistant Secretary.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number and class of shares and the date of issue,
shall be entered on the stock transfer books of the corporation. When shares are
represented by certificates the corporation shall issue and deliver, to each
shareholder to whom such shares have been issued or transferred, certificates
representing the shares owned by him. When shares are not represented by
certificates, then within a reasonable time after the issuance or transfer of
such shares, the corporation shall send the shareholder to whom such shares have
been issued or transferred a written statement the information required by law
to be on certificates.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, and, when shares
are represented by certificates, on surrender for cancellation of the
certificate for such shares.
Section 3. Lost Certificates. The Board of Directors or the President
may direct a new certificate to be issued in place of any certificate
theretofore issued by the corporation claimed to have been lost or destroyed,
upon receipt of an affidavit of such fact from the shareholder. When authorizing
such issuance of a new certificate, the Board of Directors or the President may
require that the shareholder give the corporation a bond in such sum as the
Board or the President may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate claimed to have
been lost or destroyed or may require the shareholder to agree to indemnify the
corporation against any claims that may be made against the corporation with
respect to the certificate claimed to have been lost or destroyed.
-11-
<PAGE>
Section 4. Holder of Record. The corporation may treat as an absolute
owner of shares the person in whose name the shares stand of record on its books
just as if that person had full competency, capacity and authority to exercise
all rights of ownership irrespective of any knowledge or notice to the contrary
or any description indicating a representative pledge or other fiduciary
relation or any reference to any other instrument or to the rights of any other
person appearing upon its records or upon the share certificate except that any
person furnishing to the corporation proof of his appointment as a fiduciary
shall be treated as if he were a holder of record of its shares.
ARTICLE IX
GENERAL PROVISIONS
Section 1. Distributions. The Board of Directors may from time to time
authorize, and the corporation may grant, distributions and share dividends
pursuant to law and subject to the provisions of its Articles of Incorporation.
Section 2. Seal. The corporate sea; of the corporation shall consist
of two concentric circles between which is the name of the corporation and in
the center of which is inscribed SEAL; and such seal, as impressed on the margin
hereof, is hereby adopted as the corporate seal of the corporation.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors.
Section 4. Pronouns. Each reference to pronouns herein shall be
construed in the masculine, feminine, neuter, singular or plural, as the context
may require.
Section 5. Amendments. The Board of Directors may amend or repeal the
Bylaws, except to the extent otherwise provided by law, the Articles of
Incorporation or a Bylaw adopted by the shareholders, and except that a Bylaw
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the Board of Directors unless the Articles of Incorporation or a
Bylaw adopted by the shareholders authorizes the Board of Directors to adopt,
amend or repeal that particular Bylaw or the Bylaws generally.
ARTICLE X
INDEMNIFICATION
Section 1. Coverage. Any person who at any time serves or has served
as a director or officer of the corporation, or in such capacity at the request
of the corporation for any other corporation, partnership, joint venture, trust
or other enterprise, or as a trustee or administrator under an employee benefit
plan, shall have a right to be indemnified by the corporation to the fullest
extent permitted by law against (a) reasonable expenses, including reasonable
attorneys' fees, actually incurred by him in connection with any threatened,
pending or completed action, suit or proceeding
-12-
<PAGE>
(and any appeal thereof), whether civil, criminal, administrative, investigative
or arbitrative, and whether or not brought by or on behalf of the corporation,
seeking to hold him liable by reason of the fact that he is or was acting in
such capacity, and (b) reasonable payments made by him in satisfaction of any
judgment, money decree, fine (including, without limitation, an excise tax
assessed with respect to an employee benefit plan), penalty or settlement for
which he may have become liable in any such action, suit or proceeding.
Section 2. Payment. Expenses incurred by such person shall be paid in
advance of the final disposition of such investigation, action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the corporation.
Section 3. Evaluation. The Board of Directors of the corporation shall
take all such action as may be necessary and appropriate to authorize the
corporation to pay the indemnification required by this Article X, including
without limitation, to the extent needed, making a determination that
indemnification is permissible under the circumstances and a good faith
evaluation of the manner in which the claimant for indemnity acted and of the
amount of indemnity due him, and giving notice to and obtaining approval by the
shareholders of the corporation.
Section 4. Consideration. Any person who at any time after the
adoption of this Article X serves or has served in any of the aforesaid
capacities for or on behalf of the corporation shall be deemed to be doing or to
have done so in reliance upon, and as consideration for, the right of
indemnification provided herein. Such right shall inure to the benefit of the
legal representatives of any such person and shall not be exclusive of any other
rights to which such person may be entitled apart from the provisions of this
Article X. Any repeal or modification of these indemnification provisions shall
not affect any rights or obligations existing at the time of such repeal or
modification.
Section 5. Definitions. For purposes of this Article X, terms defined
by the North Carolina Business Corporation Act and used but not defined herein
shall have the assigned to them by the Act.
-13-
<PAGE>
Exhibit 3.17(i)
STATE OF NORTH CAROLINA
Department of the Secretary of State
- --------------------------------------------------------------------------------
To all whom these presents shall come, Greetings:
I, ELAINE F. MARSHALL, Secretary of State of the State of North Carolina,
do hereby certify the following and hereto attached to be a true copy of
ARTICLES OF INCORPORATION
OF
FNA POLYMER CORP.
the original of which is now on file in a matter of record in this office.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed
my official seal at the City of
Raleigh, this 26th day of June,
1997.
SEAL
/s/ Elaine F. Marshall
-------------------------------
Secretary of State
- --------------------------------------------------------------------------------
<PAGE>
State of North Carolina
Department of the Secretary of State
ARTICLES OF INCORPORATION
Pursuant to (S)55-2-02 of the General Statutes of North Carolina, the
undersigned does hereby submit these Article of Incorporation for the purpose of
forming a business corporation.
1. The name of the corporation is: Atlas, Corp.
2. The number of shares the corporation is authorized to issue is:
100,000
These shares shall be: (check either a or b)
a. x all of one class, designated as common stock;
--- or
b. ___ divided into classes or series within a class as provided in the
attached schedule, with the information required by NCGS (S)
55-6-01.
3. The street address and county of the initial registered office of the
corporation is:
Number and Street: Womble Carlyle Sandridge & Rice
3300 One First Union Center
City, State, Zip Code: Charlotte, North Carolina, 28202-6025
Mecklenberg County
4. The mailing address if different from the street address of initial
registered office is:_____________________________
5. The name of the initial registered agent is: James R. Bryant, III
6. Any other provisions which the corporation elects to include are
attached:
To the full extent from time to time permitted by law, no person who is
serving or who has served as a director of the corporation shall be
personally liable in any action for monetary damages for breach of his or
her duty as a director, whether such action is brought by or in the right
of the corporation or otherwise. Neither the amendment or repeal of this
Article, nor the adoption of any provision of these Articles of
Incorporation inconsistent with this Article, shall eliminate or reduce the
protection afforded by this Article to a director of the corporation with
respect to any matter which occurred, or any cause of
<PAGE>
action, suit or claim which but for this Article would have accrued or
risen, prior to such amendment, repeal or adoption.
7. The name and address of the persons who are to serve as the initial
Board of Directors until the first meeting of Shareholders or until their
successors be elected and qualified are as follows:
Sheun Ming Ling
Rua Campos Sales, 71 - Mont Serrat
Porto Alegre, RS, Brasil 90430
Winston Ling
Rua Lucas de Oliveira, 1311-802 - Bela Vista
Porto Alegre, RS, Brasil 90420
Wilson Ling
Rua Quintino Bocaiuva, 577-1004 - Moinhos de Vento
Porto Alegre, RS, Brasil 90420
8. The name and address of each incorporator is as follows:
Kathi W. Borkholder
Womble Carlyle Sandridge & Rice
3300 One First Union Center
Charlotte, North Carolina 28202-6025
9. These articles will be effective upon filing, unless a date and/or
time is specified:________________________________
This the 23rd day of April, 1991.
/s/ Kathi W. Borkholder
--------------------------------
Kathi W. Borkholder
Incorporator
<PAGE>
Exhibit 3.17(ii)
ARTICLES OF AMENDMENT
OF
ATLAS, CORP.
The undersigned corporation hereby submits these Articles of Amendment for
the purpose of amending its Articles of Incorporation.
1. The name of the corporation is Atlas, Corp.
2. The Articles of Incorporation of the corporation are hereby amended as
follows:
Article 1 is amended to read as follows:
1. The name of the Corporation is Fitesa North America Corporation.
3. Director and Shareholder approval of the foregoing amendment was obtained
on the 30th day of September, 1994 as required by the North Carolina Business
Corporation Act.
ATLAS, CORP.
By /s/ Sheun Ming Ling
-------------------------------
Sheun Ming Ling, President
<PAGE>
Exhibit 3.17(iii)
ARTICLES OF AMENDMENT TO
------------------------
ARTICLES OF INCORPORATION
-------------------------
OF
--
FITESA NORTH AMERICA CORPORATION
--------------------------------
Fitesa North America Corporation, a corporation organized and existing
under and by virtue of the Business Corporation Act of the State of North
Carolina (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation adopted a resolution
amending Article One of the Articles of Incorporation of the Corporation to read
in its entirety as follows:
ARTICLE ONE
-----------
The name of the corporation is FNA Polymer Corp.
SECOND: That thereafter, pursuant to said resolution, the amendment
was submitted for approval to the holders of the outstanding shares of the
Corporation entitled to vote thereon, which approval was given by written
consent pursuant to Section 55-7-04 of the North Carolina Business Corporation
Act.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 55-10-06 of the North Carolina Business Corporation Act on
14 August 1996.
<PAGE>
IN WITNESS WHEREOF, Fitesa North America Corp. has caused this certificate
to be signed this 15th day of August, 1996.
FITESA NORTH AMERICA CORPORATION
/s/ Jerry Zucker
--------------------------------
By: Jerry Zucker
Its: President
<PAGE>
Exhibit 3.18
BYLAWS
OF
ATLAS, CORP.
Effective April 24, 1991
<PAGE>
TABLE OF CONTENTS TO BYLAWS
OF
ATLAS, CORP.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 -- OFFICES...........................................................1
Section 1. Principal and Registered Office..............................1
Section 2. Other Offices................................................1
ARTICLE 2 -- MEETINGS OF SHAREHOLDERS..........................................1
Section 1. Place of Meeting.............................................1
Section 2. Annual Meeting...............................................1
Section 3. Substitute Annual Meeting....................................1
Section 4. Special Meetings.............................................1
Section 5. Notice of Meetings...........................................1
Section 6. Quorum.......................................................2
Section 7. Shareholders' List...........................................2
Section 8. Voting of Shares.............................................3
Section 9. Action Without Meeting.......................................3
ARTICLE 3 -- BOARD OF DIRECTORS................................................3
Section 1. General Powers...............................................3
Section 2. Number, Term and Qualification...............................3
Section 3. Removal......................................................4
Section 4. Vacancies....................................................4
Section 5. Compensation.................................................4
ARTICLE 4 -- MEETINGS OF DIRECTORS.............................................4
Section 1. Annual and Regular Meetings..................................4
Section 2. Special Meetings.............................................4
Section 3. Notice of Meetings...........................................5
Section 4. Quorum.......................................................5
Section 5. Manner of Acting.............................................5
Section 6. Presumption of Assent........................................5
Section 7. Action Without Meeting.......................................5
Section 8. Meeting by Communications Device.............................5
ARTICLE 5 -- COMMITTEES........................................................6
Section 1. Election and Powers..........................................6
Section 2. Removal; Vacancies...........................................6
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
Section 3. Meetings.................................................... 6
Section 4. Minutes..................................................... 6
ARTICLE 6 -- OFFICERS......................................................... 7
Section 1. Titles...................................................... 7
Section 2. Election; Appointment....................................... 7
Section 3. Removal..................................................... 7
Section 4. Vacancies................................................... 7
Section 5. Compensation................................................ 7
Section 6. Chairman and Vice Chairman of the Board of Directors........ 7
Section 7. President................................................... 7
Section 8. Vice Presidents............................................. 8
Section 9. Secretary................................................... 8
Section 10. Assistant Secretaries....................................... 8
Section 11. Treasurer................................................... 8
Section 12. Assistant Treasurers........................................ 9
Section 13. Controller and Assistant Controllers........................ 9
Section 14. Voting Upon Stocks.......................................... 9
ARTICLE 7 -- CAPITAL STOCK.................................................... 9
Section 1. Certificates................................................ 9
Section 2. Transfer of Shares..........................................10
Section 3. Transfer Agent and Registrar................................10
Section 4. Regulations.................................................10
Section 5. Fixing Record Date..........................................10
Section 6. Lost Certificates...........................................10
ARTICLE 8 -- INDEMNIFICATION OF DIRECTORS AND OFFICERS........................11
Section 1. Indemnification Provisions..................................11
Section 2. Definitions.................................................11
Section 3. Settlements.................................................11
Section 4. Litigation Expense Advances.................................11
Section 5. Approval of Indemnification Payments........................12
Section 6. Suits by Claimant...........................................12
Section 7. Consideration; Personal Representatives and Other Remedies..12
Section 8. Scope of Indemnification Rights.............................12
ARTICLE 9 -- GENERAL PROVISIONS...............................................13
Section 1. Dividends and other Distributions...........................13
Section 2. Seal........................................................13
Section 3. Waiver of Notice............................................13
Section 4. Checks......................................................13
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
Section 5. Fiscal Year.................................................13
Section 6. Amendments..................................................13
Section 7. Shareholders' Agreement.....................................13
</TABLE>
-iii-
<PAGE>
BYLAWS
OF
ATLAS, CORP.
ARTICLE 1 -- OFFICES
--------------------
Section 1. Principal and Registered Office. The principal office of the
corporation shall be located at Charlotte, North Carolina, which shall also be
the registered office of the corporation.
Section 2. Other Offices. The corporation may have offices at such other
places, either within or without the State of North Carolina, as the board of
directors may from time to time determine.
ARTICLE 2 -- MEETINGS OF SHAREHOLDERS
-------------------------------------
Section 1. Place of Meeting. Meetings of shareholders shall be held at
the principal office of the corporation, or at such other place, either within
or without the State of North Carolina, as shall be designated in the notice of
the meeting.
Section 2. Annual Meeting. The annual meeting of shareholders shall be
held at 10:00 o'clock a.m. on the second Monday of April of each year, if not a
legal holiday, but if a legal holiday, then on the next business day which is
not a legal holiday, for the purpose of electing directors of the corporation
and the transaction of such other business as may be properly brought before the
meeting.
Section 3. Substitute Annual Meeting. If the annual meeting is not held
on the day designated by these bylaws, a substitute annual meeting may be called
in accordance with Section 4 of this Article. A meeting so called shall be
designated and treated for all purposes as the annual meeting.
Section 4. Special Meetings. Special meetings of the shareholders may be
called at any time by the president or the board of directors, and must be
called if the holders of at least ten percent of all the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
Section 5. Notice of Meetings. At least 10 and no more than 60 days prior
to any annual or special meeting of shareholders, the corporation shall notify
shareholders of the date,
<PAGE>
time and place of the meeting and, in the case of a special or substitute annual
meeting or where otherwise required by law, shall briefly describe the purpose
or purposes of the meeting. Only business within the purpose or purposes
described in the notice may be conducted at a special meeting. Unless otherwise
required by the articles of incorporation or by law (for example, in the event
of a meeting to consider the adoption of a plan of merger or share exchange, a
sale of assets other than in the ordinary course of business or a voluntary
dissolution), the corporation shall be required to give notice only to
shareholders entitled to vote at the meeting. If an annual or special
shareholders' meeting is adjourned to a different date, time or place, notice
thereof need not be given if the new date, time or place is announced at the
meeting before adjournment. If a new record date for the adjourned meeting is
fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting
shall be given to persons who are shareholders as of the new record date. It
shall be the primary responsibility of the secretary to give the notice, but
notice may be given by or at the direction of the president or other person or
persons calling the meeting. If mailed, such notice shall be deemed to be
effective when deposited in the United States mail with postage thereon prepaid,
correctly addressed to the shareholder's address shown in the corporation's
current record of shareholders.
Section 6. Quorum. A majority of the votes entitled to be cast by a
voting group on a matter, represented in person or by proxy at a meeting of
shareholders, shall constitute a quorum for that voting group for any action on
that matter, unless quorum requirements are otherwise fixed by a court of
competent jurisdiction acting pursuant to Section 55-7-03 of the General
Statutes of North Carolina. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and any adjournment thereof, unless a new record date is or must be set
for the adjournment. Action may be taken by a voting group at any meeting at
which a quorum of that voting group is represented, regardless of whether action
is taken at that meeting by any other voting group. In the absence of a quorum
at the opening of any meeting of shareholders, such meeting may be adjourned
from time to time by a vote of the majority of the shares voting on the motion
to adjourn.
Section 7. Shareholders' List. After a record date is fixed for a
meeting, the secretary of the corporation shall prepare an alphabetical list of
the names of all its shareholders who are entitled to notice of the
shareholders' meeting. Such list shall be arranged by voting group (and within
each voting group by class or series of shares) and shall show the address of
and number of shares held by each shareholder. The shareholders' list shall be
made available for inspection by any shareholder beginning two business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting, at the corporation's principal office or at such
other place identified in the meeting notice in the city where the meeting will
be held. The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
-2-
<PAGE>
Section 8. Voting of Shares. Except as otherwise provided by the
articles of incorporation or by law, each outstanding share of voting capital
stock of the corporation shall be entitled to one vote on each matter submitted
to a vote at a meeting of the shareholders. Unless otherwise provided in the
articles of incorporation cumulative voting for directors shall not be allowed.
Action on a matter by a voting group for which a quorum is present is approved
if the votes cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the vote of a greater number is required by law
or by the articles of incorporation. Voting on all matters shall be by voice
vote or by a show of hands, unless the holders of one-tenth of the shares
represented at the meeting shall demand a ballot vote on a particular matter.
Absent special circumstances, the shares of the corporation are not entitled to
vote if they are owned, directly or indirectly, by a second corporation,
domestic or foreign, and the corporation owns, directly or indirectly, a
majority of the shares entitled to vote for directors of the second corporation,
except that this provision shall not limit the power of the corporation to vote
shares held by it in a fiduciary capacity.
Section 9. Action Without Meeting. Any action which the shareholders
could take at a meeting may be taken without a meeting if one or more written
consents, setting forth the action taken, shall be signed, before or after such
action, by all the shareholders who would be entitled to vote upon the action at
a meeting. The consent shall be delivered to the corporation for inclusion in
the minutes or filing with the corporate records. If by law, the corporation is
required to give its nonvoting shareholders written notice of the proposed
action, it shall do so at least 10 days before the action is taken, and such
notice must contain or be accompanied by the same material that would have been
required by law to be sent to nonvoting shareholders in a notice of meeting at
which the proposed action would have been submitted to the shareholders for
action.
ARTICLE 3 -- BOARD OF DIRECTORS
-------------------------------
Section 1. General Powers. The business and affairs of the corporation
shall be managed under the direction of the board of directors except as
otherwise provided by the articles of incorporation or by a valid shareholders'
agreement.
Section 2. Number, Term and Qualification. The number of directors of
the corporation shall consist of one or more individuals. The shareholders at
any annual meeting may by resolution fix the number of directors to be elected
at the meeting; but in the absence of such resolution, the number of directors
elected at the meeting shall constitute the number of directors of the
corporation until the next annual meeting of shareholders, unless the number is
changed prior to such meeting by action of the shareholders. Each director's
term shall expire at the annual meeting next following the director's election
as a director, provided, that notwithstanding the election of the term of the
director, the director shall continue to hold office until a successor is
elected and qualifies or until his death, resignation, removal or
-3-
<PAGE>
disqualification or until there is a decrease in the number of directors.
Directors need not be residents of the State of North Carolina or shareholders
of the corporation unless the articles of incorporation so provide.
Section 3. Removal. Directors may be removed from office with or without
cause (unless the articles of incorporation provide that directors may be
removed only for cause) provided the notice of the shareholders' meeting at
which such action is to be taken states that a purpose of the meeting is removal
of the director and the number of votes cast to remove the director exceeds the
number of votes cast not to remove him.
Section 4. Vacancies. Except as otherwise provided in the article of
incorporation, a vacancy occurring in the board of directors, including, without
limitation a vacancy resulting from an increase in the number of directors or
from the failure by the shareholders to elect the full authorized number of
directors, may be filled by a majority of the remaining directors or by the sole
director remaining in office. The shareholders may elect a director at any time
to fill a vacancy not filled by the directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Section 5. Compensation. The directors shall not receive compensation for
their services as such, except that by resolution of the board of directors, the
directors may be paid fees, which may include but are not restricted to fees for
attendance at meetings of the board or of a committee, and they may be
reimbursed for expenses of attendance. Any director may serve the corporation in
any other capacity and receive compensation therefor.
ARTICLE 4 -- MEETINGS OF DIRECTORS
----------------------------------
Section 1. Annual and Regular Meetings. The annual meeting of the board
of directors shall be held immediately following the annual meeting of the
shareholders. The board of directors may by resolution provide for the holding
of regular meetings of the board on specified date and at specified times.
Notice of regular meetings held at the principal office of the corporation and
at the usual scheduled time shall not be required. If any date for which a
regular meeting is scheduled shall be a legal holiday, the meeting shall be held
on a date designated in the notice of the meeting, if any, during either the
same week in which the regularly scheduled date falls or during the preceding or
following week. Regular meetings of the board shall be held at the principal
office of the corporation or at such other place as may be designated in the
notice of the meetings.
Section 2. Special Meetings. Special meetings of the board of directors
may be called by or at the request of the chairman of the board, the president
or any two directors. Such meetings may be held at the time and place
designated in the notice of the notice of the meeting.
-4-
<PAGE>
Section 3. Notice of Meetings. Unless the articles of incorporation
provide otherwise, the annual and regular meetings of the board of directors may
be held without notice of the date, time, place or purpose of the meeting. The
secretary or other person or persons calling a special meeting shall give notice
by any usual means of communication to be sent at least two days before the
meeting if notice is sent by means of telephone, telecopy or personal delivery
and at least five days before the meeting if notice is sent by mail. A
director's attendance at, or participation in, a meeting for which notice is
required shall constitute a waiver of notice, unless the director at the
beginning of the meeting (or promptly upon arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.
Section 4. Quorum. Except as otherwise provided in the articles of
incorporation, a majority of the directors in office shall constitute a quorum
for the transaction of business at a meeting of the board of directors.
Section 5. Manner of Acting. Except as otherwise provided in the articles
of incorporation, the act of the majority of the directors present at a meeting
at which a quorum is present shall be the act of the board of directors.
Section 6. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken is deemed to have assented to the action taken unless he objects
at the beginning of the meeting (or promptly upon arrival) to holding, or
transacting business at, the meeting or unless his dissent or abstention is
entered in the minutes of the meeting or unless he shall file written notice of
his dissent or abstention to such action with the presiding officer of the
meeting before its adjournment or with the corporation immediately after
adjournment of the meeting. The right of dissent or abstention shall not apply
to a director who voted in favor of such action.
Section 7. Action Without Meeting. Unless otherwise provided in the
articles of incorporation, action required or permitted to be taken at a meeting
of the board of directors may be taken without a meeting if the action is taken
by all members of the board. The action must be evidenced by one or more
written consents signed by each director before or after such action, describing
the action taken, and included in the minutes or filed with the corporate
record. Action taken without a meeting is effective when the last director signs
the consents unless the consent specifies a different effective date.
Section 8. Meeting by Communications Device. Unless otherwise provided
in the articles of incorporation, the board of directors may permit any or all
directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
-5-
<PAGE>
ARTICLE 5 -- COMMITTEES
-----------------------
Section 1. Election and Powers. Unless otherwise provided by the articles
of incorporation, a majority of the board of directors may create one or more
committees and appoint two or more directors to serve at the pleasure of the
board on each such committee. To the extent specified by the board of directors
or in the articles of incorporation, each committee shall have and may exercise
the powers of the board in the management of the business and affairs of the
corporation, except that no committee shall have authority to do the following:
(a) Authorize distributions.
(b) Approve or propose to shareholders action required to be approved by
shareholders.
(c) Fill vacancies on the board of directors or an any of its committees.
(d) Amend the articles of incorporation.
(e) Adopt, amend or repeal the bylaws.
(f) Approve a plan of merger not requiring shareholder approval.
(g) Authorize or approve the reacquisition of shares, except according to
a formula or method prescribed by the board of directors.
(h) Authorize or approve the issuance, sale or contract for sale of
shares, or determine the designation and relative rights, preferences and
limitations of a class or series of shares, except that the board of directors
may authorize the executive committee (or a senior executive officer of the
corporation) to do so within limits specifically prescribed by the board of
directors.
Section 2. Removal; Vacancies. Any member of a committee may be removed
at any time with or without cause, and vacancies in the membership of a
committee by means of death, resignation, disqualification or removal shall be
filled by a majority of the whole board of directors.
Section 3. Meetings. The provisions of Article 4 governing meetings of
the board of directors, action without meeting, notice, waiver of notice and
quorum and voting requirements shall apply to the committees of the board and
its members.
Section 4. Minutes. Each committee shall keep minutes of its proceedings
and shall report thereon to the board of directors at or before the next meeting
of the board.
-6-
<PAGE>
ARTICLE 6 -- OFFICERS
---------------------
Section 1. Titles. The officers of the corporation shall be a president,
a vice president, a secretary and a treasurer and may include a chairman and
vice chairman of the board of directors, an executive vice president, one or
more additional vice presidents, a controller, one or more assistant
secretaries, one or more assistant treasurers, one or more assistant
controllers, and such other officers as shall be deemed necessary. The Officer
shall have the authority and perform the duties as set forth herein or as from
time to time may be prescribed by the board of directors or by the president (to
the extent that the president is authorized by the board of directors to
prescribe the authority and duties of officers). Any two or more offices may be
held by the same individual but no officer may act in more than one capacity
where action of two or more officers is required.
Section 2. Election; Appointment. The officers of the corporation shall
be elected from time to time by the board of directors or appointed from time to
time by the president (to the extent that the president is authorized by the
board to appoint officers).
Section 3. Removal. Any officer may be removed by the board at any time
with or without cause whenever in its judgment the best interests of the
corporation will be served, but removal shall not itself affect the officer's
contract rights, if any, with the corporation.
Section 4. Vacancies. Vacancies among the officers may be filled and new
offices may be created and filled by the board of directors, or by the president
(to the extent authorized by the board).
Section 5. Compensation. The compensation of the officers shall be fixed
by, or under the direction of the board of directors.
Section 6. Chairman and Vice Chairman of the Board of Directors. The
chairman of the board of directors, if such officer is elected, shall preside at
meetings of the board of directors and shall have such other authority and
perform such other duties as the board of directors shall designate. The vice
chairman, if elected, shall preside at meetings of the board in the absence of
the chairman and shall have such other authority and perform such other duties
as the board of directors shall designate.
Section 7. President. The president shall be in general charge of the
affairs of the corporation in the ordinary course of its business and shall
preside at meetings of the shareholders. The president may perform such acts,
not inconsistent with applicable law or the provisions of these bylaws, as may
be performed by the president of a corporation and may sign and execute all
authorized notes, bonds, contracts and other obligations in the name of the
corporation. The president shall have such other powers and perform such other
duties as the
-7-
<PAGE>
board of directors shall designate or as may be provided by applicable law or
elsewhere in these bylaws.
Section 8. Vice Presidents. The executive vice president, if such officer
is elected or appointed, shall exercise the powers of the president during that
a officer's absence or inability to act. In default of both the president and
the executive vice president, any other vice president may exercise the powers
of the president. Any action taken by a vice president in the performance of the
duties of the president shall be presumptive evidence of the absence or
inability to act of the president at the time the action was taken. The vice
presidents shall have such other powers and perform such other duties as may be
assigned by the board of directors or by the president (to the extent that the
president is authorized by the board of directors to prescribe the authority and
duties of other officers).
Section 9. Secretary. The secretary shall keep accurate records of the
acts and proceedings of all meetings of shareholders and of the board of
directors and shall give all notice required by law and by these bylaws. The
secretary shall have general charge of the corporate books and records and shall
have the responsibility and authority to maintain and authenticate such books
and records. The secretary shall have general charge of the corporate seal and
shall affix the corporate seal to any lawfully executed instrument requiring it.
The secretary shall have general charge of the stock transfer books of the
corporation and shall keep at the principal office of the corporation a record
of shareholders showing the name and address of each shareholder and the number
and class of the shares held by each. The secretary shall sign such instruments
as may require the signature of the secretary, and in general shall perform the
duties incident to the office of secretary and such other duties as may be
assigned from time to time by the board of directors or the president (to the
extent that the president is authorized by the board of directors to prescribe
the authority and duties of other officers).
Section 10. Assistant Secretaries. Each assistant secretary, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (if authorized by the board
of directors to prescribe the authority and duties of other officers), and the
assistant secretaries shall exercise the powers of the secretary during that
officer's absence or inability to act.
Section 11. Treasurer. The treasurer shall have custody of all funds and
securities belonging to the corporation and shall receive, deposit or disburse
the same under the direction of the board of directors. The treasurer shall
keep full and accurate accounts of the finances of the corporation, which may be
consolidated or combined statements of the corporation and one or more of its
subsidiaries as appropriate, that include a balance sheet as of the end of the
fiscal year, an income statement for that year, and a statement of cash flows
for the year unless that information appears elsewhere in the financial
statements. If financial statements are prepared for the corporation on the
basis of generally accepted accounting principles, the annual financial
statements must also be prepared on that basis. The corporation shall mail the
annual financial
-8-
<PAGE>
statements, or a written notice of their availability, to each shareholder
within 120 days of the close of each fiscal year. The treasurer shall in
general perform all duties incident to the office and such other duties as may
be assigned from time to time by the board of directors or the president (to the
extent that the president is authorized by the board of directors to prescribe
the authority and duties of other officers).
Section 12. Assistant Treasurers. Each assistant treasurer, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (to the extent that the
president is authorized by the board of directors to prescribe the authority and
duties of other officers), and the assistant treasurers shall exercise the
powers of the treasurer during that officer's absence or inability to act.
Section 13. Controller and Assistant Controllers. The controller, if such
officer is elected, shall have charge of the accounting affairs of the
corporation and shall have such other powers and perform such other duties as
the board of directors or the president (to the extent that the president is
authorized by the board of directors to prescribe the authority and duties of
other officers) shall designate. Each assistant controller shall have such
powers and perform such duties as may be assigned by the board of directors or
the president (to the extent that the president is authorized by the board of
directors to prescribe the authority and duties of other officers), and the
assistant controllers shall exercise the powers of the controller during that
officer's absence or inability to act.
Section 14. Voting Upon Stocks. Unless otherwise ordered by the board of
directors, the president shall have full power and authority in behalf of the
corporation to attend, act and vote at meetings of the shareholders of any
corporation in which this corporation may hold stock, and at such meetings shall
possess and may exercise any and all rights and powers incident to the ownership
of such stock and which, as the owner, the corporation might have possessed and
exercised if present. The board of directors may by resolution from time to
time confer such power and authority upon any other person or persons.
ARTICLE 7 -- CAPITAL STOCK
--------------------------
Section 1. Certificates. Shares of the capital stock of the corporation
shall be represented by certificates. The name and address of the persons to
whom shares of capital stock of the corporation are issued, with the number of
shares and date of issue, shall be entered on the stock transfer records of the
corporation. Certificates for shares of the capital stock of the corporation
shall be in such form not inconsistent with the articles of incorporation of the
corporation as shall be approved by the board of directors. Each certificate
shall be signed (either manually or by facsimile) by (a) the president or any
vice president and by the secretary. assistant secretary, treasurer or assistant
treasurer or (b) any two officers designated by the board
-9-
<PAGE>
of directors. Each certificate may be sealed with the seal of the corporation
or a facsimile thereof.
Section 2. Transfer of Shares. Transfer of shares shall be made on the
stock transfer records of the corporation, and transfers shall be made only upon
surrender of the certificate for the shares sought to be transferred by the
recordholder or by a duly authorized agent, transferee or legal representative.
All certificates surrendered for transfer or reissue shall be canceled before
new certificates for the shares shall be issued.
Section 3. Transfer Agent and Registrar. The board or directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.
Section 4. Regulations. The board of directors may make rules and
regulations as it deems expedient concerning the issue, transfer and
registration of shares of capital stock of the corporation.
Section 5. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other purpose, the board of directors may fix in advance
a date as the record date for the determination of shareholders. The record date
shall be not more than 70 days before the meeting or action requiring a
determination of shareholders. A determination of shareholders entitled to
notice of or to vote at a shareholders' meeting shall be effective for any
adjournment of the meeting unless the board of directors taxes a new record
date, which it shall do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting. If no record date is fixed for
the determination of shareholders, the record date shall be the day the notice
of the meeting is mailed or the day the action requiring a determination of
shareholders is taken. If no record date is fixed for action without a meeting,
the record date for determining shareholders entitled to take action without a
meeting shall be the date the first shareholder signs a consent to the action
taken.
Section 6. Lost Certificates. The board of directors must authorize the
issuance of a new certificate in place of a certificate claimed to have been
lost, destroyed or wrongfully taken, upon receipt of (a) an affidavit from the
person explaining the loss, destruction or wrongful taking and (b) a bond from
the claimant in a sum as the corporation may reasonably direct to indemnify the
corporation against loss from any claim with respect to the certificate claimed
to have been lost, destroyed or wrongfully taken. The board of directors may,
in its discretion, waive the affidavit and bond and authorize the issuance of a
new certificate in place of a certificate claimed to have been lost, destroyed
or wrongfully taken.
-10-
<PAGE>
ARTICLE 8 -- INDEMNIFICATION OF DIRECTORS AND OFFICERS
------------------------------------------------------
Section 1. Indemnification Provisions. Any person who at any time serves
or has served as a director or officer of the corporation or of any wholly owned
subsidiary of the corporation or in such capacity at the request of the
corporation for any other foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or as a trustee or administrator under any
employee benefit plan of the corporation or of any wholly owned subsidiary
thereof (a "Claimant"), shall have the right to be indemnified and held harmless
by the corporation to the fullest extent from time to time permitted by law
against all liabilities and litigation expenses (as hereinafter defined) in the
event a claim shall be made or threatened against that person in, or that person
is made or threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether or not brought by or on behalf of the corporation,
including all appeals therefrom (a "proceeding"), arising out of such service;
provided, that such indemnification shall not be effective with respect to (a)
that portion of any liabilities or litigation expenses with respect to which the
Claimant is entitled to receive payment under any insurance policy or (b) any
liabilities or litigation expenses incurred on account of any of the Claimant's
activities which were at the time taken known or believed by the Claimant to be
clearly in conflict with the best interests of the corporation.
Section 2. Definitions. As used in this Article, (a) "liabilities"
shall include, without limitation, (1) payments in satisfaction of any judgment,
money decree, excise tax, fine or penalty for which Claimant had become liable
in any proceeding and (2) payments in settlement of any such proceeding subject,
however, to Section 3 of this Article 8; (b) "litigation expenses" shall
include, without limitation, (1) reasonable costs and expenses and attorneys'
fees and expenses actually incurred by the Claimant in connection with any
proceeding and (2) reasonable costs and expenses and attorneys' fees and
expenses in connection with the enforcement of rights to the indemnification
granted hereby or by applicable law, if such enforcement is successful in whole
or in part; and (c) "disinterested directors" shall mean directors who are not
party to the proceeding in question.
Section 3. Settlements. The corporation shall not be liable to indemnify
the Claimant for any amounts paid in settlement of any proceeding effected
without the corporation's written consent. The corporation will not unreasonably
withhold its consent to any proposed settlement.
Section 4. Litigation Expense Advances.
(a) Except as provided in subsection (b) below, any litigation expenses
shall be advanced to any Claimant within 30 days of receipt by the secretary of
the corporation of a demand therefor, together with an undertaking by or on
behalf of the Claimant to repay to the corporation such amount unless it is
ultimately determined that the Claimant is entitled to be
-11-
<PAGE>
indemnified by the corporation against such expense. The secretary shall
promptly forward notice of the demand and undertaking immediately to all
directors of the corporation.
(b) Within 10 days after mailing of notice to the directors pursuant to
subsection (a) above, any disinterested director may, if desired, call a meeting
of all disinterested directors to review the reasonableness of the expenses so
requested. No advance shall be made if a majority of the disinterested directors
affirmatively determines that the item of expense is unreasonable in amount; but
if the disinterested directors determine that a portion of the expense item is
reasonable, the corporation shall advance such portion.
Section 5. Approval of Indemnification Payments. Except as provided in
Section 4 of this Article, the board of directors of the corporation shall take
all such action as may be necessary and appropriate to authorize the corporation
to pay the indemnification requited by Section 1 of this Article, including,
without limitation, making a good faith evaluation of the manner in which the
Claimant acted and of the reasonable amount of indemnity due the Claimant. In
taking any such action any Claimant who is a director of the corporation shall
not be entitled to vote on any matter concerning such Claimant's right to
indemnification.
Section 6. Suits by Claimant. No Claimant shall be entitled to bring suit
against the corporation to enforce his rights under this Article until sixty
days after a written claim has been received by the corporation, together with
any undertaking to repay as required by Section 4 of this Article. It shall be a
defense to any such action that the Claimant's liabilities or litigation
expenses were incurred on account of activities described in clause (b) of
Section 1, but the burden of proving this defense shall be on the corporation.
Neither the failure of the corporation to determine that indemnification of the
Claimant is proper, nor determination by the corporation that indemnification is
not due because of application of clause (b) of Section 1 shall be a defense to
the action or create a presumption that the Claimant has not met the applicable
standard of conduct.
Section 7. Consideration; Personal Representatives and Other Remedies.
Any Claimant who during such time as this Article or corresponding provisions of
predecessor bylaws is or has been in effect serves or has served in any of the
capacities described in Section 1 shall be deemed to be doing so or to have done
so in reliance upon, and as consideration for, the right of indemnification
provided herein or therein. The right of indemnification provided herein or
therein shall inure to the benefit of the legal representatives of any Claimant
hereunder, and the right shall not be exclusive of any other rights to which the
Claimant or legal representative may be entitled apart from this Article.
Section 8. Scope of Indemnification Rights. The rights granted herein
shall not be limited by the provisions of Section 55-8-51 of the General
Statutes of North Carolina or any successor statute.
-12-
<PAGE>
ARTICLE 9 -- GENERAL PROVISIONS
-------------------------------
Section 1. Dividends and other Distributions. The board of directors may
from time to time declare and the corporation may pay dividends or make other
distributions with respect to its outstanding shares in the manner and upon the
terms and conditions provided by law.
Section 2. Seal. The seal of the corporation shall be any form approved
from time to time or at any time by the board of directors.
Section 3. Waiver of Notice. Whenever notice is required to be given to a
shareholder, director or other person under the provisions of these bylaws, the
articles of incorporation or applicable law, a waiver in writing signed by the
person or persons entitled to the notice, whether before or after the date and
time stated in the notice and delivered to the corporation shall be equivalent
to giving the notice.
Section 4. Checks. All checks, drafts or orders for the payment of money
shall be signed by the officer or officers or other individuals that the board
of directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by the board of directors.
Section 6. Amendments. Unless otherwise provided in the articles of
incorporation or a bylaw adopted by the shareholders or by law, these bylaws may
be amended or repealed by the board of directors, except that a bylaw adopted,
amended or repealed by the shareholders may not be readopted, amended or
repealed by the board of directors if neither the articles of incorporation nor
a bylaw adopted by the shareholders authorize the board of directors to adopt,
amend or repeal that particular bylaw or the bylaws generally. These bylaws may
be amended or repealed by the shareholders even though the bylaws may also be
amended or repealed by the board of directors. A bylaw that fixes a greater
quorum or voting requirement for the board of directors may be amended or
repealed (a) if originally adopted by the shareholders, only by the
shareholders, unless such bylaw as originally adopted by the shareholders
provides that such bylaw may be amended or repealed by the board of directors or
(b) if originally adopted by the board of directors, either by the shareholders
or by the board of directors. A bylaw that fixes a greater quorum or voting
requirement may not be adopted by the board of directors by a vote less than a
majority of the directors then in office and may not itself be amended by a
quorum or vote of the directors less than the quorum or vote prescribed in such
bylaw or prescribed by the shareholders.
Section 7. Shareholders' Agreement. In the event of a conflict between
these bylaws and a valid shareholders' agreement, the shareholders' agreement
shall control.
-13-
<PAGE>
THIS IS TO CERTIFY that the above bylaws of Atlas, Corp., were adopted by
the board of directors of the corporation by consent to action without meeting
effective as of April 24, 1991.
This 15th day of May, 1991.
/s/ WILSON LING
-----------------------------------------
Wilson Ling
Secretary
-14-
<PAGE>
Exhibit 3.19(i)
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF INCORPORATION OF "FABRENE CORP.", FILED IN THIS OFFICE ON THE TWENTY-
SIXTH DAY OF JULY, A.D. 1989, AT 10 O'CLOCK A.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530369
Date: 06-25-97
<PAGE>
CERTIFICATE OF INCORPORATION
OF
FABRENE CORP.
1. Corporate Name. The name of the Corporation (hereinafter the
"Corporation") is Fabrene Corp.
2. Registered Office and Agent. The address, including street, number,
city and county, of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801
and the name of the registered agent of the Corporation at such address is The
Corporation Trust Company.
3. Purposes. The name of the business to be conducted by the Corporation
in the State of Delaware shall be to engage in any lawful act or activity for
which corporations may be organized under the Delaware General Corporation Law.
4. Authorized Capital Stock. The total number of shares of stock which
the Corporation shall have authority to issue is one thousand (1,000) shares of
common stock, one dollar ($1.00) par value per share.
5. Incorporator. The name and mailing address of the incorporator of the
Corporation is Ellen L. Kaufman at Clark, Ladner, Fortenbaugh & Young, 1818
Market Street, 32nd Floor, Philadelphia, Pennsylvania 19103.
6. Liability of Directors. No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such director as a director, except (i) for breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article VI shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
The undersigned, being the incorporator above named, for the purpose of
forming a corporation under the laws of the State of Delaware, does make, file
and record this Certificate and does hereby certify the facts stated herein are
true; and the undersigned has hereunto accordingly set her hand.
/s/ Ellen L. Kaufman
-----------------------------------
Dated: July 24, 1989 Ellen L. Kaufman
<PAGE>
Exhibit 3.19(ii)
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF RENEWAL OF "FABRENE CORP.", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY
OF OCTOBER, A.D. 1991, AT 12 O'CLOCK P.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530370
Date: 06-25-97
<PAGE>
CERTIFICATE
for Renewal and Revival of Charter
FABRENE CORP., a corporation organized under the laws of Delaware, the
charter of which was voided for non-payment of taxes, now desires to procure a
restoration, renewal and revival of its charter, and hereby certifies as
follows:
1. The name of this corporation is FABRENE CORP.
2. Its registered office in the State of Delaware, is located at 1209
Orange Street, City of Wilmington, Zip Code 19801, County of New Castle, the
name and address of its registered agent is The Corporation Trust Company.
3. The date of filing of the original Certificate of Incorporation in
Delaware was July 26, 1989.
4. The date when restoration, renewal and revival of the charter of this
company is to commence is the 28th day of February, 1991, same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 1st day of March A.D. 1991, at which time
its charter became inoperative and void for non-payment of taxes and this
certificate for renewal and revival is filed by authority of the duly elected
directors of the corporation in accordance with the laws of the State of
Delaware.
IN TESTIMONY WHEREOF, and in compliance with the provisions of Section 312
of the General Corporation Law of the State of Delaware, as amended, providing
for the renewal, extension and restoration of charters. Gordon McCarthy, the
last and acting President, and Peter Bourgeois, the last and acting Secretary of
Fabrene Corp., have hereunto set their hands to this certificate this 9th day of
October 1991.
/s/ Gordon McCarthy
-----------------------------------
Last and Acting President
/s/ Peter Bourgeois
-----------------------------------
Last and Acting Secretary
<PAGE>
Exhibit 3.19(iii)
State of Delaware
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF RENEWAL OF "FABRENE CORP.", FILED IN THIS OFFICE ON THE THIRTEENTH DAY
OF MAY, A.D. 1996, AT 9 O'CLOCK A.M.
-----------------------------------
Edward J. Freel, Secretary of State
Authentication: 8530371
Date: 06-25-97
<PAGE>
CERTIFICATE OF RESTORATION AND REVIVAL OF
CERTIFICATE OF INCORPORATION
OF FABRENE CORP.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
Fabrene Corp.
2. The corporation was organized under the provisions of the General
Corporation Law of the State of Delaware. The date of filing of its original
certificate of incorporation with the Secretary of State of Delaware is July 28,
1989.
3. The address, including the street, city, and county, of the registered
office of the corporation in the State of Delaware and the name of the
registered agent at such address are as follows: The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801, County of New Castle.
4. The corporation hereby procures a restoration and revival of its
certificate of incorporation, which became inoperative by law on March 1, 1996
for failure to file annual reports and non-payment of taxes payable to the State
of Delaware.
5. The Certificate of Incorporation of the corporation, which provides
for and will continue to provide for, perpetual duration, shall, upon the filing
of this Certificate of Restoration and Revival of the Certificate of Incorporate
in the Department of State of the State of Delaware, be restored and revived and
shall become fully operative on February 29, 1996.
6. The Certificate of Restoration and Revival of the Certificate of
Incorporation is filed by authority of the duly elected directors as prescribed
by Section 312 of the General Corporation Law of the State of Delaware, and that
Jerry Zucker, the last and present Chairman, President and CEO of Fabrene Corp.
has hereunto set his hand to this certificate this 13th day of May, 1996.
/s/ Jerry Zucker
-----------------------------------
Jerry Zucker
Chairman, President & CEO
<PAGE>
Exhibit 3.20
BY-LAWS
OF
FABRENE CORP
(AS AMENDED)
ARTICLE 1.
OFFICES AND REGISTERED AGENT
Section 1.1 Principal Office. The Corporation shall maintain its
Principal Office in the State of Oregon at 16225 S.E. 106th Avenue, Clackamas,
Oregon.
Section 1.2 Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 32 Loockerman Square, Suite L-1090,
in the City of Dover, County of Kent, Delaware. The name of the corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the Board of Directors.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
Section 2.1 Annual Meetings. An annual meeting of the Corporation's
Shareholders shall be held once each calendar year for the purpose of electing
Directors and for the transaction of such other business as may properly come
before the meeting. The annual meeting shall be held at the date and place
designated by the Board of Directors from time to time. In the absence of any
such designation, the annual meeting shall be held at the hour of ten o'clock in
the morning on the second Tuesday of the third month following the Corporation's
fiscal year-end; but if that day shall be a legal holiday, then such annual
meeting shall be held on the next succeeding business day.
Section 2.2 Special Meetings. Special meetings of the Corporation's
Shareholders may be called for any one or more lawful purposes by the
Corporation's President, the Chairman of the Board of Directors, a majority of
the Board of Directors, or the written request describing the purpose for which
the meeting is to be held filed by holders of record of not less than ten
percent of the Corporation's outstanding shares entitled to be cast on any issue
to be considered at the proposed special meeting. Special meetings of the
Shareholders shall be held at the Corporation's Registered Office at the time
designated in the notice of the meeting in accordance with Section 2.3;
provided, however, that such meetings called by a majority of the Board of
Directors may be held at such places as the Board of Directors may determine.
<PAGE>
Section 2.3 Notice of Meetings, Waiver of Notice. Written or printed
notice of all meetings of Shareholders shall be delivered not less than five (5)
nor more than fifty (50) days before the meeting date, either personally or by
registered or certified mail, to all Shareholders of record entitled to vote at
such meeting. If mailed, the notice shall be deemed to be delivered when
deposited with postage thereon prepaid in the United States mail, addressed to
the shareholder at the shareholder's address as it appears on the Corporation's
records, or if a Shareholder shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address, then directed to him at that other address. The notice shall state the
date, time and place of the meeting and, in the case of a special meeting, the
purpose or purposes for which such meeting was called. At the written request,
delivered personally or by registered or certified mail, of the person or
persons calling a special meeting of Shareholders, the President or Secretary of
the Corporation shall fix the date and time of the meeting and provide notice
thereof to the Shareholders as required above; provided, however, that the date
of the meeting shall in no event be fixed less than five (5) or more than sixty
(60) days from the date the request was received. If the notice of the meeting
is not given within fifteen (15) days after the request is made to the President
or Secretary, the person or persons calling the meeting may fix the date and
time of the meeting and give or cause to be given the required notice. Notice of
a meeting of Shareholders need not be given to any Shareholder who, in person or
by proxy signs a waiver of notice either before or after the meeting. To be
effective the waiver shall contain recitals sufficient to identify beyond
reasonable doubt the meeting to which it applies. Such recitals may, but need
not necessarily, include reference to the date and purpose of the meeting and
the business transacted thereat. Recital of the proper date of a meeting shall
be conclusive identification of the meeting to which a waiver of notice applies
unless the waiver contains additional recitals creating a patent ambiguity as to
its proper application.
Section 2.4 Quorum. Except as may otherwise be required by law or the
Corporation's Articles of Incorporation, at any meeting of Shareholders the
presence, in person or by proxy, of the holders of a majority of the outstanding
shares entitled to vote thereat shall constitute a quorum for the transaction of
any business properly before the meeting. Shares entitled to vote as a separate
voting group on a matter may take action at a meeting only if a quorum of the
shares in the separate voting group are present in person or by proxy at the
meeting. In the absence of a quorum a meeting may be adjourned from time to
time, in accordance with the provisions concerning adjournments contained
elsewhere in these Bylaws, by the holders of a majority of the shares
represented at the meeting in person or in proxy. At such adjourned meeting a
quorum of Shareholders may transact any business as might have been properly
transacted at the original meeting.
Section 2.5 Transaction of Business. Business transacted at an annual
meeting of Shareholders may include all such business as may properly come
before the meeting. Business transacted at a special meeting of Shareholders
shall be limited to the purposes stated in the notice of the meeting.
-2-
<PAGE>
Section 2.6 Shareholders of Record. For the purpose of determining
Shareholders entitled to vote at any meeting of Shareholders, or entitled to
receive dividends or other distributions or in connection with any other proper
purpose requiring a determination of Shareholders, the Board of Directors shall
by resolution fix a record date for such determination. The date shall be not
more than fifty (50) and not less than five (5) days prior to the date on which
the activity requiring the determination is to occur. The Shareholders of record
appearing in the stock transfer books of the Corporation at the close of
business on the record date so fixed shall constitute the Shareholders of right
in respect of the activity in question. In the absence of action by the Board of
Directors to fix a record date, the record date shall be ten (10) days prior to
the date on which the activity requiring a determination of Shareholders is to
occur.
Section 2.7 Voting. Except as may otherwise be required by law or the
Corporation's Articles of Incorporation, and subject to the provisions
concerning Shareholders of record contained elsewhere in these Bylaws, a person
(or his proxy) present at a meeting of Shareholders shall be entitled to one
vote for each share of voting stock as to which such person is the Shareholder
of Record. For each meeting of Shareholders an odd number of persons may be
appointed to serve as voting inspectors, either by the Board of Directors prior
to the meeting or by the presiding officer at the meeting. The voting inspectors
shall by majority decision resolve all disputes which may arise concerning the
qualification of voters, the validity of proxies, the existence of a quorum, and
the acceptance, rejection, and tabulation of votes.
Section 2.8 Adjournments. A majority of the voting shares held by
Shareholders of record present in person or by proxy at a meeting of
Shareholders may adjourn a meeting from time to time to a date, time, and placed
fixed by notice as provided for above or, if such date is less than thirty days
from the date of adjournment, to a date, time, and place fixed by the majority
and announced at the original meeting prior to adjournment.
Section 2.9 Action Without Meeting. Any action required or permitted to
be taken at a meeting of the Shareholders may be taken without a meeting if a
consent in writing, setting forth the action taken, shall be signed by all of
the Shareholders entitled to vote with respect to the subject matter thereof.
Section 2.10 Proxies. At all meetings of Shareholders, a Shareholder may
vote in person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution unless it qualifies as an
irrevocable proxy under the Act.
Section 2.11 Action. Approval of actions by Shareholders shall be in
accordance with the requirements of the Act, except to the extent otherwise
provided by the Articles of Incorporation.
-3-
<PAGE>
Section 2.12 Order of Business. The order of business at the annual
meeting, and so far as practicable at all other meetings of Shareholders, shall
be as follows:
(1) Proof of notice of the meeting
(2) Determination of a quorum
(3) Reading and disposal of unapproved minutes
(4) Reports of officers and committees
(5) Election of directors
(6) Unfinished business
(7) New business
(8) Adjournment
Except with respect to a specific rule to the contrary in these Bylaws or
the Act, Robert's Rules of Order shall be used to resolve any procedural
disputes that might arise in a Shareholders' meeting.
ARTICLE 3.
DIRECTORS
Section 3.1 Authority. Except as otherwise provided in the Corporation's
Articles of Incorporation, the Board of Directors shall have ultimate authority
over the conduct and management of the business and affairs of the Corporation.
Section 3.2 Number. The Corporation shall have five (5) Directors.
Section 3.3 Tenure. Each Director shall hold office from the date of his
election and qualification until his successor shall have been duly elected and
qualified, or until his earlier removal, resignation, death, or incapacity. An
election of all Directors by the Shareholders shall be held at each annual
meeting of the Corporation's Shareholders. A Director need not be a Shareholder.
Cumulative voting shall be allowed, as provided in the Corporation's Articles of
Incorporation.
Section 3.4 Removal. Any Director may be removed from office, with or
without cause, by a vote of the holders of a majority of the shares of the
Corporation's voting stock. Any Director may be removed from office with cause
by a majority vote of the Board of Directors at a meeting at which only the
removal and replacement of the Director or Directors in question shall be
considered.
Section 3.5 Vacancies. The Shareholders shall elect a new Director to
fill any vacancy on the Board of Directors in the same manner and subject to the
same restrictions and
-4-
<PAGE>
voting rights as apply to the election of the Director whose removal,
resignation, death, or newly created directorship created the vacancy.
Section 3.6 Regular Meetings. A regular meeting of the Board of
Directors shall be held without notice other than this Bylaw immediately after,
and at the same place as, the annual meeting of Shareholders. The Board of
Directors may by resolution provide for the holding of additional regular
meetings without notice other than such resolution; provided, however, the
resolution shall fix the date, time, and place (which may be anywhere within or
without the State of the Corporation's Principal Office) for these regular
meetings.
Section 3.7 Special Meetings; Notice of Special Meeting. Special meetings
of the Board of Directors may be called for any lawful purpose or purposes by
any Director or the President of the Corporation. The person calling a special
meeting shall give, or cause to be given, to each Director at his business
address, notice of the date, time and place of the meeting by any normal means
of communication not less than twenty-four (24) hours nor more than sixty (60)
days prior thereto. The notices may but need not, describe the purpose of the
meeting. If mailed, the notice shall be deemed to be delivered when deposited in
the United States mail at the Director's business address, with postage thereon
prepaid. If notice is given by telegram, the notice shall be deemed delivered
when the telegram is delivered to the telegraph company. Any time or place fixed
for a special meeting must permit participation in the meeting by means of
telecommunications as authorized below.
Section 3.8 Waiver of Notice of Special Meetings. Notice of a special
meeting need not be given to any Director who signs a waiver of notice either
before or after the meeting. To be effective the waiver shall contain recitals
sufficient to identify beyond reasonable doubt the meeting to which it applies.
The recitals may, but need not necessarily, include reference to the date and
purpose of the meeting and the business transacted thereat. Recital of the
proper date of a meeting shall be conclusive identification of the meeting to
which a waiver of notice applies unless the waiver contains additional recitals
creating a patent ambiguity as to its proper application. The attendance of a
Director at a special Directors meeting shall constitute a waiver of notice of
that meeting, except where the Director attends the meeting for the sole and
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 3.9 Participation by Telecommunications. Any Director may
participate in, and be regarded as present at, any meeting of the Board of
Directors by means of conference telephone or any other means of communication
by which all persons participating in the meeting can hear each other at the
same time.
Section 3.10 Quorum. A majority of Directors in office shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors.
-5-
<PAGE>
Section 3.11 Action. The Board of Directors shall take action Pursuant to
resolutions adopted by the affirmative vote of a majority of the Directors
participating in a meeting at which a quorum is present, or the affirmative vote
of a greater number of Directors where required by the Corporation's Articles of
Incorporation or otherwise by law.
Section 3.12 Action Without Meeting. Any action required or permitted to
be taken by the Board of Directors at an annual, regular, or special meeting may
be taken without a meeting if a consent in writing, setting forth the action
taken, shall be signed by all of the Directors.
Section 3.13 Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting, or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward his dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. The right to dissent shall not apply to a Director
who voted in favor of such action.
Section 3.14 Committees. The Board of Directors may by resolution
designate and delegate authority to an Executive Committee and other committees
with such authority as may be permitted by the Act. Special meetings of any
committee may be called at any time by any Director who is a member of the
committee or by any person entitled to call a special meeting of the full Board
of Directors. Except as otherwise provided in the section, the conduct of all
meetings of any committee, including notice thereof, shall be governed by
Sections 3.6 through 3.13 of this Article.
Section 3.15 Order of Business. The order of business at all meetings of
the Board of Directors shall be:
(1) Determination of a quorum
(2) Reading and disposal of all unapproved minutes
(3) Reports of officers and committees
(4) Unfinished business
(5) New business
(6) Adjournment
Except with respect to a specific rule to the contrary in these Bylaws or
the Act, Roberts Rules of Order shall be used to resolve any procedural dispute
that might arise in a Board of Directors' meeting.
-6-
<PAGE>
ARTICLE 4.
OFFICERS
Section 4.1 In General. The officers of the Corporation shall consist of
a President, a Vice President, a Secretary and a Treasurer and such additional
vice presidents, assistant secretaries, assistant treasurers and other officers
and agents as the Board of Directors deems advisable from time to time. All
officers shall be appointed by the Board of Directors to serve at its pleasure.
Except as may otherwise be provided by law or in the Articles of Incorporation,
any officer may be removed by the Board of Directors at any time, with or
without cause. Any vacancy, however occurring, in any office may be filled by
the Board of Directors for the unexpired term. One person may hold two or more
offices. Each officer shall exercise the authority and perform the duties as may
be set forth in these Bylaws and any additional authority and duties as the
Board of Directors shall determine from time to time.
Section 4.2 President. The President shall be the chief executive officer
of the Corporation and, subject to the authority of the Board of Directors,
shall manage the business and affairs of the Corporation. The President shall
preside at all meetings of the Shareholders and all meetings of the Board of
Directors, and shall see that the resolutions of the Board of Directors are put
into effect. The President shall have full authority to execute on the
Corporation's behalf any and all contracts, agreements, notes, bonds, deeds,
mortgages, certificates, instruments, and other documents except as may be
specifically limited by resolution of the Board of Directors.
Section 4.3 Vice President. The Vice President shall serve under the
direction of the President. In the absence, incapacity, or inability or refusal
of the President to act, the Vice President shall assume the authority and
perform the duties of the President. If the Board of Directors appoints more
than one Vice President, the seniority of the Vice Presidents shall be
determined from their dates of appointment unless the Board of Directors shall
otherwise specify.
Section 4.4 Secretary. Except as otherwise provided by these Bylaws or
determined by the Board of Directors, the Secretary shall serve under the
direction of the President. The Secretary shall attend all meetings of the
Shareholders and the Board of Directors and record the proceedings thereof. The
Secretary shall give, or cause to be given all notices in connection with such
meetings. The Secretary shall be the custodian of the Corporate seal and affix
the seal to any document requiring it.
Section 4.5 Treasurer. Except as otherwise provided by these Bylaws or
determined by the Board of Directors, the Treasurer shall serve under the
direction of the President. The Treasurer shall, under the direction of the
President, keep safe custody of the Corporation's funds
-7-
<PAGE>
and maintain complete and accurate books and records of account. The Treasurer
shall upon request report to the Board of Directors on the financial condition
of the Corporation.
Section 4.6 Assistant Officers. Except as otherwise provided by these
Bylaws or determined by the Board of Directors, the Assistant Secretaries and
Assistant Treasurers, if any, shall serve under the immediate direction of the
Secretary and the Treasurer, respectively, and under the ultimate direction of
the President. The Assistant Officers shall assume the authority and perform the
duties of their respective immediate superior officer as may be necessary in the
absence, incapacity, or inability or refusal of such immediate superior officer
to act. The seniority of Assistant Officers shall be determined from their dates
of appointment unless the Board of Directors shall otherwise specify.
ARTICLE 5.
INDEMNIFICATION
Section 5.1 Scope. Every person who was or is a party to, or is
threatened to be made a party to, or is otherwise involved in, any action, suit,
or proceeding, whether civil, criminal, administrative, or investigative, by
reason of the fact that he or a person of whom he is the legal representative is
or was a Director or Officer of the Corporation or is or was serving at the
request of the Corporation or for its benefit as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust, or other enterprise, shall be indemnified and held harmless to the
fullest extent legally permissible under and pursuant to the Act, against all
expenses, liabilities, and losses (including without limitation attorneys' fees,
judgments, fines, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him in connection therewith. Such right of
indemnification shall be a contract right that may be enforced in any manner
desired by such person. Such right of indemnification shall not be exclusive of
any other right which such Directors, Officers, or representatives may have or
hereafter acquire and, without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any bylaw,
agreement, vote of Shareholders, insurance, provision of law, or otherwise, as
well as their rights under this Article.
Section 5.2 Indemnification Plan. The Board of Directors may from time to
time adopt an Indemnification Plan implementing the rights granted in Section
5.1. This indemnification Plan shall set forth in detail the mechanics of how
the indemnification rights granted in Section 5.1 shall be exercised.
Section 5.3 Insurance. The Board of Directors may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was a
Director or Officer of the Corporation, or is or was serving at the request of
the Corporation as a Director or Officer of another corporation, or as its
representative in a partnership, joint venture, trust, or other enterprise,
against any liability asserted against such person and incurred in any such
capacity or
-8-
<PAGE>
arising out of such status, whether or not the Corporation would have the power
to indemnify such person.
ARTICLE 6.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 6.1 Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 6.2 Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors, and such authority may be
general or confined to specific instances.
Section 6.3 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by the officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 6.4 Deposits. All holds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
ARTICLE 7.
MISCELLANEOUS
Section 7.1 Certificate for Shares. Certificates representing shares of
capital stock of the Corporation shall state upon the face thereof the name of
the person to whom issued, the number of shares, the par value per share and the
fact that the Corporation is organized under the laws of the State of South
Carolina. Each certificate shall be signed by the President or a Vice President
and by the Secretary or an Assistant-Secretary. All certificates for shares
shall be consecutively numbered. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issuance, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon the making of an affidavit by the holder of record of the shares
represented by such certificate setting forth the facts concerning the loss,
theft or mutilation thereof and upon such bond or indemnity to the
-9-
<PAGE>
Corporation as the Board of Directors may prescribe. A new certificate may be
issued without requiring any bond when, in the judgment of the Board of
Directors, it is not imprudent to do so.
Section 7.2 Transfer of Shares. Subject to the provisions of the Act
and to any transfer restrictions binding on the Corporation, transfer of shares
of the Corporation shall be made only on the stock transfer books of the
Corporation by the holder of record thereof or by his agent, attorney-in-fact or
other legal representative, who shall furnish proper evidence of authority to
transfer, upon surrender for cancellation of the certificate for such shares.
The person in whose name shares stand on the stock transfer books of the
Corporation shall be deemed by the Corporation to be the owner thereof for all
purposes.
Section 7.3 Voting of Shares in Other Corporations Owned By The
Corporation. Subject always to the specific directions of the Board of
Directors, any share or shares of stock issued by any other corporation and
owned or controlled by the Corporation may be voted at any shareholders' meeting
of the other corporation by the President of the Corporation if he be present,
or in his absence by any Vice-President of the Corporation who may be present.
Whenever, in the judgment of the President, or, in his absence, of any Vice-
President, it is desirable for the Corporation to execute a proxy or give a
shareholders' consent in respect to any share or shares of stock issued by any
other corporation and owned or controlled by the Corporation, the proxy or
consent shall be executed in the name of the Corporation by the President or one
of the Vice-Presidents of the Corporation without necessity of any authorization
by the Board of Directors. Any person or persons designated in the manner above
stated as the proxy or proxies of the Corporation shall have full right, power
and authority to vote the share or shares of stock issued by the other
corporation.
Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be
established, and may be altered, by resolution of the Board of Directors from
time to time as the Board deems advisable.
Section 7.5 Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the term and conditions as the Board of Directors deems
advisable and as permitted by law.
Section 7.6 Seal. The seal of the Corporation shall be circular in form
and shall have inscribed thereon the name of the Corporation, the year of its
organization, and the words "Corporate Seal, Fabrene Corp."
Section 7.7 Amendment. These Bylaws may be altered, amended, or repealed
and new Bylaws may be adopted by the Directors, subject to the right of the
shareholders to alter, adopt, amend or repeal Bylaws as provided in the Act and
the Corporation's Articles of Incorporation.
-10-
<PAGE>
Section 7.8 Severability. Any provision of these Bylaws, or any
amendment or alteration thereof, which is determined to be in violation of the
Act shall not in any way render any of the remaining provisions invalid.
Section 7.9 References to Gender and Number Terms. In construing
these Bylaws, feminine or neuter pronouns shall be substituted for those
masculine in form and vice versa, and plural terms shall be substituted for
singular and singular for plural in any place in which the context so requires.
Section 7.10 Headings. The Article and Section headings in these
Bylaws are inserted for convenience only and are not part of the Bylaws.
Section 7.11 Inspection of Records by Shareholders. A shareholder is
entitled to inspect and copy, during regular business hours at the Corporation's
principal office, any of the following records of the Corporation, if he gives
the Corporation written notice of his demand at least five (5) business days
before the date on which he wishes to inspect and copy:
(1) its Articles of Incorporation or Restated Articles of Incorporation
and all amendments to them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to them currently in
effect;
(3) resolutions adopted by its Board of Directors creating one or more
class or series of shares, and fixing their relative rights,
preferences, and limitations, if shares issued pursuant to those
resolutions are outstanding;
(4) the minutes of all Shareholders' meetings, and records of all action
taken by Shareholders without a meeting, for the past three years;
(5) all written communications to Shareholders, generally, within the past
three years, including the financial statements furnished for the past
three years;
(6) a list of the names and business addresses of its current Directors
and Officers;
(7) its most recent Annual Report delivered to the Secretary of State; and
(8) all contracts or other written agreements between the Corporation and
any of its Shareholders and all contracts or other written agreements
between two or more of the Shareholders.
A Shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the Corporation, any of the
following records of the corporation
-11-
<PAGE>
if the Shareholder: gives the Corporation written notice of his demand at least
five (5) business days before the date on which he wishes to inspect and copy,
and his demand is made in good faith and for a proper purpose; he describe with
reasonable particularity his purpose and the records he desires to inspect; and
the records are directly connected with his purpose.
(1) excerpts from minutes of any meeting of the Board of Directors,
records of any action of a committee of the Board of Directors while
acting in place of the Board of Directors on behalf of the
Corporation, minutes of any meeting of the Shareholders, and records
of action taken by the Shareholders or Board of Directors without a
meeting to the extent not otherwise subject to inspection under this
section of the Bylaws;
(2) account records of the Corporation; and
(3) the record of Shareholders.
A Shareholder's agent or attorney has the same inspection and copying
rights as the shareholder he represents. The right to copy records under this
section includes, if reasonable, the right to receive copies made by
photographic, xerographic, or other means. The Corporation may impose a
reasonable charge, covering the costs of labor and material, for copies of any
documents provided to the shareholder. The charge may not exceed the estimated
cost of production or reproduction of the records.
-12-
<PAGE>
Exhibit 3.21
State of Delaware
Office of the Secretary of State
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF LIMITED LIABILITY COMPANY OF "FABRENE GROUP L.L.C.", FILED IN THIS
OFFICE ON THE TWENTY-EIGHTH DAY OF OCTOBER, A.D. 1993, AT 9 O'CLOCK A.M.
___________________________________
Edward J. Freel, Secretary of State
Authentication: 8530368
Date: 06-25-97
<PAGE>
CERTIFICATE OF FORMATION
OF
FABRENE GROUP L.L.C.
This Certificate of Formation of Fabrene Group L.L.C. (the "LLC"),
dated October 27, 1993, is being duly executed and filed by James G. Boyd,
as an authorized person to form a limited liability company under the
Delaware Limited Liability Company Act (6 Del. C. (S)18-101, et seq.).
FIRST: The name of the limited liability company formed hereby is
Fabrene Group L.L.C.
SECOND: The Address of the registered office of the LLC in the State
of Delaware is c/o The Prentice-Hall Corporation System, Inc., 32
Loockerman Square, Suite L-100, Dover, County of Kent, Delaware 19901.
THIRD: The name and address of the registered agent for service of
process of the LLC in the State of Delaware is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, County
of Kent, Delaware 19901.
FOURTH: The latest date on which the LLC is to dissolve is September
30, 2023.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation as of the date first above written.
/s/ James G. Boyd
---------------------------------
James G. Boyd
Authorized Person
<PAGE>
Exhibit 3.22
LIMITED LIABILITY COMPANY AGREEMENT
OF
FABRENE GROUP L.L.C.
WHEREAS, October, 1993, Fabrene Corp., a Delaware corporation ("FC"), and
Fabrene, Inc., an Ontario corporation ("FI") (Fabrene and FI are referred to
herein individually as a "Member" and collectively as the "Members"), formed a
limited liability company pursuant to and under the provisions of the Delaware
Limited Liability Company Act by having the Certificate of Formation of Fabrene
Group L.L.C. (the "Company") filed with the Secretary of State of the State of
Delaware; and
WHEREAS, the Members deem it important and in the best interest of the
Company that certain rules regarding the management and operations of the
Company be set forth.
NOW, THEREFORE, in consideration of their mutual promises, the Members
hereby agree as follows:
ARTICLE I. - LIMITED LIABILITY COMPANY AGREEMENT ADOPTION;
PRIORITY OF AUTHORITIES
Section 1.1 Limited Liability Company Agreement Adoption. The Members
agree that this Limited Liability Company Agreement is hereby adopted by the
Company to govern the internal business and affairs of the Company.
Section 1.2 Priority of Authorities. The terms and provisions of this
Limited Liability Company Agreement shall be controlling except to the extent
the terms and provisions hereof are in direct conflict with the Certificate of
Formation of the Company as now in existence and as amended from time to time
(the "Certificate") or the Delaware Limited Liability Company Act as now in
existence and as amended from time to time (the "Act"), in which event the
provisions of the latter document or law shall be controlling.
ARTICLE II. - OFFICES; RESIDENT AGENT
Section 2.1 Offices. The Company's registered office in the State of
Delaware shall be as set forth in the Certificate until changed as provided by
the Act. The Company shall continuously maintain a registered office in the
State of Delaware. The Company may also have such other
<PAGE>
offices and places of business, within or without the State of Delaware, as the
Members may determine from time to time or as the business of the Company may
require.
Section 2.2 Resident Agent. The name and address of the Company's
resident agent in the State of Delaware shall be as set forth in the Certificate
until changed as provided by the Act.
ARTICLE III. - MEETINGS OF THE MEMBERS
Section 3.1 Place. Meetings of the Members may be held anywhere, either
within or without the State of Delaware, as may be determined from time to time
by the Members.
Section 3.2 Date and Place of Annual Meeting. The annual meeting of the
Members shall be held at the place, date and time as may be designated from time
to time by the Members and stated in the notice of the annual meeting or in a
duly executed waiver of notice of the annual meeting.
Section 3.3 Purpose of Annual Meeting. The purpose of the annual meeting
shall be to elect the officers, if any, of the Company and to transact such
other business, without limitation, as may properly come before the annual
meeting.
Section 3.4 Election of the Officers. If any Member so requests, the
election of the officers, if any, shall be by written ballot.
Section 3.5 Special Meetings. Special meetings of the Members for any
purpose or purposes may be called by the Company or authorized officers and
shall be called by the Company or authorized officers whenever Members owning at
least 1/5 of the interests in the Company (as provided in Article V below) to
request in writing. Such request shall state the purpose or purposes of the
special meeting.
Section 3.6 Notice. Not less than five nor more then thirty days before
any annual or special meeting of the Members, written or printed notice stating
the time and place thereof and, if a special meeting, the purpose or purposes
for which such meeting to called, shall be served upon or mailed to each Member
entitled to vote thereat, at the address of such Member as it appears upon the
books of the Company or, if such Member shall have filed with the Company a
written request that notices be mailed to some other address, then to the
address designated in such request.
Section 3.7 Quorum and Voting. Members owning a majority in interest of
the Company present in person or by written proxy shall constitute a quorum.
When a quorum is present, the vote of Members owning at least a majority of the
interests which are present, in person or by proxy, shall decide any election or
question brought before the meeting, unless the election or question is one upon
which, under express provision of law, the Certificate, or this Limited
Liability Company, a
-2-
<PAGE>
different vote in required, in which case such express provision shall govern
and control the decision of such election or question. On all matters on which
they are entitled to vote, Members shall have a vote equal to their interests in
the Company.
Section 3.8 Proxies. At any meeting of the Members, a Member may vote by
proxy executed in writing by the Member or by his duly authorized attorney-in-
fact. Such proxy shall be filed with the Company before or at the time of the
meeting. Unless otherwise provided therein, a proxy shall not be valid more
than three months after the date of its execution.
Section 3.9 Waiver of Notice. Whenever written notice is required to be
given to the Members, a written waiver thereof signed by any Member entitled to
such notice (whether, in the case of notice of a meeting, the written waiver
thereof is signed before or after the meeting) shall be in all respects
tantamount to notice. A Member's attendance in person at any meeting of the
Members shall for all purposes constitute waiver of notice thereof unless the
Member attends the meeting for the sole purpose of objecting to the transaction
of any business thereat because the meeting is not lawfully called or convened
and unless such Member so objects at the beginning of the meeting and does not
otherwise participate therein.
Section 3.10 Consent of Members in Lieu of Meeting. Any action required
to or which may be taken at any annual or special meeting of the Members may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by all of the
Members.
Section 3.11 Participation by Means of Communication Equipment. Any
Member may participate in any annual or special meeting of the Members by means
of conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear and speak to each other. Such
participation shall constitute presence in person at such meeting.
ARTICLE IV. - OFFICERS
Section 4.1 Officers and Election Thereof. The officers of the Company
shall be such officers and assistant officers as the Members may from time to
time deem necessary or advisable. Any number of offices may be held by the same
person. The Members shall choose officers, if any, at their first meeting.
After such meeting, all officers shall be elected by the Members at their annual
meeting. The Members shall also be empowered to fill all vacancies in office
and to remove officers at any time with or without cause. The officers of the
Company shall hold office until their successors are chosen and qualified or
until their earlier resignation or removal.
Section 4.2 Duties and Authority. The officers of the Company, if any,
shall perform such duties and have such powers as the Members designate. An
officer or agent may sign, on behalf of the Company, such deeds, mortgages,
bonds, contracts or other instruments which have been
-3-
<PAGE>
appropriately authorized to be executed by the Members, except in cases where
the signing or execution thereof shall be expressly delegated by the Members,
this Limited Liability Company Agreement or the Act to some other officer or
agent of the Company. In general, an officer or agent shall perform all duties
as may be prescribed by the Members from time to time.
ARTICLE V. - CAPITAL AND CAPITAL ACCOUNTS
Section 5.1 Capital Contributions. FI shall contribute to the capital of
the Company U.S. $3,168,000. FC shall contribute to the capital of the Company
U.S. $32,000.
Section 5.2 Additional Capital Contributions. The Members shall be
obligated to contribute additional funds to the Company at the times and in the
amounts agreed by all of the Members.
Section 5.3 Interests in the Company. Subject to Section 5.5 below, the
amount contributed to the capital of the Company by a Member and not returned to
such Member by the Company divided by the aggregate amount unreturned
contributions to capital of all Members shall be a Member's "interest"
hereunder. Unless otherwise provided or agreed by all the Members, retained
profits of the Company shall be deemed to be amounts contributed to the Company
by the Members for purposes of this Section 6.3.
Section 5.4 Capital Accounts. Capital accounts shall be established and
maintained for each Member in accordance with tax accounting principles and, to
the extent they provide otherwise, with valid regulations issued by the U.S.
Treasury Department under Section 704(b) of the Internal Revenue Code of 1986,
as amended (the "Code").
Section 5.5 Failure to Make Capital Contributions. The interest of a Member
who fails to make any required capital contribution or other payment to the
Company shall be reduced upon failure to make such contribution or payment.
ARTICLE VI. - COMPANY PROFIT AND LOSS
Section 6.1 Division. All income, gain, deductions, credits and losses of
the Company shall be divided among the Members and charged or credited to their
capital accounts in accordance with their interests.
ARTICLE VII. - DISTRIBUTIONS
Section 7.1 Distributions to Members. Distributions may be made to the
Members in cash or other property of the Company; provided, however, that all
such distributions must be pro rata in value (i.e., the distributions may be in
property to some Members and cash to others) in
-4-
<PAGE>
accordance with the Members' interests in the Company. Notwithstanding the
foregoing, the Members may from time to time unanimously declare, and the
Company may distribute, accumulated profits agreed not necessary for the cash
needs of the Company's business.
ARTICLE VIII. - REPORTS, BOOKS AND RECORDS
Section 8.1 Reports. Within ninety days after the end of each calendar
year, copies of the financial statements of the Company shall be furnished to
the Members for such year. All information necessary for inclusion in the income
tax returns of the Members shall be furnished within ninety days after the end
of each calendar year or as soon thereafter as practicable.
Section 8.2 Books and Records. The books and records of the Company shall
be kept at the principal office of the Company or at such other places, within
or without the State of Delaware, as the Members shall from time to time
determine. The following shall be kept at the Company's principal office: a
current list of the full name and last-known business address of each Member;
copies of records that would enable a Member to determine the relative voting
rights of the Members; copies of the Certificate and this Limited Liability
Company Agreement and all amendments thereto, together with executed copies of
any written powers of attorney pursuant to which this Limited Liability Company
Agreement and any certificate and all amendments thereto have been executed;
copies of the Company's federal, state and local income tax returns and reports,
if any, for each year; copies of the Company's financial statements for the
three most recent years; true and full information regarding the status of the
business end financial condition of the Company; and true and full information
regarding the amount of cash and a description and statement of the agreed value
of any other property or services contributed by each Member and which each
Member has agreed to contribute in the future, and the date on which each become
a Member.
Section 8.3 Right of Inspection. Upon written demand and statement of
purpose, any Member of record shall have the right to examine, at any reasonable
time or times for any purpose reasonably related to the Member's Interest as a
Member of the Company, the books and records of account, minutes and records of
the Company and to make copies thereof at such Member's expense. Such inspection
may be made by any agent or attorney of the Member.
ARTICLE IX. - TRANSFERS OF INTERESTS; ADDITIONAL MEMBERS
Section 9.1 Transfers. A Member may assign or transfer its interest in the
Company; however, an assignee or transferee shall not become a Member unless all
of the remaining Members consent in writing to the assignment of transfer and
the assignee or transferee complies with Section 9.4 below. Absent such consent,
an assignee or transferee is entitled to receive only the share of income, gain,
deductions, credits and losses and the return of contributions to which the
assigning or transferring Member would otherwise be entitled.
-5-
<PAGE>
Section 9.2 Additional Members. Additional Members may be admitted to the
Company only upon the written consent of all of the remaining Members and upon
compliance with Section 9.4 below.
Section 9.3 Limitations. Assignments and transfers of interests in the
company shall be subject to, and the assignee or transferee shall acquire the
assigned or transferred Company interest subject to, all of the terms and
provisions of this Limited Liability Company Agreement. An assignment or
transfer of an interest in the Company shall not relieve the assigning or
transferring Member from its duties and obligations to the Company under
Subchapters V and VI of the Act.
Section 9.4 Membership of Assignee, Transferee or Additional Member. No
assignee, transferee or additional Member shall become a member until such
assignee, transferee or additional Member shall have:
(a) become a party to, and adopted all of the terms and conditions of,
this Limited Liability Company Agreement;
(b) if such assignee, transferee or additional Member is a
corporation, partnership (general or limited), trust or limited liability
company, providing satisfactory evidence to counsel for the Company of such
assignee's, transferee's or additional Member's authority to become a
Member under the terms and provisions of this Limited Liability Company
Agreement; and
(c) paid or agreed to pay the costs and expenses incurred by the
Company in connection with such assignee's, transferee's or additional
Member's becoming a Member;
provided, however, that for the purpose of allocating Company income, gain,
deductions, credits and losses, an assignee, transferee or additional Member
shall be treated as having become, and as appearing in the records of the
Company as a Member an such date as the assignment or transfer was consented to
pursuant to Section 9.1 hereof or on such date as the admittance of the
additional Member was consented to pursuant to Section 9.2 hereof.
ARTICLE X. - DISSOLUTION OF THE COMPANY
Section 10.1 Dissolution. The Company shall be dissolved automatically on
the date specified in the Certificate, unless prior thereto all of the Members
agree in writing to dissolve the Company as of an earlier date. Further, the
Company shall be dissolved upon the death, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event which terminates
the continued membership of a Member in the Company unless the business of the
Company is continued by the consent of all the remaining Members within 90 days
following the occurrence of any such event; provided, however, that the Company
may not be continued unless
-6-
<PAGE>
there are at least two remaining Members and provided further that nothing in
this Limited Liability Company Agreement shall impair, restrict or limit the
rights and powers of the Members under the laws of the State of Delaware and any
other jurisdiction in which the Company is doing business to reform and
reconstitute themselves as a limited liability company following the dissolution
of the Company either under provisions identical to those set forth herein or
under any other provisions.
Section 10.2 Trustee. Upon dissolution of the Company, the Members or a
person approved by the Members shall act as "Liquidating Trustee."
Section 10.3 Liquidation. As soon as possible after a dissolution of the
Company becomes effective, the Liquidating Trustee shall wind up the Company's
business and affairs. In this regard:
(a) the Liquidating Trustee shall obtain and furnish an accounting
with respect to all Company accounts and the capital account of each Member
and with respect to the Company's assets and liabilities and its operations
from the date of the last financial statements of the Company to the date
of its liquidation;
(b) to the extent the Liquidating Trustee deems appropriate, all
material, equipment, and real and personal property of the Company of any
kind or nature shall be sold for cash and the proceeds thereof shall be
credited to the Members' capital accounts;
(c) the Liquidating Trustee shall:
(i) pay (or make reasonable provision for payment of ) all of the
Company's debts, liabilities and obligations to its creditors, whether
contingent, conditional or unmatured and otherwise as provided for in
the Act (including Members who may also be creditors); and
(ii) pay (or make reasonable provision for payment of) all
expenses incurred in connection with the dissolution and liquidation
of the Company and distribution of its assets as herein provided;
(d) the Liquidating Trustee shall ascertain the fair market value by
appraisal or other reasonable means of all assets of the Company remaining
unsaid, and each Member's capital account shall be charged or credited, as
the case may be, as if such property had been sold at such fair market
value and the gain or loss realized thereby had been allocated to and among
the Members;
(e) on or as soon as practicable after the effective date of the
dissolution, all remaining cash and all other assets of the Company not
sold pursuant to the preceding subsections of this Section 10.3 shall be
distributed to the Members in proportion to and to
-7-
<PAGE>
the extent of the positive balances in the Members' capital accounts,
provided that the various items distributed to the respective Members shall
be distributed subject to such liens, encumbrances, restrictions,
contracts, limited liability company agreements, obligations, commitments
or undertakings as existed with respect to such items at the time they were
acquired by the Company or were subsequently created or entered into by the
Company and which have not been vacated, satisfied or released;
(f) in lieu of distributing any remaining properties to the Members,
the Liquidating Trustee, at his option, may sell all of such properties for
cash and, after satisfying the debts, liabilities and obligations of the
Company, distribute such cash to the Members in the same proportions set
forth in subsection (a) above; and
(g) upon dissolution of the Company and until the filing of a
certificate of cancellation, the Liquidating Trustee may, in the name of,
and for and on behalf of, the Company, prosecute and defend suits, whether
civil, criminal or administrative, gradually settle and close the Company's
business, dispose of and convey the Company's property, discharge or make
reasonable provision for the Company's liabilities, and distribute to the
Members any remaining assets of the Company as provided for herein, all
without affecting the liability of Members and without imposing liability
on the Liquidating Trustee.
ARTICLE XI. - INCOME TAX AND ELECTIONS
Section 11.1 Accounting Method. The accounting method of the Company shall
be the accrual basis and the Company's books of account shall utilize this
method for income tax reporting purposes. The Members shall cause the Company to
elect the calendar year as its taxable year.
Section 11.2 Restriction. No election shall be made by the Company to be
excluded from the application of the provisions of Subchapter K of the Code.
Section 11.3 Other Elections. The Members shall have the right to make or
not to make, in good faith, such other elections as are authorized or permitted
by any law or regulation for income tax purposes.
Section 11.4 Tax Matters Partner. FI shall be the "Tax Matters Partner," as
such term is defined in the Code, for the Company.
-8-
<PAGE>
ARTICLE XII.
INDEMNIFICATION OF MEMBERS
OFFICERS, EMPLOYEES AND AGENTS
Section 12.1 Actions by Third Persons. To the fullest extent
permitted by law, the Company shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Company, by reason
of the fact that such person is or was a Member, a director of a Member, or an
officer of the Company or a Member, or is or was serving at the request of the
Company as a director, officer, employee or agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise
against expenses (including but not limited to attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
Section 12.2 Actions by the Company. To the fullest extent permitted
by law, the Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a Member, a director of a Member or an
officer of the Company or a Member, or is or was serving at the request of the
Company as a director, officer, employee or agent of another limited liability
company, corporation, partnership, joint ventures trust or other enterprise
against expenses (including but not limited to attorney's fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Section 12.3 Determination. An indemnification under Section 12.1 or
12.2 of this Article unless ordered by a court) shall be made by the Company
only as authorized in the specific case upon a determination that
indemnification of the Member, officer or other person is proper in the
-9-
<PAGE>
circumstances because he has met the applicable standard of conduct set forth in
Section 12.1 or 12.2 of this Article. Such determination shall be made:
(i) by the Members by a majority vote of a quorum consisting of
Members who were not parties to such action, suit or proceeding; or
(ii) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested Members so directs, by independent legal
counsel in a written opinion.
Section 12.4 Expense Advances. Expenses (including attorneys' fees)
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such party to repay such amount if it shall ultimately be
determined that such party is not entitled to be indemnified by the Company as
authorized in this Article. Such expenses (including attorneys' fees) incurred
by other indemnified parties may be so paid upon such terms and conditions, if
any, as the Members deem appropriate.
Section 12.5 Insurance. The Company may, to the fullest extent permitted
by law, but only to such extent as may be determined by the Members, purchase
and maintain insurance on behalf of any person who is or was a Member, a
director of a Member, or an officer, employee or agent of the Company or a
Member or is or was serving at the request of the Company as a director,
officer, employee or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Company would have the power to indemnify
him against such liability under this Article.
Section 12.6 Continuation of Indemnification. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a Member, director of a Member, or an officer of the
Company or a Member and shall inure to the benefit of the heirs, executors and
administrators of such a person.
ARTICLE XIII. - AMENDMENTS
Section 13.1 Amendments. Any Member may propose an amendment or
amendments to the Certificate at this Limited Liability Company Agreement. No
amendment shall become effective unless approved in writing by Members owning a
majority in interest in the Company unless such amendment would make a change to
the percentage approval requirements for an action as set forth in the
Certificate, this Limited Liability Company Agreement or the Act in which case
such amendment shall become effective only if approved in writing by Members
having that percentage
-10-
<PAGE>
of interest required for approval of such action; provided, however, that no
amendment to Sections 5.l and 5.3 hereof shall be effective unless approved by
all of the Members.
ARTICLE XIV. - GENERAL PROVISIONS
Section 14.1 Entire Amendment. This Limited Liability Company Agreement
and the Certificate embody the entire understanding and agreement among the
Members concerning the Company, and supersede any and all prior negotiations,
understandings or agreements in regard thereto.
Section 14.2 Counterparts. This Limited Liability Company Agreement may
be executed in multiple counterpart copies, each of which shall be considered an
original and all of which constitute one and the same instrument.
Section 14.3 Choice of Law. This Limited Liability Company Agreement
shall be construed and interpreted according to the laws of the State of
Delaware.
Section 14.4 Binding Effect. This Limited Liability Company Agreement
and all of the terms and provisions hereof shall be binding upon and shall inure
to the benefit of the Members and their respective heirs, executors,
administrators, trustees, successors and assigns.
Section 14.5 Gender and Number. Whenever the context requires, the
gender of all words used herein shall include the masculine, feminine and neuter
and the number of all words shall include the singular and plural thereof.
Section 14.6 Reimbursement of Officers and Members. The officers of the
Company, if any, and Members shall receive reimbursement for expenses reasonably
incurred in the performance of their duties.
Section 14.7 Resignations. The officers of the Company, if any, may
resign by so stating at any meeting of the Members or by giving written notice
to the Members. Such resignation shall be effective at the prospective time
specified therein or, if no such time is stated therein, upon receipt. Unless
otherwise specified in the notice of resignation, no acceptance of such
resignation shall be necessary to make it effective.
Section 14.8 Members; Limited Liability Company Agreement. As used
herein, the term "Member" or "Members" shall include all assignees and
transferees of interests who are admitted as Members or persons who become
Members under the provisions of Article IX hereof. As used herein, the term
"Limited Liability Company Agreement" shall include this Limited Liability
Company Agreement as it may be amended from time to time.
-11-
<PAGE>
Section 14.9 Headings. All headings and other titles and captions used
in this Limited Liability Company Agreement are for convenience only and shall
not be considered in construing or interpreting any provision of this Limited
Liability Company Agreement.
UNANIMOUSLY ADOPTED by the Members of the Company on this 29th day of
October, 1993.
FABRENE CORP.
By: /s/ JAMES G. BOYD
--------------------------------
President
FABRENE, INC.
By: /s/ JERRY ZUCKER
--------------------------------
President
-12-
<PAGE>
Exhibit 3.23
FORM 4
LETTERS PATENT
COMPANIES ACT, R.S.P.E.I. 1988, CAP. C-14, S.4
LETTERS PATENT
INCORPORATING
FABRENE GROUP, INC.
DATED May 10, 1996
BY THE HONOURABLE Alan G. Buchanan
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, the Companies Act, R.S.P.E.I. 1988, Cap. C-14, provides that the
Minister may, by letters patent, grant a charter to one or more persons who
apply therefor, constituting that person and others who may become shareholders
in the company thereby created, a body corporate and politic for any purposes or
objects to which the legislative authority of the Legislature extends, except
trust companies and insurance companies.
AND WHEREAS an application has been filed to incorporate a company pursuant
to the provisions of Part I of the Companies Act, under the name of
FABRENE GROUP, INC.
THEREFORE, the Minister of Provincial Affairs and Attorney General under
the authority of Part I of the Companies Act, by these presents, constitutes the
applications and such persons as may hereafter become shareholders in the
company hereby created, a body corporate and politic under the above name, with
all the rights and powers conferred by the said Act, pursuant to the provisions
of the application which is attached hereto and forms part hereof.
DATED AT Charlottetown, Prince Edward Island
the 10th day of May, 1996
/s/ Alan G. Buchanan
--------------------------------------------
MINISTER OF PROVINCIAL AFFAIRS
AND ATTORNEY GENERAL
<PAGE>
FORM 1
APPLICATION FOR INCORPORATION
COMPANIES ACT, R.S.P.E.I. 1988, CAP. C-14, S.7(1)
TO: The Honourable The Minister of Provincial Affairs and Attorney General
The undersigned applicants are desirous of obtaining letters patent under the
provisions of the Prince Edward Island Companies Act constituting your
applicants and such others as may become shareholders in the company thereby
created, a body corporate and politic, as follows:
1. Applicants: James C. Travers Lawyer
Stewart McKelvey (occupation)
Stirling Scales
Barristers & Solicitors
P.O. Box 2140
Charlottetown, P.E.I.
C1A 8B9
2. Each of your applicants is of the full age of eighteen years.
3. The corporate name shall be: FABRENE GROUP, INC.
4. The company shall be a private company.
-------------------
(public or private)
5. The restrictions if any on share transfers are set out in Schedule "A".
6. The purposes for which incorporation is sought by the applicants are set
out in Schedule "A" attached hereto.
7. The registered office address shall be:
c/o 65 Grafton Street, Charlottetown
(P.O. Box 2140), P.E.I. C1A 8B9
8. The proposed amount of capital stock of the company shall be not less than
$1.00 and shall consist of: an unlimited number of Common shares having no
par value.
The capital of the company shall be at least equal to the sum of the
aggregate par value of all issued shares having par value, plus (Check box
A or B as applicable)
(A) [_] _____________________ dollars (the blank space being filled in
with some number representing one dollar or more) in respect to
every issued share without par value.
<PAGE>
OR
(B) [_] the aggregate amount of consideration received by the company
for the issuance of shares without par value
plus such amounts as, from time to time, by bylaw of the
company, may be transferred thereto.
9. First or Peter C. Bourgeois Businessman
Provisional -------------------- -------------------
director (occupation)
(attach list 1544 Ifield Road
if more than --------------------
3)
Mississauga, Ont. L5H 3W1
-------------------- -------------------
James G. Boyd Businessman
-------------------- -------------------
(occupation)
10 Legare Street
Charleston, South 29401
-------------------- -------------------
Carolina, USA
-------------
10. Beneficial PGI Polymer, Inc. Number & Type
owners of -------------------- of Shares
shares (attach
list if more 4838 Jenkins Avenue 1,000 Common
than 3) -------------------- -------------------
North Charleston, 29406
------------------- -------------------
South Carolina, USA (postal code)
-------------------
11. We request the provisions set out in Schedule "B" to be embodied in the
letters patent.
DATED at Charlottetown, in the County of Queens, in the Province of Prince
Edward Island, the 10th day of May, 1996.
SIGNATURE OF WITNESSES SIGNATURE OF APPLICANTS
_____________________________ /s/ James Travers
--------------------------------
(This application must be filed in duplicate)
<PAGE>
FORM 1
SCHEDULE "A"
FABRENE GROUP, INC.
- --------------------------------------------------------------------------------
(Company Name)
RESTRICTIONS ON SHARE TRANSFER
(a) No share or shares of the capital stock shall be transferred to a person
without previous consent to the directors of the Company evidenced by a
resolution passed at a meeting of the directors or by the consent in
writing of the majority of the directors of the Company.
(b) The directors shall have unfettered discretion to withhold consent for any
transfer, but shall not withhold if the transfer shall be in due course of
descent or distribution to the person representative or legatees or next of
kin of a deceased shareholder.
OBJECTS AND PURPOSES
(a) To purchase or otherwise acquire and hold, lease, let on hire and mortgage,
pledge, sell or otherwise dispose of or otherwise deal with real and
personal property and rights of all kinds and, in particular, lands,
buildings, hereditaments, business or industrial concerns and undertakings,
mortgages, charges, contracts, concessions, franchises, annuities, patents,
licenses, securities, policies, book debts and any interest in real or
personal property and any claims against such property or against any
person, firm or corporation and privileges and chooses in action of all
kinds.
(b) To invest in shares, stocks, bonds, debentures, and other securities and
other evidences of indebtedness and obligations issued or guaranteed by any
corporation, company, chartered bank, association, partnership, syndicate,
entity, person or governmental, municipal or public authority, domestic or
foreign, and evidences of any interest in respect of any such shares,
stocks, bonds, debentures, and other securities and other evidences of
indebtedness and obligations and to lend money without security or upon the
security of real or personal property and to change, alter or realize upon
any investments and to reinvest any moneys which may at any time be
available for that purpose.
(c) To acquire by original subscription, tender, purchase, exchange or
otherwise and to hold either as principal or agent and absolutely as owner
or by way of collateral security and to hypothecate any such shares,
stocks, bonds, debentures and other securities and other evidences of
indebtedness and obligations and evidences of any interest
<PAGE>
in respect of any such shares, stocks, bonds, debentures and other
securities and other evidences of indebtedness and obligations and while
the owner or holder thereof to exercise all rights, powers and privileges
of ownership including all voting rights (if any) with respect thereto.
(d) To promote, organize, manage or develop or to assist in the promotion,
organization, management or development of any corporation, company,
syndicate, firm, partnership, enterprise or undertaking, or to take over,
manage and dispose of in any manner whatsoever any business or undertaking
in which the company may be interested or in the securities of which it may
have invested its funds or with which it may have business relations.
(e) To employ experts to investigate and examine into the condition, prospects,
value, character and circumstances of any business, concern or undertaking
and generally of any assets, property or rights.
(f) To procure capital, credit, or other assistance for establishing, extending
or reorganizing any enterprise or industry carried on or intended to be
carried on by any person, firm, corporation or company.
(g) To purchase or otherwise acquire and undertake all or any of the assets,
business, property, goodwill, franchises, privileges, contracts, rights,
obligations and liabilities of any company, firm, society, partnership or
person carrying on any business which the Company is authorized to carry on
or possessed of property suitable for the purposes of the company or of any
company in which the company holds shares, bonds, debenture and obligations
and to pay for the same in cash or in shares or securities of the company
or partly in cash and partly in shares or securities of the company or any
other consideration, and to carry on the business of any such company,
firm, society, partnership, or person whose assets are so acquired.
(h) To guarantee the contracts or obligations of or otherwise assist any other
companies, society, firm or person and to mortgage, pledge, hypothecate or
otherwise charge the whole or any part of the property of the company in
connection with such guarantee or assistance.
(i) To do all such other acts or things as are incidental or conducive to the
attainment of the above objects or any of them.
(j) To have and exercise all and every the power set forth in Section 15 of the
Companies Act, R.S.P.E.I. 1988, Chapter C-14.
<PAGE>
(k) In connection with the foregoing, to have and exercise all the rights,
powers, authorities and privileges that a private individual might or could
possess or enjoy.
<PAGE>
FORM 1
SCHEDULE "B"
FABRENE GROUP, INC.
- --------------------------------------------------------------------------------
(Company Name)
ADDITIONAL PROVISIONS TO BE EMBODIED IN THE LETTERS PATENT
None.
<PAGE>
FORM 2
COMPANIES ACT, R.S.P.E.I. 1988, CAP. C-14, S.9(2)
CANADA
PROVINCE OF
PRINCE EDWARD ISLAND
IN THE MATTER of the Application for
Letters Patent, under the provisions of
the Companies Act, R.S.P.E.I. 1988, Cap.
C-14, under the name FABRENE GROUP, INC.
AFFIDAVIT
I, James C. Travers of Charlottetown, in the County of Queens, Province of
Prince Edward Island,
MAKE OATH AND SAY AS FOLLOWS:
1. THAT I am one of the applicants named in the annexed application and have a
full knowledge of the facts set out in the said application.
2. THAT the statements and allegations contained in the annexed application
are true and correct according to the best of my knowledge, information and
belief.
3. THAT I am advised and verily believe that the name FABRENE GROUP, INC. is
not the name of any other known corporation or association, incorporated or
unincorporated, or of any syndicate or partnership or of any individual or
any name under which any known business is being carried on or so nearly
resembling the same as to be liable to be confused therewith, or otherwise
on public grounds objectionable.
SWORN TO before me at the City of )
Charlottetown in Queens County, )
Province of Prince Edward Island, )
this 10th day of May, 1996. )
)
) /s/ James C. Travers
) -----------------------------
___________________________________)
A COMMISSIONER FOR TAKING
AFFIDAVITS IN THE SUPREME COURT
<PAGE>
FORM 3
ATTORNEY'S STATEMENT
COMPANIES ACT, R.S.P.E.I. 1988, CAP. C-14, S.4
RE: Application for Incorporation of
FABRENE GROUP, INC.
I, James C. Travers of Charlottetown, in the County of Queens, Province of
Prince Edward Island, a practicing attorney in the Province, certify that I have
examined the application for incorporation of FABRENE GROUP, INC. and am of the
opinion that it complies with the requirements of the Companies Act, R.S.P.E.I.
1988, Cap. C-14.
May 10, 1996 /s/ James C. Travers
- -------------------------------- ------------------------------
Date Signature
<PAGE>
Exhibit 3.24
FABRENE GROUP, INC.
-------------------
BY-LAW NO. 1
being a by-law to regulate the affairs
of the Company
ARTICLE NO. I
OFFICES
-------
The registered office of the Company shall be located at the City of
Charlottetown in Queens County in the Province of Prince Edward Island. The
Company may also have an office or offices at such other place or places as the
Board of Directors may, from time to time, determine or the business of the
Company may require.
ARTICLE NO. II
MEETINGS OF SHAREHOLDERS
------------------------
Annual
SECTION 1. The annual meeting of the shareholders of the Company shall be held
at the head office of the Company or such other place within the Province of
Prince Edward Island as the Directors may determine on such day in each year as
the Directors or the President shall, from time to time, determine for the
purpose of electing directors, appointing auditors for the ensuing year and for
the transaction of all such other business as may properly be brought before the
meeting.
Special General
SECTION 2. Special general meetings of the shareholders of the Company may be
called by the shareholders under and pursuant to the provisions of the Companies
Act in that behalf or by order of the President, or a Vice-President or by
resolution of the Board of Directors and, subject to the provisions of the
Companies Act, Letters Patent or Supplementary Letters Patent issued to the
Company, any such meeting shall be held at such place and at such time as shall
be fixed by the President, such Vice-President or the Board of Directors.
Notice
SECTION 3. Notice of any meeting of the shareholders of the Company shall state
the time and place of the meeting and the general business to be transacted
thereat and shall be delivered, mailed, telegraphed, cabled, telexed or
otherwise communicated by electronic means that produces a written copy at least
forty-eight hours prior to the date fixed for the holding of such meeting to
each shareholder of record on the books of the Company at the close of business
on the day such notice is given, at the last address of such shareholder
appearing on the books of the Company.
<PAGE>
Waiver of Notice
Any meeting of the shareholders of the Company may be held without
notice to transact any business whatsoever if all the shareholders by an
instrument or instruments in writing (whether signed before, at or after the
meeting) waive all notice of such meeting and of the business transacted or to
be transacted thereat.
The Company may accept and act upon the written waiver of notice of
any meeting of the shareholders and of the business transacted or to be
transacted at any meeting, or any irregularity in or insufficiency of any such
notice, and any such waiver signed by a shareholder or the duly appointed proxy
of any such shareholder (whether signed before, at or after the meeting) shall
be as effective as due notice of such meeting to such shareholder.
The accidental omission to give notice of any meeting or the non-
receipt of such notice by a shareholder or shareholders shall not invalidate any
resolution passed or business done at any such meeting.
Quorum
SECTION 4. Two shareholders present in person, representing in person or by
proxy a majority of the issued and outstanding shares of the capital stock of
the Company entitled to vote shall constitute a quorum for the transaction of
business at any meeting of the shareholders of the Company. In the absence of a
quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or by proxy and entitled
to vote thereat may adjourn such meeting from time to time and if a quorum be
represented at any such adjourned meeting any business can be transacted thereat
which could have been transacted at the meeting as originally called.
Where the Company has only one shareholder or only one holder of any
class or series of shares, the shareholder present in person or duly
represented, constitutes a meeting.
Vote and Proxy
SECTION 5. Each shareholder may vote at any meeting either in person or by proxy
and shall be entitled to one vote for each share of the capital stock of the
Company then conferring voting rights standing in his or her name on the books
of the Company. A company or corporation entitled to vote may do so by any
person authorized to act as its representative for such purpose.
-2-
<PAGE>
Joint Registered Holders
Where there are joint registered holders of any share or shares, any
one of such holders may vote at any meeting either personally or by proxy in
respect of such share or shares as if such holder were solely entitled thereto,
and if more than one of such holders be present at any meeting personally or by
proxy that one of the said holders so present whose name stands first in the
books of the Company or before the other or others in the books of the Company
in respect of such share or shares shall alone be entitled to vote in respect
thereof. Several executors or administrators of a deceased shareholder in whose
name any share or shares stand on the books of the Company shall for the
purposes of this paragraph be deemed joint holders thereof.
A person may be designated as proxy for a shareholder, notwithstanding
that such person is not a shareholder of the Company.
ARTICLE NO. III
DIRECTORS
---------
SECTION 1. The affairs of the Company shall be managed by a Board of a minimum
of One (1) Director and a maximum of Seven (7) Directors, as shall be determined
annually by the shareholders.
Election
SECTION 2. Such Board shall be elected, save as hereinafter provided, by the
shareholders at the annual meeting of the Company (or, in default of election at
such meeting, then at a special general meeting called for such purpose) and
shall hold office (subject to the provisions of Section 3 of this Article) until
the next annual meeting and/or until their successors are elected.
Ballot
Such election need not be by ballot unless demanded.
SECTION 3. The shareholders may at any time and from time to time by the
affirmative vote of the holders of three-fifths in number of shares of the
capital stock of the Company then conferring voting rights present in person or
represented by proxy at a special general meeting called for the purpose, remove
from office all or any of the Directors then in office and may elect a new
Director or Directors to fill the vacancy or vacancies caused by such removal.
SECTION 4. In the event of any vacancy in the Board of Directors occurring by
reason of the death or resignation of any Director or by reason of any increase
in the number of the Board of Directors under the provisions of the Companies
Act or by reason of any other cause except removal by the shareholders are
provided in Section 3 of this Article, the Directors then in office, provided
that they constitute a quorum, shall have power by resolution to fill the
vacancy by appointment of a Director to hold office until the next succeeding
annual meeting of shareholders and/or until his successor shall have been
elected or appointed.
-3-
<PAGE>
Quorum
SECTION 5. A majority of the Directors then in office shall form a quorum for
the transaction of business at any meeting of the Board of Directors. Where the
Company has only one Director, the Director present in person, constitutes a
meeting.
Vote
A majority vote of the Directors present shall carry and in the case
of an equality of votes the presiding officer shall have the casting vote in
addition to his ordinary vote.
Meetings
SECTION 6. Meetings of the Board of Directors may be called by order of the
President or a Vice-President at such time and place within the Province of
Prince Edward Island or elsewhere as the President or Vice-President may
determine.
Notice
SECTION 7. Notice of the holding of any meeting of the Board of Directors shall
be given by telephone, telegraph, cable, delivery or otherwise communicated by
electronic means that produces a written copy at least twenty-four (24) hours
prior to time fixed for such meeting, provided, however, that no notice need be
given to any Director personally present at any meeting and that a written
waiver of notice of any meeting or of the purposes of the meeting (whether
signed before, at or after the meeting) shall be effective as due notice of that
meeting. No notice need be given if there is only one Director of the Company.
At the first meeting of the Board of Directors after election at the annual
meeting or at any meetings at which a Director or Directors has or have been
elected to fill a vacancy or vacancies on the Board, no notice of such meeting
shall be necessary to the newly elected Director or Directors, as the case may
be, in order to legally constitute the meeting.
Dividends
SECTION 8. The Board of Directors may from time to time declare and provide for
the payment of dividends out of the profits or surplus funds of the company,
provided, however, that no dividend shall be declared when the Company is
insolvent or which renders the Company insolvent or which will impair the
capital of the Company.
Remuneration
SECTION 9. The Board of Directors shall have power by resolution to fix the
salary and remuneration of any and all officers of the Company and shall have
powers to fix and provide for the remuneration of the Directors from time to
time.
Protection of Directors and Officers
SECTION 10. No director or officer of the Company shall be liable for the acts,
receipts, neglects or defaults of any other director or officer, or for joining
in any receipts or other act for conformity, or for any loss or expense
happening to the Company through the insufficiency or deficiency of title to any
property acquired by the order of the Board for or on behalf of the Company, or
for the insufficiency or deficiency of any security in or upon which any of the
moneys arising from the bankruptcy, insolvency or tortious act of any person
with whom any loss occasioned by any error of judgment or oversight on his part,
or for any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his office or in relation thereto unless the same
shall happen through his own dishonesty.
-4-
<PAGE>
Indemnity of Directors and Officers
SECTION 11. Every director or officer of the Company and his heirs, executors
and administrators and estate and effects respectively shall, from time to time,
and at all times, be indemnified and saved harmless out of the funds of the
Company, from and against:
(a) All costs, charges and expenses whatsoever which such director or officer
sustains or incurs in or about any action, suit or proceeding which is
brought, commenced or prosecuted against him, for or in respect of any act,
deed, matter or thing whatsoever, made, done or permitted by him, in or
about the execution of the duties of his office.
(b) All other costs, charges and expenses which he sustains or incurs in or
about or in relation to the affairs thereof except such costs, charges or
expenses as are occasioned by his own willful neglect or default.
ARTICLE IV
OFFICERS
--------
President and Vice-President
SECTION 1. At the first meeting of the Board of Directors after their election,
the Directors shall elect from amongst themselves a President and, if deemed
advisable, one or more Vice-Presidents who shall hold office until their
respective successors are elected. The Board of Directors may from time to time
remove all or any of such officers.
Other Officers
SECTION 2. The Board of Directors shall appoint a Secretary and a Treasurer and
may appoint one or more Assistant-Secretaries and/or Assistant-Treasurers and a
General Manager and/or such other officers, agents or attorneys as may be
desired or may combine any of the offices and may remove all or any of such
officers, agents or attorneys from time to time. All officers so appointed
shall, subject to any contract of employment, hold office during the pleasure of
the Board. No such officer, agent or attorney appointed by the Board of
Directors need be a shareholder of the Company.
SECTION 3. Any two offices (except the office of President and Vice-President)
may be held by the same person.
Duties of President
SECTION 4. The President shall, subject to the control of the Board of
Directors, have the general charge and control of the business and affairs of
the Company and of the work and management of the property thereof and may make
and enter into all contracts necessary or proper for the transaction of the
business of the Company.
-5-
<PAGE>
Duties of Vice-President
SECTION 5. The Vice-President, or, if there be more than one Vice-President, the
Vice-President designated by the Board of Directors for that purpose, shall, in
the absence or inability to act of the President, perform all the duties and
have all the authority vested in the President by the by-laws of the Company and
the Companies Act.
Presiding Officer
SECTION 6. The President shall preside at all meetings of the shareholders and
of the Board of Directors of the Company. In the absence of the President from
any such meeting, the Vice-President (or, if there be more than one Vice-
President present, the Vice-President designated by the meeting then being held)
shall preside thereat. In the absence of the President and all Vice-Presidents
from any such meeting a Director designated by the meeting shall president
thereat.
Duties of Secretary
SECTION 7. The Secretary shall be custodian of the Seal of the Company and
shall, except as the Directors may otherwise determine, have charge of all the
books and records of the Company; he shall, under the direction of the officers
or the Board of Directors as in this by-law provided, issue all notices and call
all meetings of the shareholders and of the Board of Directors; he shall attend
all such meetings; and he shall also keep or cause to be kept a set of books
wherein shall be recorded:
Books
(a) a copy of the Letters Patent and of any Supplementary Letters Patent issued
to the Company and of all by-laws of the Company;
(b) the names, alphabetically arranged, of all persons who are and have been
shareholders of the Company;
(c) the address and calling of every such person, while such a shareholder, as
far as can be ascertained;
(d) the names, addresses and calling of all persons who are or have been
Directors of the Company, with the several dates at which each became or
ceased to be such Director;
(e) the number of shares of each class held by each shareholder;
(f) the amounts paid in and remaining unpaid, respectively, on the shares of
each shareholder.
The Secretary shall also attend to such other duties as may be assigned to him
by the Board of Directors from time to time.
Duties of Treasurer
SECTION 8. The Treasurer shall, except as the Directors may otherwise determine,
have charge of all moneys and securities of the Company and shall keep full and
accurate accounts of all receipts and disbursements and shall attend to such
other duties as may be assigned to him by the Board of Directors from time to
time.
-6-
<PAGE>
Duties of other Officers
SECTION 9. All other officers of the Company shall perform such duties as are
incident to their respective offices, and such other duties as shall from time
to time be assigned to them by the President or the Board of Directors.
ARTICLE NO. V
EXECUTION OF DOCUMENTS
----------------------
Execution of Cheques
SECTION 1. All cheques, bills, notes, acceptances and orders from the payment of
money to be signed, drawn, accepted or endorsed by or on behalf of the Company,
shall be signed, drawn, accepted or endorsed by such person or persons and in
such manner as the Board of Directors may from time to time by resolution
provide.
Documents Under Seal
SECTION 2. All contracts, deeds and other documents and instruments to which the
Seal of the Company must be affixed may be signed by or on behalf of the Company
by the President or a Vice-President and by the Secretary or the Treasurer, or
an Assistant-Secretary or an Assistant-Treasurer (or, in the absence or
inability to act of all of these officers, by a Director), or by any person or
persons that the Board of Directors may from time to time designate, and, when
so signed and sealed with the Seal of the Company and delivered, shall be
received as the act of the Company.
SECTION 3. Copies of by-laws, resolutions or other proceedings of the Board of
Directors or shareholders of the Company may be certified under the Corporate
Seal of the Company by the Secretary or an Assistant-Secretary or by any other
officer of the Company appointed to perform this duty by the Board of Directors.
Other Documents
SECTION 4. All other contracts, agreements, engagements or instruments may be
signed by or on behalf of the Company by such officer, Director, agent or
attorney as the Board of Directors may from time to time by resolution appoint
to perform such duties.
ARTICLE NO. VI
SHARES
------
Allotment
SECTION 1. Shares in the capital stock of the Company not allotted by the
Letters Patent or any Supplementary Letters Patent, shall be under control of
the Board of Directors who may allot or otherwise dispose of the same at such
time, on such terms and conditions and to such person or class of persons as the
Directors may from time to time by resolution determine.
-7-
<PAGE>
Replacement of Share Certificates
SECTION 2. If any certificate be worn out or defaced upon surrender thereof, the
Board of Directors may order the same to be cancelled, and upon the fulfillment
of such conditions as the Board of Directors may determine, may issue a new
certificate in lieu thereof.
If any certificate be lost or destroyed, the Board of Directors, upon
the loss or destruction being established to their satisfaction, and upon such
indemnity being given to the Company as the Board shall require and upon the
fulfillment of such other conditions as the Board may determine, may issue a new
certificate in lieu thereof.
ARTICLE NO. VII
FISCAL YEAR
-----------
The financial year of the Company shall terminate on such day in each year as
the Board of Directors may from time to time by resolution determine.
ENACTED by the Board of Directors this 10th day of May, 1996.
/S/ JERRY ZUCKER
---------------------------------------------
President
/S/ PETER C. BOURGEOIS
---------------------------------------------
Secretary
CONFIRMED by the Shareholders in accordance with the Companies Act (P.E.I.) this
10th day of May, 1996.
/S/ PETER C. BOURGEOIS
---------------------------------------------
Secretary
-8-
<PAGE>
FABRENE GROUP, INC.
-------------------
BY-LAW NO. 2
being a General Borrowing By-Law
1. The Directors may and they are hereby authorized from time to time,
to:
(a) Borrower money upon the credit of the Company;
(b) Limit or increase the amount to be borrowed;
(c) Issue bonds, debentures, debenture stock or other securities of the
Company;
(d) Pledge or sell such bonds, debentures, debenture stock or other
securities for such sums and at such prices as may be deemed
expedient;
(e) Mortgage, hypothecate, charge or pledge all or any of the real or
personal property, undertaking and rights of the Company, to secure
any such bonds, debentures, debenture stock or any other liability of
the Company;
2. The Directors may from time to time by resolution delegate to the
President and the Secretary or to any two officers of the Company (including the
President or the Secretary) all or any of the powers conferred on the Directors
through paragraph 1 of this by-law to the full extent thereof or such lesser
extent as the Directors may in any such resolution provide.
3. The powers hereby conferred shall be deemed to be in supplement of and
not in substitution for any powers to borrow money for the purposes of the
Company possessed by its Directors or officers independently of a borrowing by-
law.
ENACTED by the Board of Directors this 10th day of May, 1996.
/S/ JERRY ZUCKER
---------------------------------------------
President
/S/ PETER C. BOURGEOIS
---------------------------------------------
Secretary
CONFIRMED by the Shareholders in accordance with the Companies Act
(P.E.I.) this 10th day of May, 1996.
/S/ PETER C. BOURGEOIS
---------------------------------------------
Secretary
-9-
<PAGE>
FABRENE GROUP, INC.
-------------------
BY-LAW NO. 3
being a General Banking By-Law
(a) The Directors may from time to time borrow money from any Bank (herein
called the "Bank") upon the credit of the Company on cheques, promissory notes,
bills of exchange or otherwise in such amounts and subject to such terms as may
be considered advisable; and may assign, transfer, convey, hypothecate,
mortgage, charge or pledge to or in favour of the Bank any property of the
Company, real or personal, moveable or immoveable, present or future, including
book debts, unpaid calls, rights, powers, undertaking, franchises and the
Company's own debentures, as security for the fulfillment of any liabilities or
obligations, present or future, of the Company to the Bank and may empower the
Bank or any person or persons to sell by public or private sale, assign,
transfer or convey from time to time any such property; and may sign, make,
draw, accept, execute and deliver on behalf of and in the name of the Company
all such cheques, promissory notes, bills of exchange, drafts, acceptances,
orders for the payment of money, warehouse receipts, bills of lading, agreements
to give security, assignments, transfers, conveyances, hypothecs, mortgages,
pledges, securities and other agreements, documents, and instruments as may be
necessary or useful in connection with the borrowing of money by any other
banking business of the Company.
(b) The Directors may authorize any one or more Directors, officers,
employees or agents of the Company to exercise any of the rights, powers and
authorities conferred by this By-law upon the Directors.
(c) The borrowing of money from the Bank from time to time heretofore under
the authority of the Directors of the Company and the giving of security
therefore are hereby ratified and confirmed.
(d) This By-law shall continue in force as between the Company and the Bank
until a By-law repealing this By-law shall have been validly passed and
confirmed and a copy thereof, duly certified under the seal of the Company,
shall have been delivered to the Bank and receipt thereof acknowledged by the
Bank.
ENACTED by the Board of Directors this 10th day of May, 1996.
/S/ JERRY ZUCKER
-------------------------------------------
President
/S/ PETER C. BOURGEOIS
-------------------------------------------
Secretary
CONFIRMED by the Shareholders in accordance with the Companies Act
(P.E.I.) this 10th day of May, 1996.
/S/ PETER C. BOURGEOIS
-------------------------------------------
Secretary
-10-
<PAGE>
EXHIBIT 4.1
================================================================================
INDENTURE
Dated as of July 1, 1997
Among
POLYMER GROUP, INC., as Issuer,
The GUARANTORS Named herein
and
HARRIS TRUST AND SAVINGS BANK, as Trustee
--------------------
$400,000,000
9% Senior Subordinated Notes due 2007, Series A
9% Senior Subordinated Notes due 2007, Series B
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Indenture
Act Section Section
- --------------- ---------
(S) 310(a)(1).............................................. 7.10
(a)(2)................................................ 7.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 7.08, 7.10.
(b)................................................... 7.08; 7.10; 13.02
(c)................................................... N.A.
(S) 311(a)................................................. 7.11
(b)................................................... 7.11
(c)................................................... N.A.
(S) 312(a)................................................. 2.05
(b)................................................... 13.03
(c)................................................... 13.03
(S) 313(a)................................................. 7.06
(b)(1)................................................ 7.06
(b)(2)................................................ 7.06
(c)................................................... 7.06; 13.02
(d)................................................... 7.06
(S) 314(a)................................................. 4.11; 4.12; 13.02
(b)................................................... N.A.
(c)(1)................................................ 13.04
(c)(2)................................................ 13.04
(c)(3)................................................ N.A.
(d)................................................... N.A.
(e)................................................... 13.05
(f)................................................... N.A.
(S) 315(a)................................................. 7.01(b)
(b)................................................... 7.05; 13.02
(c)................................................... 7.01(a)
(d)................................................... 7.01(c)
(e)................................................... 6.11
(S) 316(a)(last sentence).................................. 2.09
(a)(1)(A)............................................. 6.05
(a)(1)(B)............................................. 6.04
(a)(2)................................................ N.A.
(b)................................................... 6.07
(c)................................................... 10.04
(S) 317(a)(1).............................................. 6.08
(a)(2)................................................ 6.09
(b)................................................... 2.04
(S) 318(a)................................................. 13.01
- ----------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act............. 19
SECTION 1.03. Rules of Construction......................................... 19
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating............................................... 20
SECTION 2.02. Execution and Authentication.................................. 20
SECTION 2.03. Registrar and Paying Agent.................................... 21
SECTION 2.04. Paying Agent To Hold Assets in Trust.......................... 21
SECTION 2.05. Holder Lists.................................................. 22
SECTION 2.06. Transfer and Exchange......................................... 22
SECTION 2.07. Replacement Securities........................................ 22
SECTION 2.08. Outstanding Securities........................................ 23
SECTION 2.09. Treasury Securities........................................... 23
SECTION 2.10. Temporary Securities.......................................... 23
SECTION 2.11. Cancellation.................................................. 24
SECTION 2.12. Defaulted Interest............................................ 24
SECTION 2.13. CUSIP Number.................................................. 24
SECTION 2.14. Deposit of Moneys............................................. 24
SECTION 2.15. Book-Entry Provisions for Global Securities................... 25
SECTION 2.16. Registration of Transfers and Exchanges....................... 25
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee............................................ 29
SECTION 3.02. Selection of Securities To Be Redeemed........................ 29
SECTION 3.03. Notice of Redemption.......................................... 30
SECTION 3.04. Effect of Notice of Redemption................................ 30
SECTION 3.05. Deposit of Redemption Price................................... 30
SECTION 3.06. Securities Redeemed in Part................................... 31
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities......................................... 31
SECTION 4.02. Maintenance of Office or Agency............................... 31
SECTION 4.03. Transactions with Affiliates.................................. 31
-i-
<PAGE>
SECTION 4.04. Limitation on Indebtedness.................................... 32
SECTION 4.05. Disposition of Proceeds of Asset Sales........................ 34
SECTION 4.06. Limitation on Restricted Payments............................. 35
SECTION 4.07. Corporate Existence........................................... 37
SECTION 4.08. [Intentionally Omitted]....................................... 37
SECTION 4.09. Notice of Defaults............................................ 37
SECTION 4.10. [Intentionally Omitted]....................................... 38
SECTION 4.11. Compliance Certificate........................................ 38
SECTION 4.12. Provision of Financial Information............................ 38
SECTION 4.13. [Intentionally Omitted]....................................... 38
SECTION 4.14. Change of Control............................................. 38
SECTION 4.15. Limitation on Senior Subordinated Indebtedness................ 39
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries............................. 39
SECTION 4.17. Designation of Unrestricted Subsidiaries...................... 40
SECTION 4.18. Limitation on Liens........................................... 41
SECTION 4.19. Guarantee of Notes by Restricted Subsidiaries................. 41
SECTION 4.20. Limitation on the Sale or Issuance of Equity Interests of
Restricted Subsidiaries....................................... 41
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.................................. 42
SECTION 5.02. Successor Corporation Substituted............................. 43
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................. 43
SECTION 6.02. Acceleration.................................................. 45
SECTION 6.03. Other Remedies................................................ 45
SECTION 6.04. Waiver of Past Default........................................ 46
SECTION 6.05. Control by Majority........................................... 46
SECTION 6.06. Limitation on Suits........................................... 46
SECTION 6.07. Rights of Holders To Receive Payment.......................... 47
SECTION 6.08. Collection Suit by Trustee.................................... 47
SECTION 6.09. Trustee May File Proofs of Claim.............................. 47
SECTION 6.10. Priorities.................................................... 47
SECTION 6.11. Undertaking for Costs......................................... 48
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee............................................. 48
SECTION 7.02. Rights of Trustee............................................. 49
SECTION 7.03. Individual Rights of Trustee.................................. 50
SECTION 7.04. Trustee's Disclaimer.......................................... 50
-ii-
<PAGE>
SECTION 7.05. Notice of Defaults............................................ 50
SECTION 7.06. Reports by Trustee to Holders................................. 51
SECTION 7.07. Compensation and Indemnity.................................... 51
SECTION 7.08. Replacement of Trustee........................................ 52
SECTION 7.09. Successor Trustee by Merger, etc.............................. 53
SECTION 7.10. Eligibility; Disqualification................................. 53
SECTION 7.11. Preferential Collection of Claims Against Company............. 53
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness................ 53
SECTION 8.02. No Payment on Securities in Certain Circumstances............. 54
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc................ 55
SECTION 8.04. Subrogation................................................... 56
SECTION 8.05. Obligations of Company Unconditional.......................... 56
SECTION 8.06. Notice to Trustee............................................. 56
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating
Agent......................................................... 57
SECTION 8.08. Trustee's Relation to Senior Indebtedness..................... 57
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness................. 58
SECTION 8.10. Holders Authorize Trustee To Effectuate Subordination of
Securities.................................................... 58
SECTION 8.11. This Article Not To Prevent Events of Default................. 58
SECTION 8.12. Trustee's Compensation Not Prejudiced......................... 58
SECTION 8.13. No Waiver of Subordination Provisions......................... 58
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in
Trust for Holders; Payments May Be Paid Prior to Dissolution.. 59
SECTION 8.15. Acceleration of Securities.................................... 59
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.......................... 59
SECTION 9.02. Application of Trust Money.................................... 60
SECTION 9.03. Repayment to Company.......................................... 61
SECTION 9.04. Reinstatement................................................. 61
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders................................... 61
SECTION 10.02. With Consent of Holders...................................... 62
SECTION 10.03. Compliance with Trust Indenture Act.......................... 63
SECTION 10.04. Record Date for Consents and Effect of Consents.............. 63
SECTION 10.05. Notation on or Exchange of Securities........................ 64
SECTION 10.06. Trustee To Sign Amendments, etc.............................. 64
-iii-
<PAGE>
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee...................................... 64
SECTION 11.02. Severability................................................. 65
SECTION 11.03. Release of a Guarantor....................................... 65
SECTION 11.04. Limitation of Guarantor's Liability.......................... 65
SECTION 11.05. Contribution................................................. 66
SECTION 11.06. Execution of Security Guarantee.............................. 66
SECTION 11.07. Subordination of Subrogation and Other Rights................ 66
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness................................................. 67
SECTION 12.02. No Payment on Guarantees in Certain Circumstances............ 67
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc............... 68
SECTION 12.04. Subrogation.................................................. 69
SECTION 12.05. Obligations of Guarantors Unconditional...................... 69
SECTION 12.06. Notice to Trustee............................................ 70
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent........................................................ 71
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.......... 71
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of
the Guarantors or Holders of Guarantor Senior Indebtedness... 71
SECTION 12.10. Holders Authorize Trustee To Effectuate Subordination of
Guarantee.................................................... 71
SECTION 12.11. This Article Not To Prevent Events of Default................ 72
SECTION 12.12. Trustee's Compensation Not Prejudiced........................ 72
SECTION 12.13. No Waiver of Guarantee Subordination Provisions.............. 72
SECTION 12.14. Payments May Be Paid Prior to Dissolution.................... 72
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls................................. 72
SECTION 13.02. Notices...................................................... 73
SECTION 13.03. Communications by Holders with Other Holders................. 74
SECTION 13.04. Certificate and Opinion as to Conditions Precedent........... 74
SECTION 13.05. Statements Required in Certificate........................... 74
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.................... 75
SECTION 13.07. Governing Law................................................ 75
SECTION 13.08. No Recourse Against Others................................... 75
SECTION 13.09. Successors................................................... 75
SECTION 13.10. Counterpart Originals........................................ 75
SECTION 13.11. Severability................................................. 75
SECTION 13.12. No Adverse Interpretation of Other Agreements................ 75
SECTION 13.13. Legal Holidays............................................... 75
-iv-
<PAGE>
SIGNATURES................................................................. S-1
EXHIBIT A Form of Series A Security..................................... A-1
EXHIBIT B Form of Series B Security..................................... B-1
EXHIBIT C Form of Legend for Global Securities.......................... C-1
EXHIBIT D Form of Transfer Certificate.................................. D-1
EXHIBIT E Form of Transfer Certificate for Institutional
Accredited Investors.......................................... E-1
- -----------------
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
-v-
<PAGE>
INDENTURE dated as of July 1, 1997, among POLYMER GROUP, INC., a
Delaware corporation (the "Company"), the GUARANTORS named herein and HARRIS
TRUST AND SAVINGS BANK, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person (a) assumed in
connection with an Acquisition from such Person or (b) existing at the time such
Person becomes a Restricted Subsidiary or is merged or consolidated with or into
the Company or any Restricted Subsidiary.
"Acquired Person" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such specified
Person.
"Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated with or merged into the Company
or any Restricted Subsidiary or (ii) any acquisition by the Company or any
Restricted Subsidiary of the assets of any Person which constitute substantially
all of an operating unit or line of business of such Person or which is
otherwise outside of the ordinary course of business.
"Additional Interest" has the meaning provided in Section 4(a) of the
Registration Rights Agreement.
"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; provided, however, that for purposes of
Section 4.03, the term "Affiliate" shall not include Chase Securities Inc. or
its affiliates. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Affiliate Transaction" has the meaning provided in Section 4.03.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Amended Credit Facility" means the Second Amended, Restated and
Consolidated Credit Agreement, dated as of July 3, 1997, by and among the
Company, the Subsidiaries of the Company identified
<PAGE>
-2-
on the signature pages thereof and any Subsidiary that is later added thereto,
the lenders named therein, and The Chase Manhattan Bank, as Administrative
Agent, as amended, including any deferrals, renewals, extensions, replacements,
refinancings or refundings thereof, or amendments, modifications or supplements
thereto and any agreement providing therefor (including any restatements thereof
and any increases in the amount of the commitment thereunder), whether by or
with the same or any other lender, creditor, group of lenders or group of
creditors, and including related notes, guarantee and note agreements and other
instruments and agreements executed in connection therewith.
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease (that has the effect of a disposition) or other disposition (including,
without limitation, any merger, consolidation or sale-leaseback transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary, in
one transaction or a series of related transactions, of (i) any Equity Interest
of any Restricted Subsidiary (other than directors' qualifying shares, to the
extent mandated by applicable law); (ii) any assets of the Company or any
Restricted Subsidiary which constitute substantially all of an operating unit or
line of business of the Company or any Restricted Subsidiary; or (iii) any other
property or asset of the Company or any Restricted Subsidiary outside of the
ordinary course of business (including the receipt of proceeds paid on account
of the loss of or damage to any property or asset and awards of compensation for
any asset taken by condemnation, eminent domain or similar proceedings). For
purposes of this definition the term "Asset Sale" shall not include (a) any
transaction consummated in compliance with Section 5.01 and the creation of any
Lien not prohibited by Section 4.18; (b) sales of property or equipment that has
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Restricted Subsidiary, as the
case may be; (c) any transaction consummated in compliance with Section 4.06;
(d) any transfers of properties and assets between Wholly Owned Restricted
Subsidiaries; (e) any transaction pursuant to which the Company or any
Restricted Subsidiary transfers property to a Person and the Company or such
Restricted Subsidiary leases such property from such Person; provided, however,
that such transaction complies with Section 4.04; and (f) sales of Investments
(i) that were originally made pursuant to clause (a) of the definition of
"Permitted Investments" or (ii) to the extent that such Investments were treated
as Restricted Payments. In addition, solely for purposes of Section 4.05, any
sale, conveyance, transfer, lease or other disposition of any property or asset,
whether in one transaction or a series of related transactions, involving assets
with a Fair Market Value not in excess of $5.0 million in any fiscal year shall
be deemed not to be an Asset Sale.
"Bankruptcy Law" has the meaning provided in Section 6.01.
"Board of Directors" means the Board of Directors of Holdings, the
Company or any Guarantor, as the case may be, or any authorized committee of
such Board of Directors .
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Capital Lease Obligation" means at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be properly capitalized on the balance sheet in accordance
with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital
<PAGE>
-3-
and surplus in excess of $500 million; (d) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clauses (b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1, A-
1 or the equivalent thereof by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, and in each case maturing within six months
after the date of acquisition; and (f) corporate securities having a rating
equal to or higher than BBB- and Baa3, or the equivalents thereof, by both
Standard & Poor's Ratings Group and Moody's Investors Service, Inc.,
respectively, if both such entities rate the securities, or having such rating
from one of such entities if only one such entity is rating such Securities.
"Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Company): (i)
any Person (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rule 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, upon the happening of
an event or otherwise), directly or indirectly, of more than 35% of the total
voting power of the then outstanding Voting Equity Interests of the Company;
(ii) the Company consolidates with, or merges with or into, another Person
(other than the Company or any Wholly Owned Restricted Subsidiary) or the
Company or any of its Subsidiaries sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of the assets of the Company and
its Subsidiaries (determined on a consolidated basis) to any Person (other than
the Company or any Wholly Owned Restricted Subsidiary), other than any such
transaction where immediately after such transaction the Person or Persons that
beneficially owned (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
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time) immediately prior to
such transaction, directly or indirectly, a majority of the total voting power
of the then outstanding Voting Equity Interests of Holdings or the Company, as
the cause may be, beneficially own (as so determined), directly or indirectly, a
majority of the total voting power of the then outstanding Voting Equity
Interests of the surviving or transferee Person; (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority 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 of the Company then in office; or (iv) the Company is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions of Article Five.
"Change of Control Date" has the meaning provided in Section 4.14.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, a Vice President or its Treasurer, and by
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
<PAGE>
-4-
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated EBITDA for the four
quarter period of the most recent four consecutive fiscal quarters for which
financial statements are available ending prior to the date of such
determination (the "Four Quarter Period") to (ii) Consolidated Fixed Charges for
such Four Quarter Period; provided, however, that (1) if the Company or any
Restricted Subsidiary has incurred any Indebtedness since the beginning of such
Four Quarter Period that remains outstanding on such date of determination or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated
Fixed Charges for such Four Quarter Period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such Four Quarter Period and the discharge of
any other Indebtedness repaid, repurchased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such Four Quarter Period, (2) if since the beginning of such Four Quarter
Period the Company or any Restricted Subsidiary shall have made any Asset Sale,
the Consolidated EBITDA for such Four Quarter Period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly attributable to
the assets that are the subject of such Asset Sale for such Four Quarter Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such Four Quarter Period and Consolidated
Fixed Charges for such Four Quarter Period shall be reduced by an amount equal
to the Consolidated Fixed Charges directly attributable to any Indebtedness of
the Company or any Restricted Subsidiary repaid, repurchased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Sale forsuch Four Quarter Period (or,
if the Equity Interests of any Restricted Subsidiary are sold, the Consolidated
Fixed Charges for such Four Quarter Period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such Four Quarter Period the
Company or any Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit or a
line of a business or which constitutes Replacement Assets, Consolidated EBITDA
and Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect to (x) such Investment or acquisition of assets
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such Four Quarter Period and (y) net
cost savings that the Company reasonably believes in good faith could have been
achieved during the Four Quarter Period as a result of such Investment or
acquisition and which cost savings could then be reflected in pro forma
financial statements under GAAP (provided that both (A) such cost savings were
identified and quantified in an Officer's Certificate delivered to the Trustee
at the time of the consummation of the Investment or acquisition and (B) with
respect to each Investment or acquisition completed prior to the 90th day
preceding such date of determination, actions were commenced or initiated by the
Company within 90 days of such Investment or acquisition to effect such cost
savings identified in such officer's certificate and (4) if since the beginning
of such Four Quarter Period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such Four Quarter Period) shall have made any
Asset Sale or any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such Four Quarter Period, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving pro forma effect thereto as if such Asset Sale, Investment or
acquisition of assets occurred on, with respect to any Investment or
acquisition, the first day of such Four Quarter Period and, with respect to any
Asset Sale, the day prior to the first day of such Four Quarter Period. For
purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Fixed Charges associated with any Indebtedness Incurred
in connection therewith, the pro forma calculations shall be determined in
accordance with GAAP. If any
<PAGE>
-5-
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any agreement under which Interest Rate
Protection Obligations are outstanding applicable to such Indebtedness if such
agreement under which such Hedging Obligations are outstanding has a remaining
term as at the date of determination in excess of 12 months); provided, however,
that the Consolidated Fixed Charges of the Company attributable to interest on
any Indebtedness Incurred under a revolving credit facility computed on a pro
forma basis shall be computed based upon the average daily balance of such
Indebtedness during the Four Quarter Period.
"Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Income Tax Expense for such
period; (ii) Consolidated Interest Expense for such period; (iii) Consolidated
Non-cash Charges for such period; and (iv) expenses relating to employee profit
sharing arising in connection with applicable Mexican statutory requirements
less (A) all non-cash items increasing Consolidated Net Income for such period
and (B) all cash payments during such period relating to non-cash charges that
were added back in determining Consolidated EBITDA in any prior period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Equity Interest of such Person (other than dividends paid solely in
Qualified Equity Interests) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Income Tax Expense" means, with respect to the Company
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and the Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company for
any period, without duplication, the sum of (i) the interest expense of the
Company and the Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Hedging Obligations,
(c) the interest portion of any deferred payment obligation, (d) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, and (e) all capitalized interest
and all accrued interest and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and the Restricted Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person if such person is not a Restricted Subsidiary,
except (A) to the extent of cash actually distributed by such Person during such
period to the Company or a Restricted Subsidiary as a dividend or other
distribution and (B) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income; (ii) any net income (loss) of any
person acquired by the Company or a Restricted Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income (but not loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indi-
<PAGE>
-6-
rectly, to the Company to the extent of such restrictions; (iv) any gain or loss
realized upon the sale or other disposition of any asset of the Company or the
Restricted Subsidiaries (including pursuant to any sale/leaseback transaction)
outside of the ordinary course of business; (v) any extraordinary gain or loss;
(vi) the cumulative effect of a change in accounting principles; (vii) any
restoration to income of any contingency reserve of an extraordinary, non-
recurring or unusual nature, except to the extent that provision for such
reserve was made out of Consolidated Net Income accrued at any time following
the Issue Date; and (viii) gains and losses resulting from foreign currency
transaction adjustments.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Equity Interests of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for
any period the sum of (i) depreciation, (ii) amortization and (iii) other non-
cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding,
for purposes of clause (iii) only, such charges which require an accrual of or a
reserve for cash charges for any future period).
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 or such other address as the Trustee may give
notice to the Company.
"Custodian" has the meaning provided in Section 6.01.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Defeasance Trust Payment" has the meaning provided in Section 8.02.
"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Guarantor Senior Indebtedness" means, with respect to any
Guarantor, (a) any Indebtedness of such Guarantor outstanding under the Amended
Credit Facility and (b) any other Guarantor Senior Indebtedness of such
Guarantor which, at the time of determination, has an aggregate principal amount
outstanding, together with any commitments to lend additional amounts, of at
least $25.0 million, if the instrument governing such Guarantor Senior
Indebtedness expressly states that such Indebtedness is "Designated Guarantor
Senior Indebtedness" for purposes of this Indenture and a Board Resolution
setting forth such designation by the Company has been filed with the Trustee.
"Designated Senior Indebtedness" means (a) any Indebtedness of the
Company outstanding under the Amended Credit Facility and (b) any other Senior
Indebtedness which, at the time of determination, has an aggregate principal
amount outstanding, together with any commitments to lend additional amounts, of
at least $25.0 million, if the instrument governing such Senior Indebtedness
expressly states that such Indebtedness is "Designated Senior Indebtedness" for
purposes of this Indenture and a Board Resolution setting forth such designation
by the Company has been filed with the Trustee.
"Designation" has the meaning provided in Section 4.17.
<PAGE>
-7-
"Designation Amount" see Section 4.17.
"Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.
"Disqualified Equity Interest" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable, at the option of the holder thereof
(except, in each case, upon the occurrence of a Change of Control), in whole or
in part, or exchangeable into Indebtedness on or prior to the earlier of the
maturity date of the Securities or the date on which no Securities remain
outstanding.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary of the
Company organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially inside
the United States.
"Equity Interest" in any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited, in
such Person, including any Preferred Equity Interests.
"Event of Default" see Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchange Securities" means the 9% Senior Subordinated Notes due 2007,
Series B, to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement.
"Expiration Date" has the meaning set forth in the definition of
"Offer to Purchase" below.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, however, that the Fair Market
Value of any such asset or assets shall be determined conclusively by the Board
of Directors of the Company acting in good faith, and shall be evidenced by a
Board Resolution delivered to the Trustee.
"Final Maturity Date" means May 1, 2004.
"Foreign Restricted Subsidiary" means a Restricted Subsidiary of the
Company not organized under the laws of the United States or any political
subdivision thereof and the operations of which are located substantially
outside of the United States.
"Four Quarter Period" has the meaning set forth in the definition of
"Consolidated Coverage Ratio" above.
<PAGE>
-8-
"Funding Guarantor" has the meaning provided in Section 11.05.
"GAAP" means, at any date of determination, generally accepted
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Global Securities" means one or more IAI Global Securities and 144A
Global Securities.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" has the meaning provided in Section 11.01.
"Guarantor" means (i) each Domestic Restricted Subsidiary in existence
on the Issue Date, (ii) Fabrene Group, Inc. and (iii) each other Restricted
Subsidiary, formed, created or acquired before or after the Issue Date, required
to become a Guarantor after the Issue Date pursuant to Section 4.19.
"Guarantor Blockage Period" has the meaning provided in Section
12.02(a).
"Guarantor Payment Blockage Notice" has the meaning provided in
Section 12.02(a).
"Guarantor Senior Indebtedness" means, with respect to any Guarantor,
at any date, (a) all Obligations of such Guarantor under the Amended Credit
Facility; (b) all Hedging Obligations of such Guarantor; (c) all Obligations of
such Guarantor under stand-by letters of credit; and (d) all other Indebtedness
of such Guarantor for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness unless the
instrument under which such Indebtedness of such Guarantor for money borrowed is
Incurred expressly provides that such Indebtedness for money borrowed is not
senior or superior in right of payment to such Guarantor's Guarantee of the
Notes, and all renewals, extensions, modifications, amendments or refinancings
thereof. Notwithstanding the foregoing, Guarantor Senior Indebtedness shall not
include (a) to the extent that it may constitute Indebtedness, any Obligation
for federal, state, local or other taxes; (b) any Indebtedness among or between
such Guarantor and any Subsidiary of such Guarantor or any Affiliate of such
Guarantor or any of such Affiliate's Subsidiaries; unless, and for so long as
such Indebtedness has been pledged to secure obligations under or in respect of
Guarantor Senior Indebtedness; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is Incurred in violation
of the Indenture; (e) Indebtedness evidenced by such Guarantor's Guarantee of
the Notes; (f) Indebtedness of such Guarantor that is expressly subordinate or
junior in right of payment to any other Indebtedness of such Guarantor; (g) to
the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capitalized Lease Obligations) or management agreements; (h)
any obligation that by operation of law is subordinate to any general unsecured
obligations of such Guarantor; (i) Indebtedness represented by guarantees of the
Existing Notes; and (j) Indebtedness of a Guarantor to the extent such
Indebtedness is owed to and held by any Federal, state, local or other
governmental authority.
<PAGE>
-9-
"Hedging Agreement" means, with respect to any Person, all interest
rate swap or similar agreements or foreign currency or commodity hedge, exchange
or similar agreements of such Person.
"Hedging Obligations" means, with respect to any Person, the
Obligations of such Person under Hedging Agreements.
"Holders" means the registered holders of the Securities.
"IAI Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities sold to
Institutional Accredited Investors.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Acquired Person or any of its
Subsidiaries existing at the time such Acquired Person becomes a Restricted
Subsidiary (or is merged into or consolidated with the Company or any Restricted
Subsidiary), whether or not such Indebtedness was Incurred in connection with,
as a result of, or in contemplation of, such Acquired Person becoming a
Restricted Subsidiary (or being merged into or consolidated with the Company or
any Restricted Subsidiary), shall be deemed Incurred at the time any such
Acquired Person becomes a Restricted Subsidiary or merges into or consolidates
with the Company or any Restricted Subsidiary.
"Indebtedness" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (d)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable Incurred in the
ordinary course of business and payable in accordance with industry practices,
or other accrued liabilities arising in the ordinary course of business which
are not overdue or which are being contested in good faith); (e) every Capital
Lease Obligation of such Person; (f) every net obligation under Hedging
Agreements of such Person; (g) every obligation of the type referred to in
clauses (a) through (f) of another Person and all dividends of another Person
the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise; and (h) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (a) through (g) above. Indebtedness
(a) shall never be calculated taking into account any cash and cash equivalents
held by such Person; (b) shall not include obligations of any Person (x) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business, provided that such obligations are extinguished
within two Business Days of their incurrence, (y) rsulting from the endorsement
of negotiable instruments for collection in the ordinary course of business and
consistent with past business practices and (z) under stand-by letters of credit
to the extent collateralized by cash or Cash Equivalents; (c) which provides
that an amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be deemed to be Incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination; (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Company or any Restricted Subsidi-
<PAGE>
-10-
ary; and (e) shall not include obligations under performance bonds, performance
guarantees, surety bonds and appeal bonds, letters of credit or similar
obligations, incurred in the ordinary course of business.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means a nationally recognized,
accounting, appraisal, investment banking firm or consultant which, in the
judgment of the Board of Directors of the Company, is independent and qualified
to perform the task for which it is to be engaged.
"Initial Securities" means the 9% Senior Subordinated Notes due 2007,
Series A, of the Company.
"Initial Purchaser" means Chase Securities Inc.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest" means, with respect to the Securities, the sum of any cash
interest and any Additional Interest on the Securities.
"Interest Payment Date" means each semiannual interest payment date on
January 1 and July 1 of each year, commencing January 1, 1998.
"Interest Record Date" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the
December 15 or June 15 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.
"Investment" means, with respect to any Person, any direct or indirect
loan, advance, guarantee or other extension of credit or capital contribution to
(by means of transfers of cash or other property or assets to others or payments
for property or services for the account or use of others, or otherwise), or
purchase or acquisition of capital stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person. For
purposes of the "Limitation on Restricted Payments" covenant above, the amount
of any Investment shall be the original cost of such Investment, plus the cost
of all additions thereto, but without any other adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment; reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or any
Restricted Subsidiary sells or otherwise disposes of any Voting Equity Interests
of any direct or indirect Restricted Subsidiary such that, after giving effect
to any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Voting Equity Interests of such
Restricted Subsidiary, the Company shall be deemed to have made an Investment on
the date of any such sale or disposition.
<PAGE>
-11-
"Issue Date" means the original issue date of the Securities, July 3,
1997.
"Lien" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including any
conditional sale or capital lease or other title retention agreement, any lease
in the nature thereof and any agreement to give any security interest).
"Maturity Date" means the date, which is set forth on the face of the
Securities, on which the Notes will mature.
"Net Cash Proceeds" means the aggregate proceeds in the form of cash
or Cash Equivalents received by the Company or any Restricted Subsidiary in
respect of any Asset Sale, including all cash or Cash Equivalents received upon
any sale, liquidation or other exchange of proceeds of Asset Sales received in a
form other than cash or Cash Equivalents, net of (a) the direct costs relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board of
Directors of the Company to be provided as a reserve, in accordance with GAAP,
against any liabilities associated with such assets which are the subject of
such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as reflected in an officer's certificate delivered to the Trustee
(provided that the amount of any such reserves shall be deemed to constitute Net
Cash Proceeds at the time such reserves shall have been reversed or are not
otherwise required to be retained as a reserve); and (e) with respect to Asset
Sales by Restricted Subsidiaries, the portion of such cash payments attributable
to Persons holding a minority interest in such Restricted Subsidiary.
"Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Offer" has the meaning set forth in the definition of "Offer to
Purchase" below.
"Offer to Purchase" means a written offer (the "Offer") sent by or on
behalf of the Company by first-class mail, postage prepaid, to each holder at
his address appearing in the register for the Securities on the date of the
Offer offering to purchase up to the principal amount of Securities specified in
such Offer at the purchase price specified in such Offer (as determined pursuant
to this Indenture if so required). Unless otherwise required by applicable law,
the Offer shall specify an expiration date (the "Expiration Date") of the Offer
to Purchase, which shall be not less than 20 Business Days nor more than 60 days
after the date of such Offer, and a settlement date (the "Purchase Date") for
purchase of Securities to occur no later than five Business Days after the
Expiration Date. The Company shall notify the Trustee at least 15 Business Days
(or such shorter period as is acceptable to the Trustee) prior to the mailing of
the Offer of the Company's obligation to make an Offer to Purchase, and the
Offer shall be mailed by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. The Offer shall contain
all the information required by applicable law to be included therein. The Offer
shall contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase. The Offer shall also
state:
(1) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
<PAGE>
-12-
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of this Indenture requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as specified
pursuant to this Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Securities
registered in the name of such Holder and that any portion of a Security
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered for
tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Security being accepted for payment pursuant to the Offer
to Purchase and that interest thereon shall cease to accrue on and after
the Purchase Date;
(9) that each Holder electing to tender all or any portion of a
Security pursuant to the Offer to Purchase will be required to surrender
such Security at the place or places specified in the Offer prior to the
close of business on the Expiration Date (such Security being, if the
Company or the Trustee so requires, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing);
(10) that (a) if Securities in an aggregate principal amount less than
or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in excess
of the Purchase Amount are tendered and not withdrawn pursuant to the Offer
to Purchase, the Company shall purchase Securities having an aggregate
principal amount equal to the Purchase Amount on a pro rata basis (with
such adjustments as may be deemed appropriate so that only Securities in
denominations of $1,000 principal amount or integral multiples thereof
shall be purchased); and
(11) that in the case of any Holder whose Security is purchased only
in part, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unpurchased portion of the Security so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
<PAGE>
-13-
"Officer" means the Chairman, any Vice Chairman, the President, any
Vice President, the Chief Financial Officer, the Treasurer, or the Secretary of
the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of the Company
complying with Sections 13.04 and 13.05.
"144A Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities sold in reliance
on Rule 144A.
"Opinion of Counsel" means a written opinion delivered to the Trustee
from legal counsel who is reasonably acceptable to the Trustee. The counsel may
be an employee of or counsel to the Company or the Trustee.
"Participant" has the meaning provided in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Blockage Notice" has the meaning provided in Section 8.02(a).
"Payment Blockage Period" has the meaning provided in Section 8.02(a).
"Permitted Holder" means Golder, Thoma, Cressey Fund III Limited
Partnership, The InterTech Group, Inc. (for so long as Messrs. Zucker and Boyd
own 100% of the issued and outstanding stock thereof), Mr. Zucker and Mr. Boyd
and members of either of their immediate families and trusts of which such
persons are the beneficiaries and The Chase Manhattan Corporation and its
subsidiaries or The Chase Manhattan Foundation.
"Permitted Indebtedness" see Section 4.04.
"Permitted Investments" means (a) Cash Equivalents; (b) Investments in
prepaid expenses, negotiable instruments held for collection and lease, utility
and workers' compensation, performance and other similar deposits; (c) Hedging
Obligations; (d) bonds, notes, debentures or other securities received as a
result of Asset Sales permitted under "Certain Covenants-Disposition of Proceeds
of Asset Sales" above not to exceed 25% of the total consideration for such
Asset Sales; (e) Investments in the Company and Investments in a Restricted
Subsidiary or a Person that, as a result of or in connection with such
Investment, becomes a Restricted Subsidiary or is merged with or into or
consolidated with the Company or another Restricted Subsidiary; (f) Investments
existing as of the Issue Date; and (g) any Investment consisting of a guarantee
by a Restricted Subsidiary of Senior Indebtedness or any guarantee of
Indebtedness otherwise permitted by the Indenture.
"Permitted Junior Securities" means any securities of the Company or
any other Person that are (i) equity securities without special covenants or
(ii) debt securities expressly subordinated in right of payment to all Senior
Indebtedness or Guarantor Senior Indebtedness, as the case may be, that may at
the time be outstanding, to substantially the same extent as, or to a greater
extent than, the Securities or the Guarantees, as the case may be, are
subordinated as provided in this Indenture, in any event pursuant to a court
order so providing and as to which (a) the rate of interest on such securities
shall not exceed the effective rate of interest on the Securities on the date of
this Indenture, (b) such securities shall not be entitled to the benefits of
covenants or defaults materially more beneficial to the holders of such
securities than those in effect with respect to
<PAGE>
-14-
the Securities on the date of this Indenture and (c) such securities shall not
provide for amortization (including sinking fund and mandatory prepayment
provisions) commencing prior to the date six months following the final
scheduled maturity date of the Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be (as modified by the plan of reorganization or
readjustment pursuant to which such securities are issued).
"Permitted Liens" means (a) Liens on property of a Person existing at
the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary; provided, however, that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not secure any
property or assets of the Company or any Restricted Subsidiary other than the
property or assets subject to the Liens prior to such merger or consolidation;
(b) Liens imposed by law such as carriers', warehousemen's and mechanics' Liens
and other similar Liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith and by appropriate proceedings; (c) Liens existing on
the Issue Date; (d) Liens securing only the Securities or the Guarantees; (e)
Liens in favor of the Company or any Restricted Subsidiary (including any such
Liens securing Indebtedness to the extent and for so long as such Indebtedness
is pledged to secure Senior Indebtedness or Guarantor Senior Indebtedness, as
the case may be); (f) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; provided,
however, that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (g) easements, reservation
of rights of way, restrictions and other similar easements, licenses,
restrictions on the use of properties, or minor imperfections of title that in
the aggregate do not in any case materially detract from the properties subject
thereto or interfere with the ordinary conduct of the business of the Company
and the Restricted Subsidiaries; (h) Liens resulting from the deposit of cash or
notes in connection with contracts, tenders or expropriation proceedings, or to
secure workers' compensation, surety or appeal bonds, costs of litigation when
required by law an public and statutory obligations or obligations under
franchise arrangements entered into in the ordinary course of business; (i)
Liens securing Indebtedness consisting of Capital Lease Obligations, Purchase
Money Indebtedness, mortgage financings, industrial revenue bonds or other
monetary obligations, in each case incurred solely for the purpose of financing
all or any part of the purchase price or cost of construction or installation of
assets used in the business of the Company or the Restricted Subsidiaries, or
repairs, additions or improvements to such assets; provided, however, that (I)
such Liens secure Indebtedness in an amount not in excess of the original
purchase price or the original cost of any such assets or repair, addition or
improvement thereto (plus an amount equal to the reasonable fees and expenses in
connection with the incurrence of such Indebtedness), (II) such Liens do not
extend to any other assets of the Company or the Restricted Subsidiaries (and,
in the case of repair, addition or improvements to any such assets, such Lien
extends only to the assets (and improvements thereto or thereon) repaired, added
to or improved), (III) the Incurrence of such Indebtedness is permitted by
Section 4.04, and (IV) such Liens attach within 90 days of such purchase,
construction, installation, repair, addition or improvement; and (j) Liens to
secure any refinancings, renewals, extensions, modifications or replacements
(collectively, a "refinancing") (or successive refinancings), in whole or in
part, of any Indebtedness secured by Liens referred to in the clauses above so
long as such Lien does not extend to any other property (other than improvements
thereto).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, limited
liablity limited partnership, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Securities" means one or more certificated Securities in
registered form.
<PAGE>
-15-
"Post-Petition Interest" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person 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 such 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 Equity Interest", in any Person, means an Equity Interest
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such Person, over
Equity Interests of any other class in such Person.
"principal" of a debt security means the principal of the security
plus, when appropriate, the premium, if any, on the security.
"Private Exchange Securities" have the meaning provided in Sections
2(b) of the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.
"Public Equity Offering" means, with respect to the Company, an
underwritten public offering of Qualified Equity Interests of the Company
pursuant to an effective registration statement filed under the Securities Act
(excluding registration statements filed on Form S-8).
"Purchase Amount" has the meaning set forth in the definition of
"Offer to Purchase" above.
"Purchase Agreement" means the Purchase Agreement dated as of June 30,
1997 by and among the Company, the Guarantors and the Initial Purchaser.
"Purchase Date" has the meaning set forth in the definition of "Offer
to Purchase" above.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or the cost of construction or improvement of any property;
provided, however, that the aggregate principal amount of such Indebtedness does
not exceed the lesser of the Fair Market Value of such property or such purchase
price or cost, including any refinancing of such Indebtedness that does not
increase the aggregate principal amount (or accreted amount, if less) thereof as
of the date of refinancing.
"Purchase Price" has the meaning set forth in the definition of "Offer
to Purchase" above.
"Qualified Equity Interest" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.
<PAGE>
-16-
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.
"redemption price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as set forth in the form of Security annexed hereto as Exhibit A.
"Registrar" has the meaning provided in Section 2.03.
"Registration" means a registered exchange offer for the Securities
by the Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of July 3, 1997 by and among the Company, the Guarantors and
the Initial Purchaser.
"Required Filing Dates" has the meaning provided in Section 4.12.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning provided in Section 4.06.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided, however, that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether any Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated by the Board of Directors of the Company, by a Board
Resolution of the Company delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to Section 4.17. Any such designation may be revoked by a
Board Resolution of the Company delivered to the Trustee, subject to the
provisions of Section 4.17.
"Revocation" has the meaning provided in Section 4.17.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities treated as a single class of
securities, as amended or supplemented from time to time in accordance with the
terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Securities Amount" has the meaning provided in Section 4.05.
<PAGE>
-17-
"Security Guarantee" means the Form of Security Guarantee of each
Guarantor to be endorsed on each of the Securities substantially in the form of
Exhibit A (in the case of an Initial Security) or Exhibit B (in the case of an
Exchange Security) hereto.
"Senior Indebtedness" means, at any date, (a) all Obligations of the
Company under the Amended Credit Facility; (b) all Hedging Obligations of the
Company; (c) all Obligations of the Company under stand-by letters of credit;
and (d) all other Indebtedness of the Company for borrowed money, including
principal, premium, if any, and interest (including Post-Petition Interest) on
such Indebtedness, unless the instrument under which such Indebtedness of the
Company for money borrowed is Incurred expressly provides that such Indebtedness
for money borrowed is not senior or superior in right of payment to the Notes,
and all renewals, extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Senior Indebtedness shall not include (a) to the
extent that it may constitute Indebtedness, any Obligation for Federal, state,
local or other taxes; (b) any Indebtedness among or between the Company and any
Subsidiary of the Company or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, unless and for so long as such Indebtedness has been
pledged to secure obligations under or in respect of Senior Indebtedness; (c) to
the extent that it may constitute Indebtedness, any Obligation in respect of any
trade payable Incurred for the purchase of goods or materials, or for services
obtained, in the ordinary course of business; (d) that portion of any
Indebtedness that is Incurred in violation of the Indenture; (e) Indebtedness
evidenced by the Notes; (f) Indebtedness of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness of the
Company; (g) to the extent that it may constitute Indebtedness, any obligation
owing under leases (other than Capitalized Lease Obligations) or management
agreements; (h) any obligation that by operation of law is subordinate to any
general unsecured obligations of the Company; (i) Indebtedness represented by
the Existing Notes; and (j) Indebtedness of the Company to the extent such
Indebtedness is owed to and held by any Federal, state, local or other
governmental authority.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu in right of payment with the Notes and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
"Significant Restricted Subsidiary" means, at any date of
determination, (a) any Restricted Subsidiary that, together with its
Subsidiaries that constitute Restricted Subsidiaries (i) for the most recent
fiscal year of the Company accounted for more than 10.0% of the consolidated
revenues of the Company and the Restricted Subsidiaries or (ii) as of the end of
such fiscal year, owned more than 10.0% of the consolidated assets of the
Company and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Company and the Restricted Subsidiaries for such
year prepared in conformity with GAAP, and (b) any Restricted Subsidiary which,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h), (i) or (j) of Section 6.01 has occurred, would constitute a
Significant Restricted Subsidiary under clause (a) of this definition.
"Stated Maturity" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subordinated Indebtedness" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as the case may
be, which is expressly subordinated in right of payment to the Securities or
such Guarantor's Guarantee, as the case may be.
<PAGE>
-18-
"Subsidiary" means, with respect to any Person, (a) any corporation of
which the outstanding Voting Equity Interests having at least a majority of the
votes entitled to be cast in the election of directors shall at the time be
owned, directly or indirectly, through one or more Persons by such Person, or
(b) any other Person of which at least a majority of Voting Equity Interests are
at the time, directly or indirectly, owned by such first named Person.
"Surviving Person" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except as
provided in Section 10.03) until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice president,
assistant vice president, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"United States Government Obligations" means direct non-callable
obligations of the United States of America for the payment of which the full
faith and credit of the United States is pledged.
"Unrestricted Securities" means one or more Securities that do not and
are not required to bear the Private Placement Legend in the form set forth in
Exhibit A hereto, including, without limitation, the Exchange Securities and any
Securities registered under the Securities Act pursuant to and in accordance
with the Registration Rights Agreement.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to Section 4.17. Any such designation may be revoked
by a Board Resolution of the Company delivered to the Trustee, subject to the
provisions of Section 4.17.
"Unutilized Net Cash Proceeds" has the meaning provided in Section
4.05(a).
"Voting Equity Interests" means Equity Interests in a corporation or
other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of such
corporation or Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.
<PAGE>
-19-
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
all of the outstanding Voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company and/or one or
more Wholly Owned Restricted Subsidiaries.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the 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 and not
otherwise defined herein have the meanings assigned to them therein.
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 generally accepted accounting principles in effect
from time to time, and any other reference in this Indenture to "generally
accepted accounting principles" refers to GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
<PAGE>
-20-
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Initial Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication thereof shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements (including the Security Guarantee) required by law,
stock exchange rule or usage. The Company and the Trustee shall approve the form
of the Securities and any notation, legend or endorsement (including the
Security Guarantee) on them. Each Security shall be dated the date of its
issuance and shall show the date of its authentication.
Securities offered and sold in reliance on Rule 144A and Securities
offered and sold to Institutional Accredited Investors shall be issued initially
in the form of one or more Global Securities, substantially in the form set
forth in Exhibit A hereto, deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided with the Guarantees of the Guarantors endorsed thereon and
shall bear the legend set forth in Exhibit C hereto. The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depository, as hereinafter provided.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature.
If an Officer or an Assistant Secretary whose signature is on a
Security was an Officer or an Assistant Secretary, as the case may be, at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Initial Securities for original
issue in an aggregate principal amount not to exceed $400,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of Initial Securities and (iii) Unrestricted Securities from time to time
only in exchange for (A) a like principal amount of Initial Securities or (B) a
like principal amount of Private Exchange Securities, in each case upon a
written order of the Company in the form of an Officers' Certificate. Each such
written order shall specify the amount of Securities to be authenticated and the
date on which the Securities are to be authenticated, whether the Securities are
to be Initial Securities, Private Exchange Securities or Unrestricted Securities
and whether the Securities are to be issued as Physical Securities or Global
Securities and such other information as the Trustee may reasonably request. The
aggregate principal amount of Securities outstanding at any time may not exceed
$400,000,000, except as provided in Sections 2.07 and 2.08.
<PAGE>
-21-
Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Company and Affiliates of the
Company.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency, which may be in the
Borough of Manhattan, The City of New York, where (a) Securities may be
presented or surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Securities may be presented or surrendered for payment (the
"Paying Agent") and (c) notices and demands in respect of the Securities and
this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company, upon notice to the
Trustee, may appoint one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. Except as
provided herein, the Company or any Guarantor may act as Paying Agent, Registrar
or co-Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee, together with its
affiliate Harris Trust Company of New York, as Registrar and Paying Agent until
such time as the Trustee has resigned or a successor has been appointed.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon distribution to the Trustee of all
assets that shall have been delivered by the Company to the Paying Agent (if
other than the Company), the Paying Agent shall have no further liability for
such assets. If the Company, any Guarantor or any of their respective Affiliates
acts as Paying Agent, it shall, on or before each due date of the principal of
or interest on the Securities, segregate and hold in trust for the benefit of
the Persons entitled
<PAGE>
-22-
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Interest Record Date and at such other times as the Trustee
may request in writing a list as of such date and in such form as the Trustee
may reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.05,
4.14, or 10.05). The Registrar or co-Registrar shall not be required to register
the transfer or exchange of any Security (i) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three
hereof, except the unredeemed portion of any Security being redeemed in part.
Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any Agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and neither the Company,
the Trustee nor any such Agent shall be affected by notice to the contrary. Any
Holder of a beneficial interest in a Global Security shall, by acceptance of
such beneficial interest in a Global Security, agree that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depository (or its agent), and that
ownership of a beneficial interest in a Global Security shall be required to be
reflected in a book entry.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements for replacement of Securities are met. If
required by the Company or the Trustee, such Holder must provide an indemnity
bond or other indemnity, sufficient in the judgment of both the Company and the
Trustee, to protect the Company, the Trustee and any
<PAGE>
-23-
Agent from any loss which any of them may suffer if a Security is replaced The
Company may charge such Holder for its reasonable out-of-pocket expenses in
replacing a Security, including reasonable fees and expenses of counsel.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section
2.07.
If on a Redemption Date, Purchase Date or the Final Maturity Date the
Paying Agent holds money sufficient to pay all of the principal and interest due
on the Securities payable on that date, and is not prohibited from paying such
money to the Holders pursuant to the terms of this Indenture, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, the Guarantors or any of their respective Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned shall
be disregarded.
The Company shall notify the Trustee, in writing, when it, any
Guarantor or any of its Affiliates repurchases or otherwise acquires Securities,
of the aggregate principal amount of such Securities so repurchased or otherwise
acquired.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate upon receipt of a written order of the Company
pursuant to Section 2.02 definitive Securities in exchange for temporary
Securities.
<PAGE>
-24-
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Company,
dispose of and deliver evidence of such disposal of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Company may not issue new Securities to replace Securities that it has paid or
delivered to the Trustee for cancellation. If the Company or any Guarantor shall
acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Company shall pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Securities. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate of interest then borne by the Securities.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day preceding the date
fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(b) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use a "CUSIP" number and
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided , however, that any such notice may state that
no representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Securities, and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company shall
promptly notify the Trustee of any changes in CUSIP numbers.
SECTION 2.14. Deposit of Moneys.
Prior to 12:00 noon New York City time on each Interest Payment Date,
Redemption Date, Purchase Date and the Final Maturity Date, the Company shall
deposit with the Paying Agent in immediately available funds money sufficient to
make cash payments, if any, due on such Interest Payment Date, Redemption Date,
Purchase Date or Final Maturity Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such Interest
Payment Date, Redemption Date, Purchase Date or Final Maturity Date, as the case
may be.
<PAGE>
-25-
SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit C.
Members of, or participants in, the Depository ("Participants") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and Participants, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16; provided,
however, that Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor Depository is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
the Global Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Global Securities, an equal aggregate principal amount of Physical Securities of
authorized denominations.
(d) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(c) of this Section 2.15 shall, except as otherwise provided by Section 2.16,
bear the Private Placement Legend.
(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities and the Trustee is entitled to rely upon
any electronic instructions from beneficial owners to the Holder of any Global
Security.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar or co-Registrar with a request:
(i) to register the transfer of the Physical Securities; or
<PAGE>
-26-
(ii) to exchange such Physical Securities for an equal principal
amount of Physical Securities of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; provided, however, that the Physical
Securities presented or surrendered for Registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical Securities
shall be accompanied, in the sole discretion of the Company, by the
following additional information and documents, as applicable:
(A) if such Physical Security is being delivered to the Registrar or
co-Registrar by a Holder for Registration in the name of such
Holder, without transfer, a certification from such Holder to
that effect (substantially in the form of Exhibit D hereto); or
(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and a
transferee letter of representation substantially in the form of
Exhibit E hereto and, at the option of the Company, an Opinion of
Counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act; or
(D) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and,
at the option of the Company, an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transfer is
in compliance with the Securities Act; or
(E) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially in
the form of Exhibit D hereto) and, at the option of the Company,
an Opinion of Counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities
Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of a
Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
<PAGE>
-27-
(A) certification, substantially in the form of Exhibit D hereto,
that such Physical Security is being transferred (I) to a QIB or
(II) to an Accredited Investor and, with respect to (II), at the
option of the Company, an Opinion of Counsel reasonably
acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act; and
(B) written instructions directing the Registrar or co-Registrar to
make, or to direct the Depository to make, an endorsement on the
applicable Global Security to reflect an increase in the
aggregate amount of the Securities represented by the Global
Security,
then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the principal amount of Securities represented by the applicable
Global Security to be increased accordingly. If no 144A Global Security or IAI
Global Security, as the case may be, is then outstanding, the Company shall,
unless either of the events in the proviso to Section 2.15(b) have occurred and
are continuing, issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate such a Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or Co-Registrar of written instructions,
or such other instruction as is customary for the Depository, from the
Depository or its nominee, requesting the Registration of transfer of an
interest in a 144A Global Security or an IAI Global Security, as the case may
be, to another type of Global Security, together with the applicable Global
Securities (or, if the applicable type of Global Security required to represent
the interest as requested to be obtained is not then outstanding, only the
Global Security representing the interest being transferred), the Registrar or
Co-Registrar shall reflect on its books and records (and the applicable Global
Security) the applicable increase and decrease of the principal amount of
Securities represented by such types of Global Securities, giving effect to such
transfer. If the applicable type of Global Security required to represent the
interest as requested to be obtained is not outstanding at the time of such
request, the Company shall issue and the Trustee shall, upon written
instructions from the Company in accordance with Section 2.02, authenticate a
new Global Security of such type in principal amount equal to the principal
amount of the interest requested to be transferred.
(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.
(i) If the Depository is at any time unwilling or unable to continue
as a depositary for the Global Securities and a successor depositary is not
appointed by the Company within 90 days, Physical Securities will be issued
in exchange for the Global Securities. Upon receipt by the Registrar or co-
Registrar of written instructions, or such other form of instructions as is
customary for the Depository, from the Depository or its nominee on behalf
of any Person (subject to the previous sentence) having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the Depository
or the Person designated by the Depository as having such a beneficial
interest containing registration instructions and, in the case of any such
transfer or exchange of a beneficial interest in Securities the offer and
sale of which have not been registered under the Securities Act, the
following additional information and documents:
<PAGE>
-28-
(A) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (substantially in the form of Exhibit D hereto) and,
at the option of the Company, an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transfer is
in compliance with the Securities Act; or
(B) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially in
the form of Exhibit D hereto) and, at the option of the Company,
an Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository and
the Registrar or co-Registrar, the aggregate principal amount of the
applicable Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the
form of an Officers' Certificate in accordance with Section 2.02, the
Trustee will authenticate and deliver to the transferee a Physical Security
in the appropriate principal amount.
(ii) Securities issued in exchange for a beneficial interest in a
Global Security pursuant to this Section 2.16(d) shall be registered in
such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise,
shall instruct the Registrar or co-Registrar in writing. The Registrar or
co-Registrar shall deliver such Physical Securities to the Persons in whose
names such Physical Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar or co-Registrar shall
deliver only Securities that bear the Private Placement Legend unless, and the
Trustee is hereby authorized to deliver Securities without the Private Placement
Legend if, (i) there is delivered to the Trustee an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act;(ii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act (including pursuant to a Registration); or (iii) the date of such
transfer, exchange or replacement is two years after the later of (x) the Issue
Date and (y) the last date that the Company or any affiliate (as defined in Rule
144 under the Securities Act) of the Company was the owner of such Securities
(or any predecessor thereto).
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
<PAGE>
-29-
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Participants or
beneficial owners of interest in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company wants to redeem Securities pursuant to paragraph 5 or
6 of the Securities at the applicable redemption price set forth thereon, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed. The Company shall give such notice to the
Trustee at least 30 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein.
SECTION 3.02. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
paragraph 5 of the Securities, the Trustee shall select the Securities to be
redeemed in compliance with the requirements of the national securities
exchange, if any, on which the Securities are listed or, if the Securities are
not then listed on a national securities exchange, on a pro rata basis, by lot
or in such other manner as the Trustee shall deem fair and appropriate.
Selection of the Securities to be redeemed pursuant to paragraph 6 of the
Securities shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to the procedures of the Depository)
based on the aggregate principal amount of Securities held by each Holder. The
Trustee shall make the selection from the Securities then outstanding, subject
to redemption and not previously called for redemption.
The Trustee may select for redemption pursuant to paragraph 5 or 6 of
the Securities portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption.
<PAGE>
-30-
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address;
provided, however, that notice of a redemption pursuant to paragraph 6 of the
Securities shall be mailed to each Holder whose Securities are to be redeemed no
later than 60 days after the date of the Closing of the relevant Public Equity
Offering of the Company.
Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent to which the Securities
are to be surrendered for redemption;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders
is to receive payment of the redemption price upon surrender to the Paying
Agent; and
(6) in the case of any redemption pursuant to paragraph 5 or 6 of the
Securities, if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof will
be issued.
At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.
SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price, plus accrued interest thereon, if any, to the Redemption Date,
but interest installments whose maturity is on or prior to such Redemption Date
shall be payable to the Holders of record at the close of business on the
relevant Interest Record Date.
SECTION 3.05. Deposit of Redemption Price.
At least one Business Day before the Redemption Date, the Company
shall deposit with the Paying Agent (or if the Company is its own Paying Agent,
shall, on or before the Redemption Date, segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest, if any, on all
Securities
<PAGE>
-31-
to be redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Company to the Trustee
for cancellation.
If any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid on the Redemption Date due to the failure of
the Company to deposit with the Paying Agent money sufficient to pay the
redemption price thereof, the principal and accrued and unpaid interest, if any,
thereon shall, until paid or duly provided for, bear interest as provided in
Sections 2.12 and 4.01 with respect to any payment default.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities
in the manner provided in the Securities and the Registration Rights Agreement.
An installment of principal or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Company, a Guarantor or any of
their respective Affiliates) holds on that date money designated for and
sufficient to pay the installment in full and is not prohibited from paying such
money to the Holders of the Securities pursuant to the terms of this Indenture.
The Company shall pay cash interest on overdue principal at the same
rate per annum borne by the Securities. The Company shall pay cash interest on
overdue installments of interest at the same rate per annum borne by the
Securities, to the extent lawful, as provided in Section 2.12.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 13. The Company hereby initially designates the
Trustee at its address set forth in Section 13.02 as its office or agency in The
Borough of Manhattan, The City of New York, for such purposes.
SECTION 4.03. Transactions with Affiliates.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, conduct any business or enter into any
transaction (or series of related transactions) with or for the benefit of any
of their respective Affiliates or any officer, director or employee of the
Company or any Restricted Subsidiary (each an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms which are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than would be avail-
<PAGE>
-32-
able in a comparable transaction with an unaffiliated third party and (ii) (A)
if such Affiliate Transaction (or series of related Affiliate Transactions)
involves aggregate payments or the transfer of other consideration between the
Company and an Affiliate of the Company having a Fair Market Value in excess of
$15.0 million, such Affiliate Transaction is in writing and the Company delivers
an officer's certificate to the Trustee certifying that such Affiliate
Transaction (or series of Affiliate Transactions) complies with the foregoing
provisions, (B) if such Affiliate Transaction (or series of related Affiliate
Transactions) involves aggregate payments or the transfer of other consideration
between the Company and an Affiliate of the Company having a Fair Market Value
in excess of $15.0 million, such Affiliate Transaction is in writing and a
majority of the disinterested members of the Board of Directors of the Company
shall have approved such Affiliate Transaction and determined that such
Affiliate Transaction complies with the foregoing provisions. In addition, any
Affiliate Transaction involving aggregate payments or the transfer of other
consideration between the Company and an Affiliate of the Company having a Fair
Market Value in excess of $25.0 million will also require a written opinion from
an Independent Financial Advisor (filed with the Trustee) stating that the terms
of such Affiliate Transaction are fair, from a financial point of view, to the
Company or the Restricted Susidiary involved in such Affiliate Transaction, as
the case may be.
Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions with or among the Company and any
Wholly Owned Restricted Subsidiary or between or among Wholly Owned Restricted
Subsidiaries; (ii) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees, consultants or agents of
the Company or any Restricted Subsidiary of the Company as determined in good
faith by the Company's Board of Directors; (iii) any transactions undertaken
pursuant to any contractual obligations or rights in existence on the Issue Date
(as in effect on the Issue Date); (iv) any Restricted Payments made in
compliance with Section 4.06; (v) loans and advances to officers, directors and
employees of the Company or any Restricted Subsidiary for travel, entertainment,
moving and other relocation expenses, in each case made in the ordinary course
of business; and (vi) the entering into by the Company and any of its
consolidated Restricted Subsidiaries of a tax sharing or similar arrangement.
SECTION 4.04. Limitation on Indebtedness.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness), except for Permitted Indebtedness; provided, however,
that the Company and any Restricted Subsidiary may Incur Indebtedness if, at the
time of and immediately after giving pro forma effect to such Incurrence of
Indebtedness and the application of the proceeds therefrom, the Consolidated
Coverage Ratio would be greater than 2.0 to 1.0.
The foregoing limitations will not apply to the Incurrence by the
Company or any Restricted Subsidiary of any of the following (collectively,
"Permitted Indebtedness"), each of which shall be given independent effect:
(a) Indebtedness under the Notes;
(b) Indebtedness Incurred pursuant to (i) the Amended Credit Facility
and/or (ii) any other agreements or indentures governing Senior
Indebtedness if at the time of and immediately after giving effect thereto,
the aggregate consolidated Indebtedness Incurred under both clauses (i) and
(ii) would not exceed $325.0 million at any one time outstanding; provided,
however, that such $325.0 million shall be reduced (without duplication) by
the amount of any repayment of Indebtedness under the Amended Credit
Facility pursuant to Section 4.05;
<PAGE>
-33-
(c) Indebtedness of any Restricted Subsidiary owed to and held by the
Company or any Guarantor, other Indebtedness of the Company owed to and
held by any Guarantor which is unsecured and subordinated in right of
payment to the payment and performance of the Company's obligations under
any Senior Indebtedness, the Indenture and the Notes and Indebtedness of a
Foreign Restricted Subsidiary that is not a Guarantor owed to and held by
any other Restricted Subsidiary that is not a Guarantor; provided, however,
that an Incurrence of Indebtedness that is not permitted by this clause (c)
shall be deemed to have occurred upon (i) any sale or other disposition of
any Indebtedness of the Company or any Restricted Subsidiary referred to in
this clause (c) to a Person (other than the Company or a Guarantor), (ii)
any sale or other disposition of Equity Interests of any Guarantor which
holds Indebtedness of the Company or another Restricted Subsidiary such
that such Guarantor ceases to be a Guarantor and (iii) the designation of a
Restricted Subsidiary that is a Guarantor and which holds Indebtedness of
the Company or any other Restricted Subsidiary as an Unrestricted
Subsidiary;
(d) the Guarantees and guarantees by any Guarantor of Indebtedness of
the Company; provided, however, that if such guarantee is of Subordinated
Indebtedness, then the Guarantee of such Guarantor shall be senior to such
Guarantor's guarantee of Subordinated Indebtedness;
(e) Hedging Obligations of the Company or any Guarantor entered into
in the ordinary course of business and not for speculative purposes;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations
which do not exceed $25.0 million in the aggregate at any one time
outstanding;
(g) Indebtedness to the extent representing a replacement, renewal,
refinancing or extension (collectively, a "refinancing") of outstanding
Indebtedness Incurred in compliance with the Consolidated Coverage Ratio of
the first paragraph of this covenant or clause (a) of this paragraph of
this covenant; provided, however, that (i) any such refinancing shall not
exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness being refinanced, plus
the amount of accrued interest thereon, plus the amount of any reasonably
determined prepayment premium necessary to accomplish such refinancing and
such reasonable fees and expenses incurred in connection therewith, (ii)
Indebtedness representing a refinancing of Indebtedness other than Senior
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness
being refinanced, (iii) Indebtedness that is pari passu with the Notes may
only be refinanced with Indebtedness that is made pari passu with or
subordinate in right of payment to the Notes and Subordinated Indebtedness
may only be refinanced with Subordinated Indebtedness, (iv) no Restricted
Subsidiary that is not a Guarantor may Incur Indebtedness to refinance
Indebtedness of the Company or any Guarantor and (v) Indebtedness of the
Company may only be refinanced by Indebtedness of the Company and
Indebtedness of a Restricted Subsidiary may only be refinanced by
Indebtedness of such Restricted Subsidiary or by the Company; and
(h) in addition to the items referred to in clauses (a) through (f)
above, Indebtedness of the Company (including any Indebtedness under the
Amended Credit Facility that utilizes this subparagraph (h)) having an
aggregate principal amount not to exceed $50.0 million at any one time
outstanding.
<PAGE>
-34-
SECTION 4.05. Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
(i) the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (ii) at least 75% of such
consideration consists of (A) cash or Cash Equivalents, or (B) properties,
capital assets and interests in joint ventures (however structured) that replace
the properties and assets that were the subject of such Asset Sale or in
properties and capital assets that will be used in the business of the Company
and its Restricted Subsidiaries as existing at such time or in businesses
reasonably related thereto (as determined in good faith by the Company's Board
of Directors) ("Replacement Assets"). The amount of any Indebtedness (other than
any Subordinated Indebtedness) of the Company or any Restricted Subsidiary that
is actually assumed by the transferee in such Asset Sale and from which the
Company and the Restricted Subsidiaries are fully and unconditionally released
shall be deemed to be cash for purposes of determining the percentage of cash
consideration received by the Company or the Restricted Subsidiaries.
The Company or such Restricted Subsidiary, as the case may be, may (i)
apply the Net Cash Proceeds of any Asset Sale within 270 days of receipt thereof
to repay Senior Indebtedness and permanently reduce any related commitment, or
(ii) make an Investment in Replacement Assets.
To the extent all or part of the Net Cash Proceeds of any Asset Sale
are not applied within 270 days of such Asset Sale as described in clause (i) or
(ii) of the immediately preceding paragraph (such Net Cash Proceeds, the
"Unutilized Net Cash Proceeds"), the Company shall, within 45 days after such
270th day, make an Offer to Purchase all outstanding Notes and other Senior
Subordinated Indebtedness, pro rata, up to a maximum principal amount (expressed
as a multiple of $1,000) of Notes and other Senior Subordinated Indebtedness
equal to such Unutilized Net Cash Proceeds, at a purchase price in cash equal to
100% of the principal amount thereof (or the accreted value of such other Senior
Subordinated Indebtedness, if such other Senior Subordinated Indebtedness is
issued at a discount), plus accrued and unpaid interest thereon, if any, to the
Purchase Date; provided, however, that the Offer to Purchase may be deferred
until there are aggregate Unutilized Net Cash Proceeds equal to or in excess of
$25.0 million, at which time the entire amount of such Unutilized Net Cash
Proceeds, and not just the amount in excess of $25.0 million, shall be applied
as required pursuant to this paragraph.
(b) With respect to any Offer to Purchase effected pursuant to this
covenant, among the Notes, to the extent the aggregate principal amount of Notes
and other Senior Subordinated Indebtedness tendered pursuant to such Offer to
Purchase exceeds the Unutilized Net Cash Proceeds to be applied to the
repurchase thereof, such Notes and other Senior Subordinated Indebtedness shall
be purchased pro rata based on the aggregate principal amount of such Notes and
other Senior Subordinated Indebtedness tendered (or the accreted value of such
other Senior Subordinated Indebtedness, if such other Senior Subordinated
Indebtedness is issued at a discount) by each holder of Notes and such other
Senior Subordinated Indebtedness. To the extent the Unutilized Net Cash Proceeds
exceed the aggregate amount of Notes and other Senior Subordinated Indebtedness
tendered pursuant to such Offer to Purchase, the Company may retain and utilize
any portion of the Unutilized Net Cash Proceeds not applied to repurchase the
Notes and other Senior Subordinated Indebtedness for any purpose consistent with
the other terms of the Indenture.
(c) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) subject to paragraph (b) of this Section 4.05,
accept for payment all Securities validly tendered pursuant to the Offer, (ii)
deposit with the Paying Agent or, if the Company is acting as its own Paying
Agent, segregate
<PAGE>
-35-
and hold in trust as provided in Section 2.04, money sufficient to pay the
Purchase Price of all Securities or portions thereof so accepted and (iii)
deliver or cause to be delivered to the Trustee for cancellation all Securities
so accepted together with an Officers' Certificate stating the Securities or
portions thereof accepted for payment by the Company. The Paying Agent (or the
Company, if so acting) shall promptly mail or deliver to Holders of Securities
so accepted, payment in an amount equal to the Purchase Price for such
Securities, and the Trustee shall promptly authenticate and mail or deliver to
each Holder of Securities a new Security or Securities equal in principal amount
to any unpurchased portion of the Security surrendered as requested by the
Holder. Any Security not accepted for payment shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Offer on or as soon as practicable after the
Purchase Date.
(d) In the event that the Company makes an Offer to Purchase the
Securities and other Senior Subordinated Indebtedness, the Company shall comply
with any applicable securities laws and regulations, and any violation of the
provisions of this Indenture relating to such Offer to Purchase occurring as a
result of such compliance shall not be deemed a Default or an Event of Default.
(e) Each Holder shall be entitled to tender all or any portion of the
Notes owned by such Holder pursuant to the Offer to Purchase, subject to the
requirement that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount and subject to any proration among tendering
Holders and holders of other Senior Subordinated Indebtedness as described
above.
SECTION 4.06. Limitation on Restricted Payments.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or any other distribution on any
Equity Interests of the Company or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their
capacities as such) of Equity Interests of the Company or any Restricted
Subsidiary (other than any dividends, distributions and payments made to
the Company or any Restricted Subsidiary and dividends or distributions
payable to any Person solely in Qualified Equity Interests of the Company
or in options, warrants or other rights to purchase Qualified Equity
Interests of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Restricted Subsidiary (other than
any such Equity Interests owned by the Company or any Restricted
Subsidiary);
(iii) purchase, redeem, defease or retire for value, or make any
principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness (other
than any Subordinated Indebtedness held by the Company); or
(iv) make any Investment in any Person (other than Permitted
Investments)
(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "Restricted Payment"), unless
(a) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such
Restricted Payment;
<PAGE>
-36-
(b) immediately after giving effect to such Restricted Payment, the
Company would be able to Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of Section 4.04; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments declared or made on or after
the Issue Date does not exceed an amount equal to the sum of (1) 50% of
cumulative Consolidated Net Income determined for the period (taken as one
period) from the beginning of the first fiscal quarter commencing after the
Issue Date and ending on the last day of the most recent fiscal quarter
immediately preceding the date of such Restricted Payment for which
consolidated financial information of the Company is available (or if such
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (2) the aggregate net cash proceeds received by the Company
either (x) as capital contributions to the Company after the Issue Date or
(y) from the issue and sale (other than to a Restricted Subsidiary) of its
Qualified Equity Interests after the Issue Date (excluding the net proceeds
from any issuance and sale of Qualified Equity Interests financed, directly
or indirectly, using funds borrowed from the Company or any Restricted
Subsidiary until and to the extent such borrowing is repaid), plus (3) the
principal amount (or accreted amount (determined in accordance with GAAP),
if less) of any Indebtedness of the Company or any Restricted Subsidiary
Incurred after the Issue Date which has been converted into or exchanged
for Qualified Equity Interests of the Company, plus (4) without duplication
of any amounts included in clause (i) above, in the case of the disposition
or repayment of, or the receipt by the Company or any Restricted Subsidiary
of any dividends or distributions from, any Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the lesser
of the amount of such Investment and the amount received by the Company or
any Restricted Subsidiary upon such disposition, repayment, dividend or
distribution, plus (5) in the event the Company or any Restricted
Subsidiary makes any Investment in a Person that, as a result of or i
connection with such Investment, becomes a Restricted Subsidiary, an amount
equal to the Company's or any Restricted Subsidiary's existing Investment
in such Person that was previously treated as a Restricted Payment, plus
(6) so long as the Designation thereof was treated as a Restricted Payment
made after the Issue Date, with respect to any Unrestricted Subsidiary that
has been redesignated as a Restricted Subsidiary after the Issue Date in
accordance with Section 4.17, an amount equal to the Company's Investment
in such Unrestricted Subsidiary (provided that such amount shall not in any
case exceed the Designation Amount with respect to such Restricted
Subsidiary upon its Designation), plus (7) $25.0 million, minus (8) the
Designation Amount (measured as of the date of Designation) with respect to
any Subsidiary of the Company which has been designated as an Unrestricted
Subsidiary after the Issue Date in accordance with Section 4.17.
The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving of
formal notice of such redemption, if at the date of such declaration or giving
of such formal notice such payment or redemption would comply with the
provisions of the Indenture; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other than
to a Restricted Subsidiary) of, Qualified Equity Interests of the Company;
provided, however, that any such net cash proceeds and the value of any
Qualified Equity Interests issued in exchange for such retired Equity Interests
are excluded from clause (c)(2) of the preceding paragraph (and were not
included therein at any time) and are not used to redeem the Notes pursuant to
paragraphs 5 or 6 of the Securities; (iii) the purchase, redemption, retirement,
defeasance or other acquisition of Subordinated Indebtedness, or any other
payment thereon, made in exchange for, or out of the net cash proceeds of, a
substantially concurrent issue and sale (other than to a Restricted Subsidiary)
of (x)
<PAGE>
-37-
Qualified Equity Interests of the Company; provided, however, that any such net
cash proceeds and the value of any Qualified Equity Interests issued in exchange
for Subordinated Indebtedness are excluded from clauses (c)(2) and (c)(3) of the
preceding paragraph (and were not included therein at any time) and are not used
to redeem the Notes pursuant to paragraphs 5 or 6 of the Securities or (y)
Subordinated Indebtedness permitted to be Incurred pursuant to clause (g) of the
second paragraph of Section 4.04; (iv) the making of loans or advances to
officers and directors of the Company or any Restricted Subsidiary entered into
in the ordinary course of business in an amount not to exceed $5.0 million at
any one time outstanding;(v) the repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of principal of Subordinated
Indebtedness at a purchase price not greater than 101% of the principal amount
of such Subordinated Indebtedness in the event of a Change of Control pursuant
to a provision similar to Section 4.14; provided, however, that prior to any
such repurchase, the Company has made an Offer to Purchase as provided in
Section 4.14 with respect to the Notes and has repurchased all Notes validly
tendered for payment in connection with such Offer to Purchase; or (vi)
Investments in joint ventures (however structured) not to exceed $25.0 million
at any one time outstanding; provided, however, that in the case of each of
clauses (ii), (iii), (v) and (vi) no Default or Event of Default shall have
occurred and be continuing or would arise therefrom.
In determining the amount of Restricted Payments permissible under
this Section, amounts expended pursuant to clauses (i) and (iv) of the
immediately preceding paragraph shall be included as Restricted Payments. The
amount of any non-cash Restricted Payment shall be deemed to be equal to the
Fair Market Value thereof at the date of the making of such Restricted Payment.
SECTION 4.07. Corporate Existence.
Subject to Article Five, the Company shall do or shall cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational documents
of each such Restricted Subsidiary and the rights (charter and statutory) and
material franchises of the Company and the Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right or
franchise, or the corporate existence of any Restricted Subsidiary, if the Board
of Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries, taken as a whole; provided, further, however, that a
determination of the Board of Directors of the Company shall not be required in
the event of a merger of one or more Wholly Owned Restricted Subsidiaries of the
Company with or into another Wholly Owned Restricted Subsidiary of the Company
or another Person, if the surviving Person is a Wholly Owned Restricted
Subsidiary of the Company organized under the laws of the United States or a
State thereof or of the District of Columbia or, in the case of a Foreign
Restricted Subsidiary, the jurisdiction of incorporation or organization of such
Foreign Restricted Subsidiary. This Section 4.07 shall not prohibit the Company
from taking any other action otherwise permitted by, and made in accordance
with, the provisions of this Indenture.
SECTION 4.08. [Intentionally Omitted]
SECTION 4.09. Notice of Defaults.
(a) In the event that any Indebtedness of the Company or any of its
Subsidiaries is declared due and payable before its maturity because of the
occurrence of any default (or any event which, with notice or lapse of time, or
both, would constitute such a default) under such Indebtedness, the Company
shall promptly give written notice to the Trustee of such declaration, the
status of such default or event and what action the Company is taking or
proposes to take with respect thereto.
<PAGE>
-38-
(b) Upon becoming aware of any Default or Event of Default, the
Company shall promptly deliver an Officers' Certificate to the Trustee
specifying the Default or Event of Default.
SECTION 4.10. [Intentionally Omitted].
SECTION 4.11. Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after the
close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Company has been made under the
supervision of the signing officers with a view to determining whether a Default
or Event of Default has occurred and whether or not the signers know of any
Default or Event of Default by the Company that occurred during such fiscal
year. If they do know of such a Default or Event of Default, the certificate
shall describe all such Defaults or Events of Default, their status and the
action the Company is taking or proposes to take with respect thereto. The first
certificate to be delivered by the Company pursuant to this Section 4.11 shall
be for the fiscal year ending December 29, 1997.
SECTION 4.12. Provision of Financial Information.
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the SEC (if permitted by SEC practice and applicable law and regulations) the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the SEC pursuant to such Section 13(a) or 15(d)
or any successor provision thereto if the Company were so subject, such
documents to be filed with the SEC on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so subject. The Company shall also in
any event (a) within 15 days of each Required Filing Date (whether or not
permitted or required to be filed with the SEC) (i) transmit (or cause to be
transmitted) by mail to all Holders, as their names and addresses appear in the
Security Register, without cost to such Holders upon their request, and (ii)
file with the Trustee, copies of the annual reports, quarterly reports and proxy
statements which the Company is required to file with the SEC pursuant to the
preceding sentence, or, if such filing is not so permitted, information and data
of a similar nature, and (b) if, notwithstanding the preceding sentence, filing
such documents by the Company with the SEC is not permitted by SEC practice or
applicable law or regulations, promptly upon written request supply copies of
such documents to any Holder. In addition, for so long as any Securities remain
outstanding and prior to the later of the consummation of the Exchange Offer and
the filing of the Initial Shelf Registration Statement, if required, the Company
will furnish to the Holders, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.13. [Intentionally Omitted].
SECTION 4.14. Change of Control.
(a) Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall notify the
Holders of the Securities of such occurrence in the manner prescribed by this
Indenture and shall, within 45 days after the Change of Control Date, make an
Offer to Purchase all Securities then outstanding at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Purchase Date (subject to the right of Holders
of record on the relevant Interest Record Date to receive interest due on the
relevant Interest
<PAGE>
-39-
Payment Date). The Company's obligations may be satisfied if a third party makes
the Offer to Purchase in the manner, at the times and otherwise in compliance
with the requirements of this Indenture applicable to an Offer to Purchase made
by the Company and purchases all Securities validly tendered and not withdrawn
under such Offer to Purchase. Each Holder shall be entitled to tender all or any
portion of the Securities owned by such Holder pursuant to the Offer to
Purchase, subject to the requirement that any portion of a Security tendered
must be tendered in an integral multiple of $1,000 principal amount.
(b) On or prior to the Purchase Date specified in the Offer to
Purchase, the Company shall (i) accept for payment all Securities or portions
thereof validly tendered pursuant to the Offer, (ii) deposit with the Paying
Agent or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 2.04, money sufficient to pay the Purchase Price
of all Securities or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee for cancellation all Securities so accepted together
with an Officers' Certificate stating the Securities or portions thereof
accepted for payment by the Company. The Paying Agent (or the Company, if so
acting) shall promptly mail or deliver to Holders of Securities so accepted,
payment in an amount equal to the Purchase Price for such Securities, and the
Trustee shall promptly authenticate and mail or deliver to each Holder of
Securities a new Security or Securities equal in principal amount to any
unpurchased portion of the Security surrendered as requested by the Holder. Any
Security not accepted for payment shall be promptly mailed or delivered by the
Company to the Holder thereof. The Company shall publicly announce the results
of the Offer on or as soon as practicable after the Purchase Date.
(c) If the Company makes an Offer to Purchase, the Company will comply
with all applicable tender offer laws and regulations and any violation of the
provisions of this Indenture relating to such Offer to Purchase occurring as a
result of such compliance shall not be deemed a Default or an Event of Default.
SECTION 4.15. Limitation on Senior Subordinated Indebtedness.
(a) The Company shall not, directly or indirectly, Incur any
Indebtedness that by its terms would expressly rank senior in right of payment
to the Securities and subordinate in right of payment to any other Indebtedness
of the Company.
(b) The Company shall not permit any Guarantor to, and no Guarantor
shall, directly or indirectly, Incur any Indebtedness that by its terms would
expressly rank senior in right of payment to the Guarantee of such Guarantor and
subordinate in right of payment to any other Indebtedness of such Guarantor.
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions to
the Company or any other Restricted Subsidiary on its Equity Interests or with
respect to any other interest or participation in, or measured by, its profits,
or pay any Indebtedness owed to the Company or any other Restricted Subsidiary,
(b) make loans or advances to, or guarantee any Indebtedness or other
obligations of, or make any Investment in, the Company or any other Restricted
Subsidiary, or (c) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) the Amended Credit Facility, or any other
agreement of the Company or the Restricted Subsidiaries outstanding on the Issue
Date, in each case as in effect on the Issue Date, and any amendments,
restatements, renewals, replacements or refinancings thereof; provided, however,
that any such amendment,
<PAGE>
-40-
restatement, renewal, replacement or refinancing is no more restrictive in the
aggregate with respect to such encumbrances or restrictions than those contained
in the agreement being amended, restated, reviewed, replaced or refinanced; (ii)
applicable law; (iii) any instrument governing Indebtedness or Equity Interests
of an Acquired Person acquired by the Company or any Restricted Subsidiary as in
effect at the time of such acquisition (except to the extent such Indebtedness
was Incurred by such Acquired Person in connection with, as a result of or in
contemplation of such acquisition); provided, however, that such encumbrances
and restrictions are not applicable to the Company or any Restricted Subsidiary,
or the properties or assets of the Company or any Restricted Subsidiary, other
than the Acquired Person; (iv) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices; (v) Purchase Money Indebtedness for property acquired in the ordinary
course of business that only imposes encumbrances and restrictions on the
property so acquired; (vi) any agreement for the sale or disposition of the
Equity Interests or assets of any Restricted Subsidiary; provided, however, that
such encumbrances and restrictions described in this clause (vi) are only
applicable to such Restricted Subsidiary or assets, as applicable, and any such
sale or disposition is made in compliance with Section 4.05 to the extent
applicable thereto; (vii) refinancing Indebtedness permitted under clause (h) of
the second paragraph of Section 4.04; provided, however, that such encumbrances
and restrictions contained in the agreements governing such Indebtedness are no
more restrictive in the aggregate than those contained in the agreements
governing the Indebtedness being refinanced immediately prior to such
refinancing; or (viii) this Indenture.
SECTION 4.17. Designation of Unrestricted Subsidiaries.
(a) The Company may designate after the Issue Date any Subsidiary of
the Company as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such Designation, the
Company could Incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the Consolidated Coverage Ratio of the first paragraph
of Section 4.04; and
(iii) the Company would be permitted to make an Investment (other than
a Permitted Investment) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to the first paragraph of
Section 4.06 in an amount (the "Designation Amount") equal to the amount of
the Company's Investment in such Subsidiary on such date.
Neither the Company nor any Restricted Subsidiary shall at any time
(x) provide credit support for, subject any of its property or assets (other
than the Equity Interests of any Unrestricted Subsidiary) to the satisfaction
of, or guarantee, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary, or (z) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary, except for any
non-recourse guarantee given solely to support the pledge by the Company or any
Restricted Subsidiary of the capital stock of any Unrestricted Subsidiary. For
purposes of the foregoing, the Designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be deemed to include the Designation of all of the
Subsidiaries of such Subsidiary.
(b) The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") only if:
<PAGE>
-41-
(i) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company, delivered to the Trustee certifying compliance with
the foregoing provisions.
SECTION 4.18. Limitation on Liens.
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, directly or indirectly, Incur any Liens of any kind against or
upon any of their respective properties or assets now owned or hereafter
acquired, or any proceeds therefrom or any income or profits therefrom, to
secure any Indebtedness unless contemporaneously therewith effective provision
is made, (x) in the case of the Company, to secure the Securities and all other
amounts due under this Indenture and any other class of Senior Subordinated
Indebtedness, and (y) in the case of a Restricted Subsidiary which is a
Guarantor, to secure such Restricted Subsidiary's Guarantee of the Securities
and all other amounts due under this Indenture, in each case, equally and
ratably with such Indebtedness (or, in the event that such Indebtedness is
subordinated in right of payment to the Securities or such Restricted
Subsidiary's Guarantee, prior to such Indebtedness) with a Lien on the same
properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (i) Liens securing Senior
Indebtedness (including, without limitation, Indebtedness Incurred under the
Amended Credit Facility) and (ii) Permitted Liens.
SECTION 4.19. Guarantee of Notes by Restricted Subsidiaries.
In the event the Company (i) organizes or acquires any Domestic
Restricted Subsidiary after the Issue Date that is not a Guarantor or (ii)
causes or permits any Foreign Restricted Subsidiary that is not a Guarantor to,
directly or indirectly, guarantee the payment of any Indebtedness of the Company
or any Domestic Restricted Subsidiary ("Other Indebtedness") then, in each case
the Company shall cause such Restricted Subsidiary to simultaneously execute and
deliver a supplemental indenture to the Indenture pursuant to which it will
become a Guarantor under the Indenture; provided, however, that in the event a
Domestic Restricted Subsidiary is acquired in a transaction in which a merger
agreement is entered into, such Domestic Restricted Subsidiary shall not be
required to execute and deliver such supplemental indenture until the
consummation of the merger contemplated by any such merger agreement; provided,
further, that if such Other Indebtedness is (i) Indebtedness that is ranked pari
passu in right of payment with the Notes or the Guarantee of such Restricted
Subsidiary, as the case may be, the Guarantee of such Subsidiary shall be pari
passu in right of payment with the guarantee of the Other Indebtedness; or (ii)
Subordinated Indebtedness, the Guarantee of such Subsidiary shall be senior in
right of payment to the guarantee of the Other Indebtedness (which guarantee of
such Subordinated Indebtedness shall provide that such guarantee is subordinated
to the Guarantees of such Subsidiary to the same extent and in the same manner
as the Other Indebtedness is subordinated to the Notes or the Guarantee of such
Restricted Subsidiary, as the case may be).
SECTION 4.20. Limitation on the Sale or Issuance of Equity
Interests of Restricted Subsidiaries.
The Company shall not sell any Equity Interest of a Restricted
Subsidiary, and shall not cause or permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any Equity Interests, except:
<PAGE>
-42-
(i) to the Company or a Wholly Owned Restricted Subsidiary; or (ii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary. Notwithstanding
the foregoing, the Company is permitted to sell all the Equity Interests of a
Restricted Subsidiary so long as the Company complies with Section 4.05 and, if
applicable, Article Five.
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc.
(a) The Company shall not consolidate with or merge with or into
(whether or not the Company is the Surviving Person) any other entity and the
Company shall not and shall not cause or permit any Restricted Subsidiary to,
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Company's properties and assets (determined on a
consolidated basis for the Company and the Restricted Subsidiaries) to any
entity in a single transaction or series of related transactions, unless: (i)
either (x) the Company shall be the Surviving Person or (y) the Surviving Person
(if other than the Company) shall be a corporation organized and validly
existing under the laws of the United States of America or any State thereof or
the District of Columbia or, if any such Restricted Subsidiary was a Foreign
Restricted Subsidiary, under the laws of the United States of America or any
state thereof or the District of Columbia or the jurisdiction under which such
Foreign Restricted Subsidiary was organized, and shall, in any such case,
expressly assume by a supplemental indenture, the due and punctual payment of
the principal of, premium, if any, and interest on all the Securities and the
performance and observance of every covenant of this Indenture and the
Registration Rights Agreement to be performed or observed on the part of the
Company; (ii) immediately thereafter, no Default or Event of Default shall have
occurred and be continuing; and (iii) immediately after giving effect to any
such transaction involving the Incurrence by the Company or any Restricted
Subsidiary, directly or indirectly, of additional Indebtedness (and treating any
Indebtedness not previously an obligation of the Company or any Restricted
Subsidiary in connection with or as a result of such transaction as having been
Incurred at the time of such transaction), the Surviving Person (A) shall have a
Consolidated Net Worth equal to or greater than the Consolidated Net Worth of
the Company immediately prior to such transaction and (B)could Incur, on a pro
forma basis after giving effect to such transaction as if it had occurred at the
beginning of the four quarter period immediately preceding such transaction for
which consolidated financial statements of the Company are available, at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph of Section 4.04.
Notwithstanding the foregoing clause (iii) of the immediately
preceding paragraph, any Restricted Subsidiary may consolidate with, merge into
or transfer all or part of its properties and assets to the Company or any
Restricted Subsidiary that is a Guarantor.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitutes all or substantially all
the properties and assets of the Company shall be deemed to be the transfer of
all or substantially all the properties and assets of the Company.
<PAGE>
-43-
(b) No Guarantor (other than a Guarantor whose Guarantee is to be
released in accordance with the terms of Section 11.03) shall consolidate with
or merge with or into another Person, whether or not such Person is affiliated
with such Guarantor and whether or not such Guarantor is the Surviving Person,
unless (i) the Surviving Person (if other than such Guarantor) is a corporation
organized and validly existing under the laws of the United States, any State
thereof or the District of Columbia or, if any such Guarantor was a Foreign
Restricted Subsidiary, under the laws of the United States of America or any
state thereof or the District of Columbia or the jurisdiction under which the
Foreign Restricted Subsidiary was organized; (ii) the Surviving Person (if other
than such Guarantor) expressly assumes by a supplemental indenture all the
obligations of such Guarantor under its Guarantee and the performance and
observance of every covenant of the Indenture and the Registration Rights
Agreement to be performed or observed by such Guarantor; (iii) at the time of
and immediately after such Disposition, no Default or Event of Default shall
have occurred and be continuing; and (iv) immediately after giving effect to any
such transaction involving the Incurrence by such Guarantor, directly or
indirectly, of additional Indebtedness (and treating any Indebtedness not
previously an obligation of such Guarantor in connection with or as a result of
such transaction as having been Incurred at the time of such transaction), the
Company could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning of the four quarter period
immediately preceding such transaction for which consolidated financial
statements of the Company are available, at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under the Consolidated Coverage
Ratio of the first paragraph of Section 4.04; provided, however, that this
paragraph shall not be a condition to a merger or consolidatio of a Guarantor if
such merger or consolidation only involves the Company and/or one or more other
Guarantors. Notwithstanding the foregoing, nothing in this covenant shall
prohibit the consolidation or merger with or into or the sale of all or
substantially all of the assets or properties of a Guarantor to any other
Restricted Subsidiary that is a Guarantor.
SECTION 5.02 Successor Corporation Substituted.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.01 in which the Company or a
Guarantor, as the case may be, is not the Surviving Person and the Surviving
Person is to assume all the Obligations of the Company under the Securities,
this Indenture and the Registration Rights Agreement or of such Guarantor under
its Guarantee, the Indenture and the Registration Rights Agreement, as the case
may be, pursuant to a supplemental indenture, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor, as the case may be, and the Company shall be
discharged from its Obligations under this Indenture and the Securities or such
Guarantor shall be discharged from its Obligations under the Indenture and its
Guarantee, as the case may be.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following shall be an "Event of Default" for purposes of
this Indenture:
(a) failure to pay principal of (or premium, if any, on) any Security
when due (whether or not prohibited by the provisions of Article Eight);
<PAGE>
-44-
(b) failure to pay any interest on any Security when due, continued
for 30 days or more (whether or not prohibited by the provisions of Article
Eight);
(c) default in the payment of principal of or interest on any Security
required to be purchased pursuant to any Offer to Purchase required by this
Indenture when due and payable or failure to pay on the Purchase Date the
Purchase Price for any Security validly tendered pursuant to any Offer to
Purchase required by this Indenture (whether or not prohibited by the
provisions of Article Eight);
(d) failure to perform or comply with any of the provisions of Section
5.01;
(e) failure to perform any other covenant, warranty or agreement of
the Company under this Indenture or in the Securities or of the Guarantors
under this Indenture or in the Guarantees continued for 30 days or more
after written notice to the Company by the Trustee or the Holders of at
least 25% in aggregate principal amount of the outstanding Securities;
(f) default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Company or any of its
Subsidiaries having an outstanding principal amount of $20.0 million or
more individually or in the aggregate that has resulted in the acceleration
of the payment of such Indebtedness or failure by the Company or any of its
Restricted Subsidiaries to pay principal of at least $20.0 million when due
at the stated maturity of any such Indebtedness and such default or
defaults shall have continued after any applicable grace period and shall
not have been cured or waived within 10 days after the occurrence thereof;
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Restricted Subsidiaries in an
amount of $20.0 million or more (net of any amounts covered by reputable
and creditworthy insurance companies) which remains undischarged or
unstayed for a period of 60 days after the date on which the right to
appeal has expired;
(h) the Company or any of its Significant Restricted Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law: (i) admits in
writing its inability to pay its debts generally as they become due; (ii)
commences a voluntary case or proceeding; (iii) consents to the entry of an
order for relief against it in an involuntary case or proceeding; (iv)
consents or acquiesces in the institution of a bankruptcy or insolvency
proceeding against it; (v) consents to the appointment of a Custodian of it
or for all or substantially all of its property; or (vi) makes a general
assignment for the benefit of its creditors, or any of them takes any
action to authorize or effect any of the foregoing;
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company or any
Significant Restricted Subsidiary in an involuntary case or proceeding;
(ii) appoints a Custodian of the Company or any Significant Restricted
Subsidiary for all or substantially all of its property; or (iii) orders
the liquidation of the Company or any Significant Restricted Subsidiary;
and in each case the order or decree remains unstayed and in effect for 60
days; provided, however, that if the entry of such order or decree is
appealed and dismissed on appeal, then the Event of Default hereunder by
reason of the entry of such order or decree shall be deemed to have been
cured;
(j) other than as provided in or pursuant to any Guarantee or the
Indenture, the Guarantee of any Guarantor that constitutes a Significant
Restricted Subsidiary ceases to be in full force and effect
<PAGE>
-45-
or is declared null and void and unenforceable or found to be invalid or
any Guarantor that is a Significant Restricted Subsidiary denies its
liability under its Guarantee (other than by reason of a release of such
Guarantor from its Guarantee in accordance with the terms of the Indenture
and such Guarantee).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.
SECTION 6.02. Acceleration.
If an Event of Default with respect to the Securities (other than an
Event of Default specified in clause (h) or (i) of Section 6.01 with respect to
the Company) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of the outstanding Securities by notice in
writing to the Company (and to the Trustee if given by the Holders) may declare
the unpaid principal of and accrued interest to the date of acceleration on all
outstanding Securities to be due and payable immediately and, upon any such
declaration, such principal amount and accrued interest, notwithstanding
anything contained in this Indenture or the Securities to the contrary, shall
become immediately due and payable; provided, however, that so long as the
Amended Credit Facility shall be in full force, if an Event of Default shall
have occurred and be continuing (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 with respect to the Company), the Securities
shall not become due and payable until the earlier to occur of (x) five Business
Days following delivery of a written notice by the Trustee of such acceleration
of the Securities to the agent under the Amended Credit Facility and (y) the
acceleration (ipso facto or otherwise) of any Indebtedness under the Amended
Credit Facility.
If an Event of Default specified in clause (h) or (i) of Section 6.01
with respect to the Company occurs, all unpaid principal of and accrued interest
on all outstanding Securities shall ipso facto become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Securities has been obtained, the Holders of
not less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if all existing Events of Default (other than the nonpayment of
principal of and interest on the Securities which has become due solely by
virtue of such acceleration) have been cured or waived and if the rescission
would not conflict with any judgment or decree. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy maturing
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 to the extent permitted by
law.
<PAGE>
-46-
SECTION 6.04. Waiver of Past Default.
Subject to Sections 2.09, 6.07 and 10.02, prior to the declaration of
acceleration of the Securities, the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities by written notice to
the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on any
Security as specified in clauses (a), (b) and (c) of Section 6.01 or a Default
in respect of any term or provision of this Indenture that may not be amended or
modified without the consent of each Holder affected as provided in Section
10.02. The Company shall deliver to the Trustee an Officers' Certificate stating
that the requisite percentage of Holders have consented to such waiver and
attaching copies of such consents. In case of any such waiver, the Company, the
Trustee and the Holders shall be restored to their former positions and rights
hereunder and under the Securities, respectively. This paragraph of this Section
6.04 shall be in lieu of (S) 316(a)(1)(B) of the TIA and such (S) 316(a)(1)(B)
of the TIA is hereby expressly excluded from this Indenture and the Securities,
as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of another Holder, it being
understood that the Trustee shall have no duty (subject to Section 7.01) to
ascertain whether or not such actions or forebearances are unduly prejudicial to
such holders, or that may involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction. In the event the Trustee takes
any action or follows any direction pursuant to this Indenture, the Trustee
shall be entitled to indemnification satisfactory to it in its sole discretion
against any loss or expense caused by taking such action or following such
direction. This Section 6.05 shall be in lieu of (S) 316(a)(1)(A) of the TIA,
and such (S) 316(a)(1)(A) of the TIA is hereby expressly excluded from this
Indenture and the Securities, as permitted by the TIA.
SECTION 6.06. Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or
the Securities unless:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of the
outstanding Securities make a written request to the Trustee to pursue a
remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
<PAGE>
-47-
(v) during such 60-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
which, in the opinion of the Trustee, is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, but subject in
any event to the provisions of Articles VIII and XII, the right of any Holder to
receive payment of principal of or interest on a Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in Section 6.01(a), (b) or (c) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest overdue on principal
and to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and may be
a member of the creditors' committee.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
<PAGE>
-48-
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third: to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to the Holders pursuant to
this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as 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 and expenses, 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 shall not apply to a suit by the Trustee, a suit by
a Holder or group of Holders of more than 10% in aggregate principal amount of
the outstanding Securities, or to any suit instituted by any Holder for the
enforcement or the payment of the principal or interest on any Securities on or
after the respective due dates expressed in the Security.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default:
(1) The Trustee shall not be liable except for the performance of
such duties as are specifically set forth herein; 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 conforming to
the requirements of this Indenture; however, in the case of any such
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine such
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
<PAGE>
-49-
(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) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction
of Holders if it shall have reasonable grounds for believing that repayment
of such funds is not assured to it or it does not receive from such Holders
an indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money
held in trust by the Trustee need not be segregated from other funds except
to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(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 and/or an Opinion of Counsel, which shall conform to the
provisions of Section 13.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through attorneys and agents of its selection
and shall not be responsible for the misconduct or negligence of any agent or
attorney (other than an agent who is an employee of the Trustee) 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 reasonably believes to be authorized or within
its rights or powers.
(e) Before the Trustee acts or refrains from acting, it may consult
with counsel and the advice or opinion of such counsel as to matters of law
shall be full and complete authorization and protection from liability in
respect of any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
<PAGE>
-50-
(f) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors 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.
(h) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney.
(i) The Trustee shall not be deemed to have notice of any Event of
Default unless a Trust Officer of the Trustee has actual knowledge thereof or
unless the Trustee shall have received written notice thereof at the Corporate
Trust Office of the Trustee, and such notice references the Securities and this
Indenture. As used herein, the term "actual knowledge" means the actual fact or
statement of knowing, without any duty to make any investigation with regard
thereto.
(j) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(k) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its negligence or willful misconduct.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee, subject to
Section 7.10 hereof. Any Agent may do the same with like rights. However, the
Trustee is subject to 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 Securities, it shall not
be accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing and the
Trustee has actual knowledge of such Defaults or Events of Default, the Trustee
shall mail to each Holder notice of the Default
<PAGE>
-51-
or Event of Default within 30 days after the occurrence thereof. Except in the
case of a Default or an Event of Default in payment of principal of or interest
on any Security or a Default or Event of Default in complying with Section 5.01,
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 interest
of Holders. This Section 7.05 shall be in lieu of the proviso to (S) 315(b) of
the TIA and such proviso to (S) 315(b) of the TIA is hereby expressly excluded
from this Indenture and the Securities, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA (S) 313(a), within 60 days after each May 15
beginning with the May 15 following the date of this Indenture, the Trustee
shall mail to each Holder a report dated as of such May 15 that complies with
TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b), (c) and (d).
A copy of each such report at the time of its mailing to Holders shall
be filed with the SEC and each stock exchange, if any, on which the Securities
are listed.
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or of any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, such compensation as the Company and the Trustee
shall from time to time agree in writing for its services. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances, including all costs and
expenses of collection (including reasonable fees, disbursements and expenses of
its agents and outside counsel) incurred or made by it in addition to the
compensation for its services except any such disbursements, expenses and
advances as may be attributable to the Trustee's negligence or willful
misconduct. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants, experts and
outside counsel and any taxes or other expenses incurred by a trust created
pursuant to Section 9.01 hereof.
The Company shall indemnify the Trustee for, and hold it harmless
against any and all loss, damage, claims, liability or expense, including taxes
(other than franchise taxes imposed on the Trustee and taxes based upon,
measured by or determined by the income of the Trustee), arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent that
such loss, damage, claim, liability or expense is due to its own negligence or
willful misconduct. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. However, the
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 (and may employ its own counsel) at the Company's
expense; provided, however, that the Company's reimbursement obligation with
respect to counsel employed by the Trustee will be limited to the reasonable
fees and expenses of such counsel.
The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee as a result of its own negligence or willful misconduct.
<PAGE>
-52-
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Securities against all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of or interest on particular Securities
or the Purchase Price or redemption price of any Securities to be purchased
pursuant to an Offer to Purchase or redeemed.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses (including the
reasonable fees and expenses of its agents and counsel) and the compensation for
the services shall be preferred over the status of the Holders in a proceeding
under any Bankruptcy Law and are intended to constitute expenses of
administration under any Bankruptcy Law. The Company's obligations under this
Section 7.07 and any claim arising hereunder shall survive the resignation or
removal of any Trustee, the discharge of the Company's obligations pursuant to
Article Nine and any rejection or termination under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in
writing. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company in
writing and may appoint a successor Trustee with the Company's consent. The
Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent under any
Bankruptcy Law;
(c) a custodian or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 7.07, all property held
by it as Trustee to the successor Trustee, subject to the Lien provided in
Section 7.07, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have the rights, powers and duties of
the Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee.
<PAGE>
-53-
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee which shall be eligible to
act as Trustee under TIA (S)(S) 310(a)(1) and 310(a)(2). 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. If the Trustee has or shall acquire
any "conflicting interest" within the meaning of TIA (S) 310(b), the Trustee and
the Company shall comply with the provisions of TIA (S) 310(b); provided,
however, that there shall be excluded from the operation of TIA (S) 310(b)(1)
any indenture or indentures under which other 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 (S) 310(b)(1) are met. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 7.10, the Trustee shall resign immediately in the
manner and with the effect hereinbefore specified in this Article Seven.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and the Trustee and each Holder of
the Securities by his acceptance thereof likewise covenant and agree, that all
Securities shall be issued subject to the provisions of this Article Eight; and
each person holding any Security, whether upon original issue or upon transfer,
assignment or exchange thereof, accepts and agrees that all payments of the
principal of and interest on the Securities by the Company shall, to the extent
and in the manner set forth in this Article Eight, be subordinated and junior in
right of payment to the prior payment in full in cash of all amounts payable
under Senior Indebtedness.
<PAGE>
-54-
SECTION 8.02. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities and excluding any payment from funds
held in trust for the benefit of Holders pursuant to Article Nine (a "Defeasance
Trust Payment")) by or on behalf of the Company of principal of or interest on
the Securities, whether pursuant to the terms of the Securities, upon
acceleration, pursuant to an Offer to Purchase or otherwise, shall be made if,
at the time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Designated Senior Indebtedness, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of such Designated Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be immediately accelerated, and upon receipt by the Trustee
of written notice (a "Payment Blockage Notice" ) from the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf of
such Designated Senior Indebtedness, then, unless and until such non-payment
event of default has been cured or waived or has ceased to exist or such
Designated Senior Indebtedness has been discharged or repaid in full in cash or
the benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities and excluding any
Defeasance Trust Payment) shall be made by or on behalf of the Company of
principal of or interest on the Securities, to such Holders, during a period (a
"Payment Blockage Period") commencing on the date of receipt of such notice by
the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the contrary,
(x) in no event shall a Payment Blockage Period extend beyond 179 days from the
date the Payment Blockage Notice in respect thereof was given, (y) there shall
be a period of at least 181 consecutive days in each 360-day period when no
Payment Blockage Period is in effect and (z) not more than one Payment Blockage
Period may be commenced with respect to the Securities during any period of 360
consecutive days. No non-payment event of default that existed or was continuing
on the date of commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period (to the
extent the holder of Designated Senior Indebtedness, or trustee or agent, giving
notice commencing such Payment Blockage Period had knowledge of such existing or
continuing event of default) may be, or be made, the basis for the commencement
of any other Payment Blockage Period by the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such non-payment event of default has been cured or waived for a period
of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, the Company
shall have made payment to the Trustee or any Holder when such payment is
prohibited by Section 8.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered by the Trustee (if the Notice
required by Section 8.06 has been received by the Trustee) or the Holder to, the
holders of Designated Senior Indebtedness or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Designated Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that, upon notice from the Trustee
to the holders of Designated Senior Indebtedness that such prohibited payment
has been made, the holders of the Designated Senior Indebtedness (or their
representative or representatives or a trustee or trustees) notify the Trustee
in writing of the amounts then due and owing on the Designated Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Designated Senior Indebtedness.
<PAGE>
-55-
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities and
excluding any Defeasance Trust Payment), upon any dissolution or winding-up or
total liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
Senior Indebtedness shall first be paid in full in cash before the Holders of
the Securities or the Trustee on behalf of such Holders shall be entitled to
receive any payment by the Company of the principal of or interest on the
Securities, or any payment by the Company to acquire any of the Securities for
cash, property or securities, or any distribution with respect to the Securities
of any cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities and excluding any Defeasance Trust Payment). Before
any payment may be made by, or on behalf of, the Company of the principal of or
interest on the Securities upon any such dissolution or winding-up or total
liquidation or reorganization, any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities (excluding any payment or distribution of Permitted Junior Securities
and excluding any Defeasance Trust Payment), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by the Company or by
any receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, directly to the holders of the Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to the
trustee or trustees or agent or agents under any agreement or indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities and excluding any Defeasance Trust Payment), shall be paid by the
Company to the Trustee or any Holder of Securities at a time when such payment
or distribution is prohibited by Section 8.03(a) and before all obligations in
respect of Senior Indebtedness are paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid over or delivered by the Trustee (if the Notice required by Section 8.06
has been received by the Trustee) or the Holder to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their respective representatives,
or to the trustee or trustees or agent or agents under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full in
cash after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
with or into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article Five shall not be deemed a dissolution, winding-
up, liquidation or reorganization for the purposes of this Section 8.03 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Five.
<PAGE>
-56-
SECTION 8.04. Subrogation.
Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the Holders of the Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article Eight, and no
payment over pursuant to the provisions of this Article Eight to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article Eight are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities, on the one
hand, and the holders of the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article Eight
shall have been applied, pursuant to the provisions of this Article Eight, to
the payment of all amounts payable under Senior Indebtedness, then and in such
case, the Holders of the Securities shall be entitled to receive from the
holders of such Senior Indebtedness any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount required to make
payment in full in cash of such Senior Indebtedness.
SECTION 8.05. Obligations of Company Unconditional.
Nothing contained in this Article Eight or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company and
the Holders of the Securities, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders of the Securities the principal of and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of the Senior Indebtedness, nor shall anything herein or therein
prevent the Holder of any Security or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Eight of the
holders of the Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article Eight shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Senior Indebtedness then due
and payable shall first be paid in full in cash before the Holders of the
Securities or the Trustee are entitled to receive any direct or indirect payment
from the Company of principal of or interest on the Securities.
SECTION 8.06. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities pursuant to the provisions of this
Article Eight. The Trustee shall not be charged with knowledge of the existence
of any event of default with respect to any Senior Indebtedness or of any other
facts which would prohibit the
<PAGE>
-57-
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing at its Corporate Trust Office to that effect
signed by an Officer of the Company, or by a holder of Senior Indebtedness or
trustee or agent therefor; and prior to the receipt of any such written notice,
the Trustee shall, subject to Article Seven, be entitled to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 8.06 at least two Business Days prior to the
date upon which by the terms of this Indenture any moneys shall become payable
for any purpose (including, without limitation, the payment of the principal of
or interest on any Security), then, regardless of anything herein to the
contrary, the Trustee shall have full power and authority to receive any moneys
from the Company and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date. Nothing contained in this Section
8.06 shall limit the right of the holders of Senior Indebtedness to recover
payments as contemplated by Section 8.03. The Trustee shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself or
itself to be a holder of any Senior Indebtedness (or a trustee on behalf of, or
other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Eight, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Eight, 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.
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities referred to
in this Article Eight, the Trustee and the Holders of the Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending, or upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Securities for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the 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 Eight.
SECTION 8.08. Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Eight with respect to any Senior Indebtedness which
may at any time be held by it in its individual or any other capacity to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Eight, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Section 8.03(b)). The Trustee shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or
<PAGE>
-58-
to any other person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article Eight or otherwise.
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The provisions of this Article Eight are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 8.10. Holders Authorize Trustee To Effectuate Subordination of
Securities.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Eight, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, total
liquidation or reorganization of the Company (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of the Company, the filing of a claim for the unpaid balance
of its or his Securities in the form required in those proceedings.
SECTION 8.11. This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article Eight shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 8.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Eight shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
SECTION 8.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 8.09, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article Eight or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
<PAGE>
-59-
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in Trust
for Holders; Payments May Be Paid Prior to Dissolution.
All money and United States Government Obligations deposited in trust
with the Trustee pursuant to and in accordance with Article Nine shall be for
the sole benefit of the Holders and shall not be subject to this Article Eight.
Nothing contained in this Article Eight or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Section
8.02, from making payments of principal of and interest on the Securities or
from depositing with the Trustee any moneys for such payments or from effecting
a termination of the Company's and the Guarantors' obligations under the
Securities and this Indenture as provided in Article Nine, or (ii) the
application by the Trustee of any moneys deposited with it for the purpose of
making such payments of principal of and interest on the Securities, to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have received
the written notice provided for in Section 8.02(b) or in Section 8.06. The
Company shall give prompt written notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
SECTION 8.15. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of the Senior Indebtedness of
the acceleration.
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations.
Subject to the provisions of Article Eight, the Company may terminate
its and the Guarantors' substantive obligations in respect of the Securities by
delivering all outstanding Securities to the Trustee for cancellation and paying
all sums payable by it on account of principal of and interest on all Securities
or otherwise. In addition to the foregoing, subject to the provisions of Article
Eight with respect to the creation of the defeasance trust provided for in the
following clause (i), the Company may, provided that no Default or Event of
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default or Event of Default specified in Section 6.01(h) or (i),
occurs at any time on or prior to the 91st calendar day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 91st day)) and provided that no default under any Senior
Indebtedness would result therefrom, terminate its and the Guarantors'
substantive obligations in respect of Article Four (other than Sections 4.01,
4.02, 4.07, 4.11 and 4.12) and Article Five hereof and any Event of Default
specified in Section 6.01 (d) or (e) by (i) depositing with the Trustee, under
the terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient (without reinvestment) to pay all remaining Indebtedness
on the Securities, (ii) delivering to the Trustee either an Opinion of Counsel
or a ruling directed to the Trustee from the Internal Revenue Service to the
effect that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and termination of obligations,
(iii) delivering to the Trustee an Opinion of Counsel to the effect that the
Company's exercise of its option under this Section 9.01 will not result in any
of
<PAGE>
-60-
the Company, the Trustee or the trust created by the Company's deposit of
funds pursuant to this provision becoming or being deemed to be an "investment
company" under the Investmen Company Act of 1940, as amended (the "Investment
Company Act"), and (iv) delivering to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating compliance with all conditions precedent
provided for herein. In addition, subject to the provisions of Article Eight
with respect to the creation of the defeasance trust provided for in the
following clause (i), the Company may, provided that no Default or Event of
Default has occurred and is continuing or would arise therefrom (or, with
respect to a Default or Event of Default specified in Section 6.01(h) or (i),
occurs at any time on or prior to the 91st calendar day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 91st day)) and provided that no default under any Senior
Indebtedness would arise therefrom, terminate all of its and the Guarantors'
substantive obligations in respect of the Securities (including its obligations
to pay the principal of and interest on the Securities and the Guarantors'
Guarantee thereof) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or United States Government Obligations
sufficient (without reinvestment) to pay all remaining Indebtedness on the
Securities, (ii) delivering to the Trustee either a ruling directed to the
Trustee from the Internal Revenue Service to the effect that the Holders of the
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations or an
Opinion of Counsel addressed to the Trustee based upon such a ruling or based
on a change in the applicable Federal tax law since the date of this Indenture
to such effect, (iii) delivering to the Trustee an Opinion of Counsel to the
effect that the Company's exercise of its option under this Section 9.01 will
not result in any of the Company, the Trustee or the trust created by the
Company's deposit of funds pursuant to this provision becoming or being deemed
to b an "investment company" under the Investment Company Act and (iv)
delivering to the Trustee an Officers' Certificate and an Opinion of Counsel
each stating compliance with all conditions precedent provided for herein.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.13 and 4.01 (but not with
respect to termination of substantive obligations pursuant to the third sentence
of the foregoing paragraph), 4.02, 7.07, 7.08, 9.03 and 9.04 shall survive until
the Securities are no longer outstanding. Thereafter the Company's obligations
in Sections 7.07, 9.03 and 9.04 shall survive.
After such delivery or irrevocable deposit and delivery of an
Officers' Certificate and Opinion of Counsel, the Trustee upon request shall
acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Securities and this Indenture except for those surviving
obligations specified above.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 9.01 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Securities.
SECTION 9.02. Application of Trust Money.
The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to Section 9.01, and shall apply the
deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.
<PAGE>
-61-
SECTION 9.03. Repayment to Company.
Subject to Sections 7.07 and 9.01, the Trustee shall promptly pay to
the Company upon written request any excess money held by it at any time. The
Trustee shall pay to the Company upon written request any money held by it for
the payment of principal or interest that remains unclaimed for two years;
provided, however, that the Trustee before being required to make any payment
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that, after a date
specified therein which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining shall
be repaid to the Company. After payment to the Company, Holders entitled to
money must look solely to the Company for payment as general creditors unless an
applicable abandoned property law designates another person and all liability of
the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 9.04. Reinstatement.
If the Trustee is unable to apply any money or United States
Government Obligations in accordance with Section 9.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantors' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.01 until such time as the Trustee is permitted to apply
all such money or United States Government Obligations in accordance with
Section 9.01; provided, however, that if the Company has made any payment of
interest on or principal of any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money or United States
Government Obligations held by the Trustee.
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a resolution of
their respective Boards of Directors, and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency; provided, however,
that such amendment or supplement does not adversely affect the rights of
any Holder;
(b) to effect the assumption by a successor Person of all obligations
of the Company under the Securities and his Indenture in connection with
any transaction complying with Article Five of this Indenture;
(c) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
<PAGE>
-62-
(d) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(e) to make any change that would provide any additional benefit or
rights to the Holders;
(f) to make any other change that does not adversely affect the rights
of any Holder under this Indenture;
(g) to evidence the succession of another Person to any Guarantor and
the assumption by any such successor of the covenants of such Guarantor
herein and in the Guarantee in connection with any transaction complying
with Article Five of this Indenture;
(h) to add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company or any Guarantor;
(i) to secure the Securities pursuant to the requirements of Section
4.18 or otherwise; or
(j) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee in accordance with the provisions of Section 11.03
and to add a Guarantor pursuant to the requirements of Section 4.19;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such amendment or supplement complies with the provisions
of this Section 10.01.
SECTION 10.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Guarantors, when
authorized by a resolution of their respective Boards of Directors, and the
Trustee may amend or supplement this Indenture or the Securities with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to Section 6.07, the Holders of a majority in
principal amount of the outstanding Securities may waive compliance by the
Company or any Guarantor with any provision of this Indenture or the Securities.
However, without the consent of each Holder affected, an amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, may not:
(a) change the Stated Maturity of the principal of or any installment
of interest on such Security or alter the optional redemption or repurchase
provisions of any Security or this Indenture in a manner adverse to the
Holders of the Securities;
(b) reduce the principal amount of (or the premium) of any Security;
(c) reduce the rate of or extend the time for payment of interest on
any Security;
(d) change the place or currency of payment of principal of (or
premium) or interest on any Security;
(e) modify any provisions of Section 6.04 (other than to add sections
of this Indenture or the Securities subject thereto) or 6.07 or this
Section 10.02 (other than to add sections of this Indenture or
<PAGE>
-63-
the Securities which may not be amended, supplemented or waived without the
consent of each Holder affected);
(f) reduce the percentage of the principal amount of outstanding
Securities necessary for amendment to or waiver of compliance with any
provision of this Indenture or the Securities or for waiver of any Default
in respect thereof;
(g) waive a Default in the payment of principal of, interest on, or
redemption payment with respect to, the Securities (except a rescission of
acceleration of the Securities by the Holders thereof as provided in
Section 6.02 and a waiver of the payment default that resulted from such
acceleration);
(h) modify the ranking or priority of any Security or the Guarantee in
respect thereof of any Guarantor or modify the definition of Senior
Indebtedness or Guarantor Senior Indebtedness or amend or modify any of the
provisions of Article Eight or Article Twelve in any manner adverse to the
Holders of the Securities;
(i) release any Significant Restricted Subsidiary that is a Guarantor
from any of its obligations under its Guarantee or this Indenture otherwise
than in accordance with this Indenture; or
(j) modify the provisions of Section 4.14, the definitions of any of
the terms used therein or the provisions relating to any Offer to Purchase
required pursuant to Section 4.14 in a manner materially adverse to the
Holders of Securities affected thereby otherwise than in accordance with
this Indenture.
An amendment under this Section 10.02 may not make any change under
Article Eight or Article Twelve hereof that adversely affects in any material
respect the rights of any holder of Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, then outstanding unless the holders of such
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, (or
any representative thereof authorized to give a consent) shall have consented to
such change.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 10.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 10.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 10.04. Record Date for Consents and Effect of Consents.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date
<PAGE>
-64-
is fixed, then those persons who were Holders of Securities at such record date
(or their duly designated proxies), and only those persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders of such
Securities after such record date. No such consent shall be valid or effective
for more than 90 days after such record date. The Trustee is entitled to rely
upon any electronic instruction from beneficial owners to the Holders of any
Global Security.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (j) of Section 10.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
SECTION 10.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 10.06. Trustee To Sign Amendments, etc.
The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Ten is
authorized or permitted by this Indenture and that such amendment, supplement or
waiver constitutes the legal, valid and binding obligation of the Company and
the Guarantors, enforceable in accordance with its terms (subject to customary
exceptions). The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise. In signing any amendment,
supplement or waiver, the Trustee shall be entitled to receive an indemnity
reasonably satisfactory to it.
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "Guarantee") to each Holder of a Security authenticated by
the Trustee and to the Trustee and its successors and assigns that: the
principal of and interest on the Securities will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and interest on
any overdue interest on the Securities, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or under the
Securities will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; subject, however, to the limitations set forth in
Section 11.04. Each Guarantor hereby agrees that its obligations hereunder shall
be unconditional,
<PAGE>
-65-
irrespective of the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that the Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture, and
this Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Guarantor, any amount paid by the Company or any Guarantor to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purpose of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article Six, such
obligations (whether or not due and payable) shall forth become due and payable
by each Guarantor for the purpose of this Guarantee.
SECTION 11.02. Severability.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.03. Release of a Guarantor.
If the Securities are defeased in accordance with the terms of this
Indenture, or if Section 5.01(b) is complied with, or if, subject to the
requirements of Section 5.01(a), all or substantially all of the assets of any
Guarantor or all of the Equity Interests of any Guarantor are sold (including by
issuance or otherwise) by the Company in a transaction constituting an Asset
Sale and (x) the Net Cash Proceeds from such Asset Sale are used in accordance
with Section 4.05 or (y) the Company delivers to the Trustee an Officers'
Certificate to the effect that the Net Cash Proceeds from such Asset Sale shall
be used in accordance with Section 4.05 and within the time limits specified by
Section 4.05, then each Guarantor (in the case of defeasance) or such Guarantor
(in the case of compliance with Section 5.01(b) or in the event of a sale or
other disposition of all of the Equity Interests of such Guarantor) or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor) shall be released
and discharged from all obligations under this Article Eleven without any
further action required on the part of the Trustee or any Holder. The Trustee
shall, at the sole cost and expense of the Company and upon receipt at the
reasonable request of the Trustee of an Opinion of Counsel that the provisions
of this Section 11.03 have been complied with, deliver an appropriate instrument
evidencing such release upon receipt of a request by the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
11.03. Any Guarantor not so released remains liable for the full amount of
principal of and interest on the Securities and the other obligations of the
Company hereunder as provided in this Article Eleven.
SECTION 11.04. Limitation of Guarantor's Liability.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
guarantee by such Guarantor pursuant to its Guarantee not
<PAGE>
-66-
constitute a fraudulent transfer or conveyance for purposes of title 11 of the
United States Code, as amended, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar U.S. Federal or state or other
applicable law. To effectuate the foregoing intention, the Holders and each
Guarantor hereby irrevocably agree that the obligations of each Guarantor under
its Guarantee shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor
(including any Senior Indebtedness Incurred after the Issue Date) and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to Section 11.05, result in the obligations of such
Guarantor under its Guarantee not constituting such a fraudulent transfer or
conveyance under Federal or State law.
SECTION 11.05. Contribution.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each Guarantor
(including the Funding Guarantor), determined in accordance with GAAP, subject
to Section 11.04, for all payments, damages and expenses incurred by such
Funding Guarantor in discharging the Company's obligations with respect to the
Securities or any other Guarantor's obligations with respect to the Guarantee.
SECTION 11.06. Execution of Security Guarantee.
To further evidence their Guarantee to the Holders, each of the
Guarantors hereby agree to execute a Security Guarantee to be endorsed on each
Security ordered to be authenticated and delivered by the Trustee. Each
Guarantor hereby agrees that its Guarantee set forth in Section 11.01 shall
remain in full force and effect notwithstanding any failure to endorse on each
Security a Security Guarantee. Each such Security Guarantee shall be signed on
behalf of each Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such Security
Guarantee on behalf of such Guarantor. Such signature upon the Security
Guarantee may be manual or facsimile signature of such officer and may be
imprinted or otherwise reproduced on the Security Guarantee, and in case such
officer who shall have signed the Security Guarantee shall cease to be such
officer before the Security on which such Security Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or disposed of by the
Company, such Security nevertheless may be authenticated and delivered or
disposed of as though the Person who signed the Security Guarantee had not
ceased to be such officer of such Guarantor.
SECTION 11.07. Subordination of Subrogation and Other Rights.
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Securities in accordance
with the provisions provided therefor in this Indenture.
<PAGE>
-67-
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Securities by his acceptance thereof likewise covenant and agree, that
the Guarantee of such Guarantor shall be issued subject to the provisions of
this Article Twelve; and each person holding any Security, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees that
all payments of the principal of and interest on the Securities pursuant to the
Guarantee made by or on behalf of any Guarantor shall, to the extent and in the
manner set forth in this Article Twelve, be subordinated and junior in right of
payment to the prior payment in full in cash of all amounts payable under
Guarantor Senior Indebtedness of such Guarantor.
SECTION 12.02. No Payment on Guarantees in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor of
principal of or interest on the Securities pursuant to such Guarantor's
Guarantee, whether pursuant to the terms of the Securities, upon acceleration or
otherwise, shall be made if, at the time of such payment, there exists a default
in the payment of all or any portion of the obligations on any Designated
Guarantor Senior Indebtedness of such Guarantor, whether at maturity, on account
of mandatory redemption or prepayment, acceleration or otherwise, and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Designated Guarantor Senior
Indebtedness. In addition, during the continuance of any non-payment event of
default with respect to any Designated Guarantor Senior Indebtedness pursuant to
which the maturity thereof may be immediately accelerated, and upon receipt by
the Trustee of written notice (the "Guarantor Payment Blockage Notice") from the
holder or holders of such Designated Guarantor Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Guarantor Senior
Indebtedness, then, unless and until such non-payment event of default has been
cured or waived or has ceased to exist or such Designated Guarantor Senior
Indebtedness has been discharged or paid in full in cash or the benefits of
these provisions have been waived by the holders of such Designated Guarantor
Senior Indebtedness, no direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) shall be made by or on behalf of
such Guarantor of principal or interest on the Securities during a period (a
"Guarantor Blockage Period") commencing on the date of receipt of such notice by
the Trustee and ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the contrary,
(x) in no event shall a Guarantor Blockage Period extend beyond 179 days from
the date the Guarantor Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360-day period
when no Guarantor Blockage Period is in effect and (z) not more than one
Guarantor Blockage Period may be commenced with respect to any Guarantor during
any period of 360 consecutive days. No non-payment event of default that existed
or was continuing on the date of commencement of any Guarantor Blockage Period
with respect to the Designated Guarantor Senior Indebtedness initiating such
Guarantor Blockage Period (to the extent the holder of Designated Guarantor
Senior Indebtedness, or trustee or agent, giving notice commencing such
Guarantor Blockage Period had knowledge of such existing or continuing event of
default) may be, or be made, the basis for the commencement of any other
Guarantor Blockage Period by the holder or holders of such Designated
<PAGE>
-68-
Guarantor Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Guarantor Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such non-payment event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any payment
shall be made directly to the Trustee or any Holder when such payment is
prohibited by Section 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered by the Trustee (if the Notice
required by Section 12.06 has been received by the Trustee) or the Holder to,
the holders of such Designated Guarantor Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Guarantor Senior Indebtedness may have been issued,
as their respective interests may appear, but only to the extent that, upon
notice from the Trustee to the holders of such Designated Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Designated Guarantor Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify the Trustee in writing of the
amounts then due and owing on such Designated Guarantor Senior Indebtedness, if
any, and only the amounts specified in such notice to the Trustee shall be paid
to the holders of such Designated Guarantor Senior Indebtedness.
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding-up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the Holders of the
Securities or the Trustee on behalf of such Holders shall be entitled to receive
any payment by such Guarantor of the principal of or interest on the Securities
pursuant to such Guarantor's Guarantee, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, any Guarantor of the principal of or interest on the Securities
upon any such dissolution or winding-up or total liquidation or reorganization,
any payment or distribution of assets or securities of such Guarantor of any
kind or character, whether in cash, property or securities (excluding any
payment or distribution of Permitted Junior Securities), to which the Holders of
the Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on the
basis of the respective amounts of such Guarantor Senior Indebtedness held by
such holders) or their representatives or to the trustee or trustees or agent or
agents under any agreement or indenture pursuant to which any of such Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Guarantor Senior Indebtedness in
full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be made directly to the Trustee or any Holder of
Securities at a time when such payment or distribution is prohibited by Section
12.03(a) and before all obligations in respect of the Guarantor Senior
Indebtedness of such Guarantor are paid in full in cash, such payment or
distribution shall be received and held in trust for the benefit of, and shall
be paid over or delivered by the Trustee (if the Notice required by Section
12.06 has been
<PAGE>
-69-
received by the Trustee) or the Holder to, the holders of such Guarantor Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
such Guarantor Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Guarantor Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of such Guarantor Senior Indebtedness remaining unpaid until all such
Guarantor Senior Indebtedness has been paid in full in cash after giving effect
to any prior or concurrent payment, distribution or provision therefor to or for
the holders of such Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article Five shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 12.03
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Five.
SECTION 12.04. Subrogation.
Upon the payment in full in cash of all Guarantor Senior Indebtedness
of a Guarantor, or provision for payment, the Holders of the Securities shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments or distributions of cash, property or securities of such
Guarantor made on such Guarantor Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full in cash; and, for the purposes
of such subrogation, no payments or distributions to the holders of such
Guarantor Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee on their behalf would be entitled
except for the provisions of this Article Twelve, and no payment over pursuant
to the provisions of this Article Twelve to the holders of such Guarantor Senior
Indebtedness by Holders of the Securities or the Trustee on their behalf shall,
as between such Guarantor, its creditors other than holders of such Guarantor
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this Article Twelve are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Guarantor Senior
Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the Securities
would otherwise have been entitled but for the provisions of this Article Twelve
shall have been applied, pursuant to the provisions of this Article Twelve, to
the payment of all amounts payable under Guarantor Senior Indebtedness, then and
in such case, the Holders of the Securities shall be entitled to receive from
the holders of such Guarantor Senior Indebtedness any payments or distributions
received by such holders of Guarantor Senior Indebtedness in excess of the
amount required to make payment in full in cash of such Guarantor Senior
Indebtedness.
SECTION 12.05. Obligations of Guarantors Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities or the Guarantees is intended to or shall impair,
as among each of the Guarantors and the Holders of the Securities, the
obligation of each Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Guarantee of such Guarantor, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of any Guarantor other
than the holders of Guarantor Senior Indebtedness of such Guarantor, nor shall
anything herein or therein prevent the Holder of any Security
<PAGE>
-70-
or the Trustee on their behalf from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Twelve of the holders of Guarantor Senior Indebtedness
in respect of cash, property or securities of any Guarantor received upon the
exercise of any such remedy.
Without limiting the generality of the foregoing, nothing contained in
this Article Twelve shall restrict the right of the Trustee or the Holders of
Securities to take any action to declare the Securities to be due and payable
prior to their stated maturity pursuant to Section 6.01 or to pursue any rights
or remedies hereunder; provided, however, that all Guarantor Senior Indebtedness
of any Guarantor then due and payable shall first be paid in full before the
Holders of the Securities or the Trustee are entitled to receive any direct or
indirect payment from such Guarantor of principal of or interest on the
Securities pursuant to such Guarantor's Guarantee.
SECTION 12.06. Notice to Trustee.
The Company and each Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Twelve. The Trustee shall not be
charged with knowledge of the existence of any event of default with respect to
any Guarantor Senior Indebtedness or of any other facts which would prohibit the
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing at its Corporate Trust Office to that effect
signed by an Officer of the Company or such Guarantor, or by a holder of
Guarantor Senior Indebtedness or trustee or agent therefor; and prior to the
receipt of any such written notice, the Trustee shall, subject to Article Seven,
be entitled to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 12.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from any Guarantor and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Nothing contained in this Section 12.06 shall limit the right of the holders of
Guarantor Senior Indebtedness to recover payments as contemplated by Section
12.03. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any
Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Twelve, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Twelve, 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.
<PAGE>
-71-
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such 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 Twelve.
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the rights
set forth in this Article Twelve with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee or any
Paying Agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Section 12.03(b)). The Trustee shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions of the
Guarantors or Holders of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
any Guarantor or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with. The provisions of this Article Twelve are intended to
be for the benefit of, and shall be enforceable directly by, the holders of
Guarantor Senior Indebtedness.
SECTION 12.10. Holders Authorize Trustee To Effectuate Subordination of
Guarantee.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, total
liquidation or reorganization of any Guarantor (whether in bankruptcy,
insolvency, receivership, reorganization or similar proceedings or upon an
assignment for the benefit of creditors or otherwise) tending towards
liquidation of the business and assets of such Guarantor, the filing of a claim
for the unpaid balance of its or his Securities in the form required in those
proceedings.
<PAGE>
-72-
SECTION 12.11. This Article Not To Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 6.01.
SECTION 12.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to the
Trustee pursuant to other sections in this Indenture.
SECTION 12.13. No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 12.09, the
holders of Guarantor Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which Guarantor Senior Indebtedness
is outstanding or secured; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
SECTION 12.14. Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) a Guarantor, except under the conditions described
in Section 12.02, from making payments of principal of and interest on the
Securities, or from depositing with the Trustee any moneys for such payments, or
(ii) the application by the Trustee of any moneys deposited with it for the
purpose of making such payments of principal of and interest on the Securities,
to the holders entitled thereto unless at least two Business Days prior to the
date upon which such payment becomes due and payable, the Trustee shall have
received the written notice provided for in Section 12.02(b) or in Section
12.06. The Guarantors shall give prompt written notice to the Trustee of any
dissolution, winding-up, liquidation or reorganization of such Guarantor.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions. If any provision of this Indenture modifies any TIA
provision that may be so modified, such TIA provision shall be deemed to apply
to this In-
<PAGE>
-73-
denture as so modified. If any provision of this Indenture excludes any TIA
provision that may be so excluded, such TIA provision shall be excluded from
this Indenture.
The provisions of TIA (S)(S) 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.
SECTION 13.02. Notices.
Any notice or communication shall be sufficiently given if in writing
and delivered in person, by facsimile and confirmed by overnight courier, or
mailed by first-class mail addressed as follows:
if to the Company or to the Guarantors:
Polymer Group, Inc.
4838 Jenkins Avenue
N. Charleston, South Carolina 29405
Attention: Chief Financial Officer
Facsimile: (803) 747-4092
Telephone: (803) 744-5174
with a copy, which shall not constitute notice, to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: H. Kurt von Moltke, Esq.
Facsimile: (312) 861-2200
Telephone: (312) 861-2000
if to the Trustee:
Harris Trust & Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Facsimile: (312) 461-3525
Telephone: (312) 461-2527
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
<PAGE>
-74-
Any notice or communication mailed, first-class, postage prepaid, to a
Holder including any notice delivered in connection with TIA (S) 310(b), TIA (S)
313(c), TIA (S) 314(a) and TIA (S) 315(b), shall be mailed to him at his address
as set forth on the Security Register and shall be sufficiently given to him if
so mailed within the time prescribed. To the extent required by the TIA, any
notice or communication shall also be mailed to any Person described in TIA (S)
313(c).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. Except for a
notice to the Trustee, which is deemed given only when received, 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. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and any other person shall have the
protection of TIA (S) 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 at the request of the Trustee:
(1) an Officers' Certificate in form and substance 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 satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with; provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an Officers' Certificate
or certificates of public officials.
SECTION 13.05. Statements Required in Certificate.
Each certificate with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate has read such
covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate
are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
<PAGE>
-75-
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 13.07. Governing Law.
The laws of the State of New York shall govern this Indenture, the
Securities and the Security Guarantees without regard to principles of conflicts
of law.
SECTION 13.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
or any of its Affiliates shall not have any liability for any obligations of the
Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities and the Guarantees.
SECTION 13.09. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of each Guarantor in this Indenture and
such Guarantor's Guarantee shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.10. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.11. Severability.
In case any provision in this Indenture, in the Securities or in the
Guarantee 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, and a Holder shall have no claim therefor against any party
hereto.
SECTION 13.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 13.13. Legal Holidays.
If a payment date is a not a Business Day at a place of payment,
payment may be made at that place on the next succeeding Business Day, and no
interest shall accrue for the intervening period.
[Signature Pages Follow]
<PAGE>
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
--------------------------------------
Name: Jerry Zucker
Title: Chairman, President & CEO
PGI POLYMER, INC.
PNA CORP.
FNA POLYMER CORP.
FABRENE GROUP, INC.
FABRENE CORP.
FABRENE GROUP, L.L.C.
FIBERTECH GROUP, INC.
TECHNETICS GROUP, INC.
FIBERGOL CORPORATION
CHICOPEE HOLDINGS, INC.
CHICOPEE, INC.,
as Guarantors
By: /s/ James G. Boyd
--------------------------------------
Name: James G. Boyd
Title: Executive Vice President,
Treasurer and CFO
HARRIS TRUST AND SAVINGS BANK, as Trustee
By: /s/ D. G. Donovan
-------------------------------------
Name: D. G. Donovan
Title: Assistant Vice President
<PAGE>
EXHIBIT A
---------
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE
CASE OF THE FOREGOING CAUSE (D), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
A-1
<PAGE>
POLYMER GROUP, INC.
9% Senior Subordinated Note
due July 1, 2007, Series A
CUSIP No.:[ ]
No. [ ] $[ ]
POLYMER GROUP, INC., a Delaware corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to [ ]
or registered assigns, the principal sum of [ ] Dollars, on July 1, 2007.
Interest Payment Dates: January 1 and July 1, commencing on January 1,
1998.
Interest Record Dates: December 15 and June 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officer.
POLYMER GROUP, INC.
By:
------------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: [ ]
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 9% Senior Subordinated Notes due July 1, 2007,
Series A, described in the within-mentioned Indenture.
Dated: [ ]
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:
------------------------------
Authorized Signatory
A-3
<PAGE>
(REVERSE OF SECURITY)
POLYMER GROUP, INC.
9% Senior Subordinated Note
due July 1, 2007, Series A
1. Interest.
POLYMER GROUP, INC., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. Cash interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from July
3, 1997. The Company will pay interest semi-annually in arrears on each Interest
Payment Date, commencing January 1, 1998. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time
on demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Securities
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Harris Trust and Savings Bank (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of July
1, 1997 (the "Indenture"), by and among the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Security is one of a duly authorized issue of
Securities of the Company designated as its 9% Senior Subordinated Notes due
2007, Series A (the "Initial Securities"), limited (except as otherwise provided
in the Indenture) in aggregate principal amount to
A-4
<PAGE>
$400,000,000, which may be issued under the Indenture. The Securities include
the Initial Securities, the Private Exchange Securities (as defined in the
Indenture) and the Unrestricted Securities (as defined below) issued in exchange
for the Initial Securities pursuant to the Registration Rights Agreement. The
Initial Securities and the Unrestricted Securities are treated as a single class
of securities under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
unsecured obligations of the Company. The Securities are subordinated in right
of payment to all Senior Indebtedness of the Company to the extent and in the
manner provided in the Indenture. Each Holder of a Security, by accepting a
Security, agrees to such subordination, authorizes the Trustee to give effect to
such subordination and appoints the Trustee as attorney-in-fact for such
purpose.
Payment on the Securities is guaranteed (each, a "Guarantee"), on a
senior subordinated basis, jointly and severally, by each Restricted Subsidiary
of the Company existing on the Issue Date (each, a "Guarantor") pursuant to
Article Eleven and Article Twelve of the Indenture. In addition, in certain
circumstances subject to certain exceptions, the Indenture requires the Company
to cause each Restricted Subsidiary formed, created or acquired after the Issue
Date to become a party to the Indenture as a Guarantor and guarantee payment on
the Securities pursuant to Article Eleven and Article Twelve of the Indenture.
In certain circumstances, the Guarantees may be released.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after July 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the Redemption Date (subject to the
right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the 12-
month period commencing on July 1 of the years indicated below:
Year Percentage
---- ----------
2002 104.625%
2003 103.083%
2004 101.542%
2005 and thereafter 100.000%
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to July 1,
2000, the Company may redeem in the aggregate up to 35% of the originally issued
aggregate principal amount of the Securities with the net cash proceeds of one
or more Public Equity Offerings by the Company at a redemption price in cash
equal to 109.250% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date); provided, however, that at least 65% of
the originally issued aggregate principal amount of the Securities must remain
outstanding immediately after giving effect to each such redemption (excluding
any Securities held by the Company or any of its Affiliates). Notice of any
A-5
<PAGE>
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering of the Company.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 45
days after the Change of Control Date, make an Offer to Purchase all Securities
then outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Securities at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Purchase Date (subject to the right of Holders of record on the
Interest Relevant Record Date to receive interest due on the relevant Interest
Payment Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
A-6
<PAGE>
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company
at its written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Securities and the Guarantees to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets, to engage in transactions with affiliates or certain other related
persons. The limitations are subject to a number of important qualifications and
exceptions. The Company must report annually to the Trustee on compliance with
such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
A-7
<PAGE>
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company
or any of its Affiliates shall have any liability for any obligation of the
Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities and the Guarantees.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Security for a 9% Senior Subordinated Note due 2007, Series B, of the
Company (an "Unrestricted Security") which have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects to the Initial Securities. The Holders shall be entitled to
receive certain additional interest payments in the event such exchange offer is
not consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
23. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guarantee thereof without regard to principles of conflicts of
laws.
A-8
<PAGE>
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security
upon which this notation is endorsed) hereby unconditionally guarantees on a
senior subordinated basis (such Guarantee by the Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guarantee therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Security Guarantee is subject to release upon the terms set forth
in the Indenture.
PGI POLYMER, INC.
PNA CORP.
FNA POLYMER CORP.
FABRENE GROUP, INC.
FABRENE CORP.
FABRENE GROUP, L.L.C.
FIBERTECH GROUP, INC.
TECHNETICS GROUP, INC.
FIBERGOL CORPORATION
CHICOPEE HOLDINGS, INC.
CHICOPEE, INC.
By:
-------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
------------------- -----------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
-----------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, state the amount:
$
- --------------
Dated: Your Signature:
------------------- -----------------------------------
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee:
------------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
EXHIBIT B
[FORM OF SERIES B SECURITY]
POLYMER GROUP, INC.
9% Senior Subordinated Note
due July 1, 2007, Series B
CUSIP No.:[ ]
No. [ ] $[ ]
POLYMER GROUP, INC., a Delaware corporation (the "Company", which
term includes any successor corporation), for value received promises to pay to
[ ] or registered assigns, the principal sum of [ ] Dollars,
on July 1, 2007.
Interest Payment Dates: January 1 and July 1, commencing on January
1, 1998.
Interest Record Dates: December 15 and June 15.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officer.
POLYMER GROUP, INC.
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
Dated: [ ]
B-1
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 9% Senior Subordinated Notes due July 1, 2007,
Series B, described in the within-mentioned Indenture.
Dated: [ ]
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:
-----------------------------
Authorized Signatory
B-2
<PAGE>
(REVERSE OF SECURITY)
POLYMER GROUP, INC.
9% Senior Subordinated Note
due July 1, 2007, Series B
1. Interest.
POLYMER GROUP, INC., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. Cash interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from July
3, 1997. The Company will pay interest semi-annually in arrears on each Interest
Payment Date, commencing January 1, 1998. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal from time to time
on demand and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful from time to time on demand, in
each case at the rate borne by the Securities
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Interest Record Date immediately preceding the Interest Payment Date even
if the Securities are canceled on registration of transfer or registration of
exchange after such Interest Record Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by wire transfer of Federal funds
(provided that the Paying Agent shall have received wire instructions on or
prior to the relevant Interest Record Date), or interest by check payable in
such U.S. Legal Tender. The Company may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Harris Trust and Savings Bank (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or Registrar
without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Registrar.
4. Indenture and Guarantees.
The Company issued the Securities under an Indenture, dated as of July
1, 1997 (the "Indenture"), by and among the Company, the Guarantors and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Security is one of a duly authorized issue of
Securities of the Company designated as its 9% Senior Subordinated Notes due
2007, Series B (the "Unrestricted Securities"), limited (except as otherwise
provided in the Indenture) in aggregate principal
B-3
<PAGE>
amount to $400,000,000, which may be issued under the Indenture. The Securities
include the 9% Senior Subordinated Notes due 2007, Series A (the "Initial
Securities"), the Private Exchange Securities (as defined in the Indenture) and
the Unrestricted Securities. The Initial Securities, the Private Exchange
Securities and the Unrestricted Securities are treated as a single class of
securities under the Indenture. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) (the "TIA"), as in effect
on the date of the Indenture (except as otherwise indicated in the Indenture)
until such time as the Indenture is qualified under the TIA, and thereafter as
in effect on the date on which the Indenture is qualified under the TIA.
Notwithstanding anything to the contrary herein, the Securities are subject to
all such terms, and holders of Securities are referred to the Indenture and the
TIA for a statement of them. The Securities are general unsecured obligations of
the Company. The Securities are subordinated in right of payment to all Senior
Indebtedness of the Company to the extent and in the manner provided in the
Indenture. Each Holder of a Security, by accepting a Security, agrees to such
subordination, authorizes the Trustee to give effect to such subordination and
appoints the Trustee as attorney-in-fact for such purpose.
Payment on the Securities is guaranteed (each, a "Guarantee"), on a
senior subordinated basis, jointly and severally, by each Restricted Subsidiary
of the Company existing on the Issue Date (each, a "Guarantor") pursuant to
Article Eleven and Article Twelve of the Indenture. In addition, in certain
circumstances subject to certain exceptions, the Indenture requires the Company
to cause each Restricted Subsidiary formed, created or acquired after the Issue
Date to become a party to the Indenture as a Guarantor and guarantee payment on
the Securities pursuant to Article Eleven and Article Twelve of the Indenture.
In certain circumstances, the Guarantees may be released.
5. Optional Redemption.
The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after July 1, 2002, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest thereon, if any, to the Redemption Date (subject to the
right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on July 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 104.625%
2003 103.083%
2004 101.542%
2005 and thereafter 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offerings.
In addition, at any time and from time to time on or prior to July 1,
2000, the Company may redeem in the aggregate up to 35% of the originally issued
aggregate principal amount of the Securities with the net cash proceeds of one
or more Public Equity Offerings by the Company at a redemption price in cash
equal to 109.250% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Interest Record Date to receive interest due
on the relevant Interest Payment Date); provided, however, that at least 65% of
the originally issued aggregate principal amount of the Securities must remain
outstanding immediately after giving effect to each such redemption (excluding
any Securities held by the Company or any of its Affiliates). Notice of any
B-4
<PAGE>
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering of the Company.
7. Notice of Redemption.
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select for
redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.
If any Security is to be redeemed in part only, the notice of
redemption that relates to such Security shall state the portion of the
principal amount thereof to be redeemed. A new Security in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Security. On and after the Redemption
Date, interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.
8. Change of Control Offer.
Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall within 45 days
after the Change of Control Date, make an Offer to Purchase all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon, if any, to the
Purchase Date (subject to the right of Holders of record on the relevant
Interest Record Date to receive interest due on the relevant Interest Payment
Date).
9. Limitation on Disposition of Assets.
The Company is, subject to certain conditions and certain exceptions,
obligated to make an Offer to Purchase Securities at a purchase price equal to
100% of the principal amount thereof, plus accrued and unpaid interest thereon,
if any, to the Purchase Date (subject to the right of Holders of record on the
Interest Relevant Record Date to receive interest due on the relevant Interest
Payment Date) with the proceeds of certain asset dispositions.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.
11. Persons Deemed Owners.
B-5
<PAGE>
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for
two years, the Trustee and the Paying Agent will repay the funds to the Company
at its written request. After that, all liability of the Trustee and such Paying
Agent with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company and the Guarantors may be discharged from their
obligations under the Indenture, the Securities and the Guarantees, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Guarantees, in each case upon satisfaction of certain conditions specified in
the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture, the Securities and the
Guarantees may be amended or supplemented with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding, and any existing Default or Event of Default or compliance
with any provision may be waived with the consent of the Holders of a majority
in aggregate principal amount of the Securities then outstanding. Without notice
to or consent of any Holder, the parties thereto may amend or supplement the
Indenture, the Securities and the Guarantees to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not materially adversely
affect the rights of any Holder of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things,
limit the ability of the Company and the Restricted Subsidiaries to make
restricted payments, to incur indebtedness, to create liens, to sell assets, to
permit restrictions on dividends and other payments by Restricted Subsidiaries
to the Company, to consolidate, merge or sell all or substantially all of its
assets, to engage in transactions with affiliates or certain other related
persons. The limitations are subject to a number of important qualifications and
exceptions. The Company must report annually to the Trustee on compliance with
such limitations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture, the Securities or the Guarantees except as
provided in the Indenture. The Trustee is not obligated to enforce the
Indenture, the Securities or the Guarantees unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Securities then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Securities notice of certain
continuing Defaults or Events of Default if it determines that withholding
notice is in their interest.
B-6
<PAGE>
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
No, director, officer, employee or stockholder, as such, of the
Company or any of its Affiliates shall have any liability for any obligation of
the Company or any of its Affiliates under the Securities, the Guarantee of such
Guarantor or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities and the Guarantees.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Governing Law.
The laws of the State of New York shall govern the Indenture, this
Security and any Guarantee thereof without regard to principles of conflicts of
laws.
B-7
<PAGE>
[FORM OF SECURITY GUARANTEE]
SENIOR SUBORDINATED GUARANTEE
The Guarantor (as defined in the Indenture referred to in the Security
upon which this notation is endorsed) hereby unconditionally guarantees on a
senior subordinated basis (such Guarantee by the Guarantor being referred to
herein as the "Guarantee") the due and punctual payment of the principal of,
premium, if any, and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal, premium and interest on the Securities, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee, all in accordance with the terms set forth in Article Eleven of the
Indenture.
The obligations of the Guarantor to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth,
and are expressly subordinated and subject in right of payment to the prior
payment in full of all Guarantor Senior Indebtedness (as defined in the
Indenture) of such Guarantor, to the extent and in the manner provided in
Article Eleven and Article Twelve of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guarantee therein made.
This Security Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which
this Security Guarantee is noted shall have been executed by the Trustee under
the Indenture by the manual signature of one of its authorized officers.
This Security Guarantee shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
This Security Guarantee is subject to release upon the terms set forth
in the Indenture.
PGI POLYMER, INC.
PNA CORP.
FNA POLYMER CORP.
FABRENE GROUP, INC.
FABRENE CORP.
FABRENE GROUP, L.L.C.
FIBERTECH GROUP, INC.
TECHNETICS GROUP, INC.
FIBERGOL CORPORATION
CHICOPEE HOLDINGS, INC.
CHICOPEE, INC.
By:
--------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)
- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated:______________ Signed: ___________________________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.05 or Section 4.14 of the Indenture, check the appropriate
box:
Section 4.05 [ ]
Section 4.14 [ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.05 or Section 4.14 of the Indenture, state the
amount: $_____________
Dated:______________ Your Signature:___________________________________
(Signed exactly as name appears
on the other side of this Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
C-1
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 9% Senior Subordinated Notes due 2007
(the "Securities"), of Polymer Group, Inc.
This Certificate relates to $_______ principal amount of Securities
held in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "Transferor").
The Transferor:*
[_] has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
[_] has requested that the Registrar by written order to exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Securities does not require Registration under the Securities
Act of 1933, as amended (the "Act"), because*:
[_] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
[_] Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[_] Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Act) which delivers a certificate to the Trustee in the form of
Exhibit E to the Indenture.
[_] Such Security is being transferred in reliance on Rule 144 under the
Act.
[_] Such Security is being transferred in reliance on and in compliance
with an exemption from the Registration requirements of the Act other than Rule
144A or Rule 144 under the Act to a person other than an institutional
"accredited investor." [An Opinion of Counsel to the effect that such transfer
does not require Registration under the Securities Act accompanies this
certification.]
------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------
[Authorized Signatory]
Date:
---------------
*Check applicable box.
D-1
<PAGE>
EXHIBIT E
Form of Transferee Letter of Representation
Polymer Group, Inc.
c/o Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administrator
Dear Sirs:
This certificate is delivered to request a transfer of $________
principal amount of the 9% Senior Subordinated Notes due 2007 (the "Notes") of
Polymer Group, Inc. (the "Company"). Upon transfer, the Notes would be
registered in the name of the new beneficial owner as follows:
Name:________________________________
Address:_____________________________
Taxpayer ID Number:__________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the "Securities
Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and we invest
in or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
2. We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of the
Company was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Notes of
$250,000 or (e) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of
E-1
<PAGE>
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (d) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this leter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Notes for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Notes pursuant to clause
(d) or (e) above to require the delivery of an opinion of counsel, certificates
and/or other information satisfactory to the Company and the Trustee.
Dated: TRANSFEREE:
------------------------- --------------------------
By:
----------------------------------
E-2
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
among
POLYMER GROUP, INC.,
THE GUARANTORS NAMED HEREIN
and
CHASE SECURITIES INC.
Dated July 3, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
July 3, 1997, by and among POLYMER GROUP, INC., a Delaware corporation (the
"Company"), PGI Polymer, Inc., a Delaware corporation, PNA Corp., a North
Carolina corporation, FNA Polymer Corp., a North Carolina corporation, Fabrene
Group, Inc., a Canadian corporation, Fabrene Corp., a Delaware corporation,
Fabrene Group, L.L.C., a Delaware limited liability company, FiberTech Group,
Inc., a Delaware corporation, Technetics Group, Inc., a Delaware corporation,
FiberGol Corporation, a Delaware corporation, Chicopee Holdings, Inc., a
Delaware corporation and Chicopee, Inc., a Delaware corporation (collectively
with each of the Company's domestic subsidiaries formed or acquired after the
Closing Date required to become a guarantor hereunder pursuant to the Indenture
(as defined), the "Guarantors," and, together with the Company, the "Issuers"),
and CHASE SECURITIES INC. (the "Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of June 30, 1997, by and among the Issuers and the Initial
Purchaser (the "Purchase Agreement") relating to the sale by the Issuers to the
Initial Purchaser of $400,000,000 aggregate principal amount of the Company's 9%
Senior Subordinated Notes due 2007 (the "Notes"). The Notes have been guaranteed
(the "Guarantees") on a senior subordinated basis by each of the Guarantors. In
order to induce the Initial Purchaser to enter into the Purchase Agreement, the
Issuers have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchaser and its direct and indirect
transferees. The execution and delivery of this Agreement is a condition to the
Initial Purchaser's obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Applicable Period: See Section 2(b).
Closing Date: The Closing Date as defined in the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Closing Date; provided,
however, that, with respect to the Initial Shelf Registration Statement, (i) if
the Filing Date in respect thereof is fewer than 60 days prior to the 150th day
after the Closing Date, then the Effectiveness Date in respect thereof shall be
the 60th day after such Filing Date and (ii) if the Filing Date is after the
filing of the Exchange Offer Registration Statement with the SEC, then the
Effectiveness Date in respect thereof shall be the 60th day after such Filing
Date.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
<PAGE>
-2-
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder. Exchange Offer: See
Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: See Section 2(a).
Expiration Date: See Section 2(a).
Filing Date: The 60th day after the Closing Date; provided, however,
that, with respect to the Initial Shelf Registration Statement, (i) if a Shelf
Registration Event shall have occurred fewer than 30 days prior to the 60th day
after the Closing Date, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event and (ii) if a Shelf Registration
Event shall have occurred after the filing of the Exchange Offer Registration
Statement with the SEC, then the Filing Date in respect thereof shall be the
30th day after such Shelf Registration Event.
Guarantees: See the second introductory paragraph to this Agreement.
Guarantors: See the introductory paragraph to this Agreement.
Holder: Any record Registrable Securities.
Indemnified Person: See the third paragraph of Section 7.
Indemnifying Person: See the third paragraph of Section 7.
Indenture: The Indenture, dated as of July 1, 1997, among the Company,
the Guarantors and Harris Trust and Savings Bank, as trustee, pursuant to which
the Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration Statement: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date of original issuance of the Notes.
Issuers: See the introductory paragraph to this Agreement.
NASD: See Section 5(t).
Notes: See the second introductory paragraph to this Agreement.
Participant: See the first paragraph of Section 7.
<PAGE>
-3-
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
Private Exchange: See Section 2(b).
Private Exchange Securities: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph to this
Agreement.
Records: See Section 5(o).
Registrable Securities: The Notes upon original issuance thereof and
at all times subsequent thereto, each Exchange Security as to which Section
2(c)(v) hereof is applicable upon original issuance and at all times subsequent
thereto and, if issued, the Private Exchange Securities, until in the case of
any such Notes, Exchange Securities or Private Exchange Securities, as the case
may be, (i) a Registration Statement (other than, with respect to any Exchange
Security as to which Section 2(c)(v) hereof is applicable, the Exchange Offer
Registration Statement) covering such Notes, Exchange Securities or Private
Exchange Securities has been declared effective by the SEC and such Notes,
Exchange Securities or Private Exchange Securities, as the case may be, have
been disposed of in accordance with such effective Registration Statement, (ii)
such Notes, Exchange Securities or Private Exchange Securities, as the case may
be, are sold in compliance with Rule 144, (iii) such Note has been exchanged for
an Exchange Security pursuant to the Exchange Offer and Section 2(c)(v) is not
applicable thereto, or (iv) such Notes, Exchange Securities or Private Exchange
Securities, as the case may be, cease to be outstanding.
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Offer Registration Statement, that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
<PAGE>
-4-
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration Statement: See Section 3(b).
Shelf Registration Event: See Section 2(c).
Subsequent Shelf Registration Statement: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if applicable, the
trustee under any indenture governing the Exchange Securities and Private
Exchange Securities (if any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter or through an agent
for reoffering to the public.
2. Exchange Offer
(a) The Issuers agree to file with the SEC, on or before the Filing
Date, an offer to exchange (the "Exchange Offer") any and all of the Registrable
Securities for a like aggregate principal amount of senior subordinated debt
securities of the Company which are identical to the Notes and are guaranteed,
jointly and severally, by each of the Guarantors with terms identical to the
Guarantees (the "Exchange Securities") (and which are entitled to the benefits
of a trust indenture that is substantially identical to the Indenture (other
than such changes as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification of such trust indenture under the TIA) and
which has been qualified under the TIA), except that the Exchange Securities
shall have been registered pursuant to an effective Registration Statement under
the Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer will be registered under the Securities Act on the appropriate form (the
"Exchange Offer Registration Statement") and will comply with all applicable
tender offer rules and regulations under the Exchange Act. Each of the Issuers
agrees to use its best efforts (i) to cause the Exchange Offer Registration
Statement to become effective and to commence the Exchange Offer on or prior to
the Effectiveness Date, (ii) to keep the Exchange Offer open for 30 days (or
longer if required by applicable law) (the last day of such period, the
"Expiration Date") and (iii) to exchange Exchange Securities for all Notes
validly tendered and not withdrawn pursuant to the Exchange Offer on or prior to
the fifth day following the Expiration Date.
Each Holder who participates in the Exchange Offer will be deemed to
represent that any Exchange Securities received by it will be acquired in the
ordinary course of its business, that at the time of the
<PAGE>
-5-
consummation of the Exchange Offer such Holder will have no arrangement with any
Person to participate in the distribution of the Exchange Securities in
violation of the provisions of the Securities Act and that such Holder is not an
affiliate of any of the Issuers within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities, Exchange Securities to which Section 2(c)(v) is applicable
and Exchange Securities held by Participating Broker-Dealers, and the Issuers
shall have no further obligation to register Registrable Securities (other than
Private Exchange Securities and other than Exchange Securities as to which
Section 2(c)(v) hereof applies) pursuant to Section 3 of this Agreement. No
securities other than the Exchange Securities shall be included in the Exchange
Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC (and
publicly disseminated) with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Securities.
Each of the Issuers shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirements of the
Securities Act for at least 180 days following the first bona fide offering of
securities under such Registration Statement (or such shorter time as such
Persons must comply with such requirements in order to resell the Exchange
Securities) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Issuers upon the request of the Initial Purchaser
shall, simultaneously with the delivery of the Exchange Securities in the
Exchange Offer, issue and deliver to the Initial Purchaser, in exchange (the
"Private Exchange") for the Notes held by the Initial Purchaser, a like
principal amount of debt securities of the Company that are identical to the
Exchange Securities and are guaranteed, jointly and severally, by each of the
Guarantors with terms identical to the Guarantees (the "Private Exchange
Securities") (and which are issued pursuant to the same indenture as the
Exchange Securities) (except for the placement of a restrictive legend on such
Private Exchange Securities). The Private Exchange Securities shall bear the
same CUSIP number as the Exchange Securities. Interest on the Exchange
Securities and Private Exchange Securities will accrue from the last interest
payment date on which interest was paid on the Notes surrendered in exchange
therefor or, if no interest has been paid on the Notes, from the Issue Date.
Any indenture under which the Exchange Securities or the Private
Exchange Securities will be issued shall provide that the holders of any of the
Exchange Securities and the Private Exchange Securities will vote and consent
together on all matters to which such holders are entitled to vote or consent as
one class and that none of the holders of the Exchange Securities and the
Private Exchange Securities will have the right to vote or consent as a separate
class on any matter.
<PAGE>
-6-
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company reasonably determines in
good faith, after consultation with counsel, that it is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not commenced on or prior to the
Effectiveness Date, (iii) the Exchange Offer is, for any reason, not consummated
on or prior to the 5th day after the Expiration Date, (iv) any Holder of Private
Exchange Securities so requests, or (v) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange
Securities on the date of the exchange that may be sold without restriction
under federal securities laws (other than due solely to the status of such
Holder or an affiliate of any of the Issuers within the meaning of the
Securities Act) (the occurrence of any such event, a "Shelf Registration
Event"), then, in the case of each of clauses (i) through (v) of this sentence,
the Company shall promptly deliver to the Holders and the Trustee notice thereof
(the "Shelf Notice") and thereafter the Issuers shall file an Initial Shelf
Registration Statement pursuant to Section 3.
3. Shelf Registration
If a Shelf Registration Event has occurred (and whether or not an
Exchange Offer Registration Statement has been filed with the SEC or has become
effective or the Exchange Offer has been consummated), then:
(a) Initial Shelf Registration Statement. The Issuers shall promptly
prepare and file with the SEC a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Securities (the "Initial Shelf Registration Statement"). The
Issuers shall file with the SEC the Initial Shelf Registration Statement on
or prior to the Filing Date. The Initial Shelf Registration Statement shall
be on Form S-1 or another appropriate form, if available, permitting
registration of such Registrable Securities for resale by such holders in
the manner designated by them (including, without limitation, in one or
more underwritten offerings). The Issuers shall not permit any securities
other than the Registrable Securities to be included in the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement (as
defined below). Each of the Issuers shall use their best efforts to cause
the Initial Shelf Registration Statement to be declared effective under the
Securities Act on or prior to the Effectiveness Date, and to keep the
Initial Shelf Registration Statement continuously effective under the
Securities Act until the date which is 24 months from the Closing Date, or
such shorter period ending when (i) all Registrable Securities covered by
the Initial Shelf Registration Statement have been sold in the manner set
forth and as contemplated in the Initial Shelf Registration Statement or
(ii) a Subsequent Shelf Registration Statement covering all of the
Registrable Securities has been declared effective under the Securities Act
(such 24 month or shorter period, the "Effectiveness Period").
(b) Subsequent Shelf Registration Statements. If the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), each of the Issuers shall use their best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof, and in
any event the Issuers shall within 45 days of such cessation of
effectiveness amend the Shelf Registration Statement in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional "shelf" Registration Statement pursuant to
Rule 415 covering all of the Registrable Securities (a "Subsequent Shelf
Registration Statement"). If a Subsequent Shelf Registration Statement is
filed, each of the Issuers shall use their best efforts to cause the
Subsequent Shelf Registration Statement to be declared effective as soon as
reasonably practicable after such filing and to keep such Registration
Statement continuously effec-
<PAGE>
-7-
tive until the end of the Effectiveness Period. As used herein the term
"Shelf Registration Statement" means the Initial Shelf Registration
Statement and any Subsequent Shelf Registration Statement.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for
such Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Securities covered by such Registration Statement
or by any underwriter of such Registrable Securities.
4. Additional Interest
(a) The Issuers and the Initial Purchaser agree that the Holders of
Notes will suffer damages if the Issuers fail to fulfill their obligations under
Section 2 or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, the Company agrees to pay,
as liquidated damages, additional interest on the Notes ("Additional Interest")
under the circumstances and to the extent set forth below (each of which shall
be given independent effect and shall not be duplicative):
(i) if either the Exchange Offer Registration Statement or the
Initial Shelf Registration Statement has not been filed on or prior to the
Filing Date (unless, with respect to the Exchange Offer Registration
Statement, a Shelf Event described in clause (i) of Section 2(c) shall have
occurred prior to the Filing Date), Additional Interest shall accrue on the
Notes over and above the stated interest in an amount equal to $0.192 per
week (or any part thereof) per $1,000 principal amount of Notes;
(ii) if either the Exchange Offer Registration Statement or the
Initial Shelf Registration Statement is not declared effective by the SEC
on or prior to the Effectiveness Date (unless, with respect to the Exchange
Offer Registration Statement, a Shelf Event described in clause (i) of
Section 2(c) shall have occurred), Additional Interest shall accrue on the
Notes over and above the stated interest in an amount equal to $0.192 per
week (or any part thereof) per $1,000 principal amount of Notes; and
(iii) if (A) the Issuers have not exchanged Exchange Securities for
all Notes validly tendered and not withdrawn in accordance with the terms
of the Exchange Offer on or prior to the fifth day after the Expiration
Date, or (B) the Exchange Offer Registration Statement ceases to be
effective at any time prior to the Expiration Date, or (C) if applicable,
any Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the Notes
over and above the stated interest in an amount equal to $0.192 per week
(or any part thereof) per $1,000 principal amount of the Notes for the
first 90 days commencing on (x) the sixth day after the Expiration Date, in
the case of (A) above, or (y) the day the Exchange Offer Registration
Statement ceases to be effective in the case of (B) above, or (z) the day
such Shelf Registration Statement ceases to be effective in the case of (C)
above;
provided, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement as required hereunder (in the case
of clause (i) of this Section 4(a)), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement as required
hereunder (in the case of clause (ii) of this Section 4(a)) or (3) upon the
exchange of Exchange Securities for all Notes validly tendered and not withdrawn
(in the case of clause (iii)(A) of this Section 4(a)), or upon the effectiveness
of the Exchange Offer Registration Statement which had ceased to remain
effective (in the case of clause (iii)(B) of this Section 4(a)), or upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the
<PAGE>
-8-
case of clause (iii)(C) of this Section 4(a)), or upon the
effectiveness of a Subsequent Shelf Registration Statement (in the case of
clause (iii)(C) of this Section 4(a)), Additional Interest on the Notes as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue (but any accrued amount shall be payable).
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). The Company shall
pay the Additional Interest due on the Registrable Securities by depositing with
the Trustee, in trust, for the benefit of the Holders thereof, on or before the
applicable semi-annual interest payment date, immediately available funds in
sums sufficient to pay the Additional Interest then due to Holders of
Registrable Securities. Each obligation to pay Additional Interest shall be
deemed to accrue immediately following the occurrence of the applicable Event
Date. Any accrued Additional Interest amount shall be due and payable on each
interest payment date immediately after the applicable Event Date to the record
Holder of Registrable Securities entitled to receive the interest payment to be
made on such date as set forth in the Indenture. The parties hereto agree that
the Additional Interest provided for in this Section 4 constitutes a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of the failure of a Shelf Registration Statement or
Exchange Offer Registration Statement to be filed or declared effective, or a
Shelf Registration Statement or an Exchange Offer Registration Statement to
remain effective, as the case may be, in accordance with this Section 4.
(c) Each of the Guarantors, jointly and severally, guarantee the
payment of the Additional Interest to the same extent and in the same manner as
the guarantee provisions set forth in the Indenture, which provisions are
incorporated herein by reference mutatis mutandis.
5. Registration Procedures
In connection with the registration of any Registrable Securities
pursuant to Sections 2 or 3 hereof, each of the Issuers shall use their best
efforts to effect such registrations to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Issuers shall:
(a) prepare and file with the SEC on or before the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section
2 or 3, and to use their best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein,
provided that, if (1) such filing is pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers shall
furnish to and afford the Holders of the Registrable Securities and each
such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed (at least five days prior to
such filing); the Issuers shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders must be afforded a reasonable opportunity to review prior to the
filing of such document, if the Holders of a majority in aggregate
principal amount of the Registrable Securities covered by such Registration
Statement, or each such Participating Broker-Dealer, as the case may be,
their counsel, or the managing underwriters, if any, shall reasonably
object;
<PAGE>
-9-
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period, in the case of a Shelf Registration Statement, or until the later
of the Expiration Date and the Applicable Period, in the case of the
Exchange Offer Registration Statement; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of
any securities being sold by a Participating Broker-Dealer covered by any
such Prospectus;
(c) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, notify the selling
Holders of Registrable Securities, or each such Participating Broker-
Dealer, as the case may be, their counsel and the managing underwriters, if
any, promptly (but in any event within five business days), and confirm
such notice in writing, (i) when a Prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits); (ii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of any preliminary prospectus
or the initiation of any proceedings for that purpose; (iii) if at any time
when a prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities the representations and
warranties of any of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(n) below cease to be true
and correct; (iv) of the receipt by any of the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; (v) of the happening of any
event or any information becoming known that requires the making of any
changes in such Registration Statement, Prospectus or documents so that, in
the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that such notification need not specifically
identify such event if notification of the occurrence thereof would, in the
Company's reasonable judgment, involve the disclosure of confidential non-
public information; and (vi) of the Company's reasonable determination that
a post-effective amendment to the Registration Statement would be
appropriate;
(d) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, use their best efforts to
prevent the issuance of any order suspending
<PAGE>
-10-
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable Securities or the
Exchange Securities to be sold by any Participating Broker-Dealer for sale
in any jurisdiction, and, if any such order is issued, to use their best
efforts to obtain the withdrawal of any such order at the earliest possible
moment;
(e) if a Shelf Registration Statement is filed pursuant to Section 3
and if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Securities being
sold in connection with an underwritten offering or any Participating
Broker-Dealer, (i) promptly incorporate in a prospectus supplement or post-
effective amendment such information about the Company, the underwriters,
if any, and the holders as the managing underwriters, if any, such Holders,
any Participating Broker-Dealer or their respective counsel reasonably
request to be included therein; (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
reasonably practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment and (iii) supplement or make amendments to such Registration
Statement;
(f) if (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, furnish to each selling
Holder of Registrable Securities and to each such Participating Broker-
Dealer who so requests and upon request to their respective counsel and
each managing underwriter, if any, without charge, one conformed copy of
the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits;
(g) if (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, deliver to each selling
Holder of Registrable Securities, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses (including each
form of preliminary prospectus) and each amendment or supplement thereto
and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 5,
each of the Issuers hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Securities or each such Participating Broker-Dealer, as the
case may be, and the underwriters or agents, if any, and dealers (if any),
in connection with the offering and sale of the Registrable Securities
covered by or the sale by Participating Broker-Dealers of the Exchange
Securities pursuant to such Prospectus and any amendment or supplement
thereto;
(h) prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use their best efforts to register
or qualify, and to cooperate with the selling Holders of Registrable
Securities or each such Participating Broker-Dealer, as the case may be,
the underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable
<PAGE>
-11-
Securities or Exchange Securities, as the case may be, for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the
United States as any selling Holder, Participating Broker-Dealer, or the
managing underwriters reasonably request in writing, provided, however,
that where Exchange Securities held by Participating Broker-Dealers or
Registrable Securities are offered other than through an underwritten
offering, the Issuers shall cause their counsel to (i) perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); (ii) use their best efforts to keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept
effective hereunder; and (iii) do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Exchange Securities held by Participating Broker-Dealers or the
Registrable Securities covered by the applicable Registration Statement,
provided, further, however, that none of the Issuers shall in any case be
required to (A) qualify generally to do business in any jurisdiction where
it is not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject, (C) subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction or (D) qualify for sales in all 50 states;
(i) if a Shelf Registration Statement is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable
such Registrable Securities to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or Holders
may reasonably request;
(j) if (1) a Shelf Registration Statement is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as promptly
as practicable prepare and (subject to Section 5(a) above) file with the
SEC, solely at the expense of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Issuers shall
not be required to amend or supplement a Registration Statement, any
related Prospectus or any document incorporated therein by reference, in
the event that, and for a period not to exceed an aggregate of 45 days in
any calendar year if, (i) an event occurs and is continuing as a result of
which a Shelf Registration Statement would, in the Issuers' good faith
judgment, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
(ii) (a) the Issuers determine in their good faith judgment that the
disclosure of such event at such time would have a material adverse effect
on the business, operations or prospects of the Issuers or (b) the
disclosure otherwise relates to a pending material business transaction
that has not been publicly disclosed;
(k) prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the Trustee with
printed certificates for the Registrable Securities in a form eligi-
<PAGE>
-12-
ble for deposit with The Depository Trust Company; and (ii) provide a CUSIP
number for the Registrable Securities;
(l) in connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings and take
all such other actions as are reasonably requested by the managing
underwriters in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, (i)
make such representations and warranties to and covenants with, the
underwriters, with respect to the business of the Issuers and their
subsidiaries and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when reasonably
requested; (ii) obtain the written opinions of counsel to the Issuers and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and
substantially in the form of the opinion delivered in connection with the
sale of the Securities to the Initial Purchaser pursuant to the Purchase
Agreement; (iii) use their best efforts to obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants of
the Issuers (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company or any of its subsidiaries for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and substantially in the form of the letters delivered to
the Initial Purchaser in connection with the sale of the Securities
pursuant to the Purchase Agreement; and (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures comparable to those set forth in Section 7 hereof with respect
to all parties to be indemnified pursuant to said Section, all of which
shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder;
(m) if (1) a Shelf Registration Statement is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, subject to the prior
receipt by the Company of undertakings to use reasonable efforts to
preserve the confidentiality of any information disclosed by the Issuers
pursuant hereto in form and substance reasonably satisfactory to the
Company, make available for inspection by one representative of the selling
Holders of such Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney, accountant or other agent retained by any such selling
Holder or each such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all relevant financial and other
records, pertinent corporate documents and properties of the Issuers and
their subsidiaries (collectively, the "Records") to the extent necessary to
enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Issuers and their
subsidiaries to supply all information in each case requested by any such
Inspector in connection with such Registration Statement; provided,
however, that records which the Company determines, in good faith, to be
confidential and any Records which the Company notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such Registration Statement; (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction; (iii) the information in
<PAGE>
-13-
such Records has been made generally available to the public; or (iv)
release thereof is necessary or advisable in connection with any action,
suit or proceeding involving any Holder or other Inspector; provided,
further, however, that prior notice shall be provided as soon as
practicable to the Issuers of the potential disclosure of any information
by such Inspector pursuant to clauses (i), (ii), (iii) or (iv) of this
sentence to permit the Issuers to obtain a protective order (or waive the
provisions of this paragraph (m)) and that such Inspector shall take such
actions as are reasonably necessary to protect the confidentiality of such
information (if practicable); each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer will be required to
agree that information obtained by it as a result of such inspections shall
be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuers unless and until such
information is generally available to the public; each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to
the Issuers and allow the Issuers to undertake appropriate action to
prevent disclosure of the Records deemed confidential at the Issuers' sole
expense;
(n) provide for an indenture trustee for the Registrable Securities
or the Exchange Securities, as the case may be, and cause the Indenture or
the trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under
any such indenture and the holders of the Registrable Securities to effect
such changes to such indenture as may be required for such indenture to be
so qualified in accordance with the terms of the TIA; and execute, and use
their best efforts to cause such trustee to execute, all documents as may
be required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner;
(o) comply with all applicable rules and regulations of the SEC to
the extent and so long as they are applicable to the Exchange Offer
Registration Statement or the Shelf Registration Statement and make
generally available to their securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or best efforts underwritten
offering; and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange,
upon the request of any Holder, obtain an opinion of counsel to the Company
in customary form, relating to the Exchange Securities or the Private
Exchange Securities, as the case may be, addressed to the Trustee for the
benefit of all Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) each of the Issuers have duly authorized,
executed and delivered the Exchange Securities and Private Exchange
Securities, the Guarantees to be endorsed thereon and the related
indenture; and (ii) each of the Exchange Securities or the Private Exchange
Securities, as the case may be, the Guarantees endorsed thereon and the
related indenture and guarantees thereunder constitute legal, valid and
binding obligations of each of the Issuers party thereto, enforceable
against each of the Issuers party thereto in accordance with their
respective terms (with customary exceptions);
<PAGE>
-14-
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be,
mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied; and
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
The Issuers may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Issuers may, from time to time, reasonably request. The Issuers may
exclude from such registration the Registrable Securities or Exchange Securities
of any selling Holder or Participating Broker-Dealer, as the case may be, who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Holder of Registrable Securities and each Participating Broker-
Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus or Exchange Securities to
be sold by such Participating Broker-Dealer, as the case may be, until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event that the
Issuers shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Securities covered by such Registration
Statement or Exchange Securities to be sold by such Participating Broker-Dealer,
as the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers
whether or not the Exchange Offer Registration Statement or a Shelf Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel) in such jurisdictions (x) where the holders of
Registrable Securities are located, in the case of the Exchange Securities, or
(y) as provided in Section 5(h), in the case of Registrable Securities to be
sold in a public offering or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period)); (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
or Exchange Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses if the printing of prospectuses is
<PAGE>
-15-
requested by the managing underwriters, if any, or, in respect of Registrable
Securities or Exchange Securities to be sold by any Participating Broker-Dealer
during the Applicable Period; (iii) messenger, telephone and delivery expenses
incurred by the Issuers; (iv) fees and disbursements of counsel for the Issuers;
(v) fees and disbursements of all independent certified public accountants
referred to in Section 5(l)(iii) (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance); (vi) rating agency fees; (vii) Securities Act liability insurance,
if the Issuers desire such insurance; (ix) fees and expenses of all other
Persons retained by the Issuers; (x) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties); (xi) the
expense of any annual audit of the Issuers; (xii) the fees and expenses incurred
by the Issuers in connection with the listing of the Registrable Securities on
any securities exchange, if the Issuers decide to so list the Registrable
Securities; and (xiii) the expenses relating to printing, word processing and
distributing all Registration Statements.
7. Indemnification
Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Securities and each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period, the
officers and directors of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages, liabilities or any action in
respect thereof (including, without limitation, the reasonable legal fees and
other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) to which such Participant may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act, any
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented if the Issuers shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, furnished to the Company in
writing by such Holder of Registrable Securities or Participating Broker-Dealer,
as the case may be, expressly for use therein; provided, however, that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Holder of Registrable Securities or Participating Broker-
Dealer, as the case may be (or to the benefit of any officer or director of, or
of any Person controlling, such Holder of Registrable Securities or
Participating Broker-Dealer) from whom the Person asserting any such losses,
claims, damages or liabilities purchased Registrable Securities or Exchange
Securities, as the case may be, to the extent that such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the related Prospectus (as amended or
supplemented if the Issuers shall have furnished any amendments or supplements
thereto) and, to the extent required by applicable law, a copy of the related
Prospectus (as so amended or supplemented) shall not have been furnished to such
Person at or prior to the sale of such Registrable Securities or Exchange
Securities, as the case may be, to such Person, unless such failure to furnish
was a result of non-compliance by the Issuers with Section 5(g).
Each Holder of Registrable Securities and each Participating Broker-
Dealer selling Exchange Securities during the Applicable Period will be required
to agree, severally and not jointly, to indemnify and hold harmless each of the
Issuers, its directors, its officers who sign the Registration Statement and
each Person
<PAGE>
-16-
who controls any Issuer within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuers to each Participant, but only with reference to information
relating to such Holder of Registrable Securities or Participating Broker-
Dealer, as the case may be, furnished to the Company in writing by such Holder
of Registrable Securities or Participating Broker-Dealer, as the case may be,
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. The liability of any such
Holder of Registrable Securities or Participating Broker-Dealer, as the case may
be, under this paragraph shall in no event exceed the proceeds received by such
Holder of Registrable Securities or Participating Broker-Dealer, as the case may
be, from sales of Registrable Securities or Exchange Securities, as the case may
be, giving rise to such obligations.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the
reasonable fees and expenses incurred by such counsel related to such
proceeding; provided, however, that the failure to so notify the Indemnifying
Person shall not relieve it of any obligation or liability which it may have
hereunder or otherwise (unless and only to the extent that the Indemnifying
Person was otherwise unaware that such suit, action, proceeding, claim, or
demand shall have been brought or asserted and such failure actually materially
prejudices the Indemnifying Person (through the forfeiture of substantive rights
or defenses)). In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but, other than in circumstances involving a
conflict among Indemnified Persons, the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to an actual or potential
conflict of interest. It is understood that, other than in circumstance
involving a conflict among Indemnified Persons, the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Participants shall be designated in writing by the Holders
of Registrable Securities or Participating Broker-Dealers selling Exchange
Securities during the Applicable Period, as the case may be, who sold a majority
in interest of Registrable Securities or Exchange Securities, as the case may
be, sold by all such Holders of Registrable Securities or Participating Broker-
Dealers, as the case may be. Any such separate firm for the Issuers, its
directors, its officers and such control Persons of the Issuers shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Person agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying Party
is contesting
<PAGE>
-17-
such request for reimbursement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, (which consent shall not be
unreasonably withheld) effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, and indemnity could have been sought hereunder by such indemnified party
and indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional written release of such Indemnified
Person in form and substance satisfactory to the Indemnified Persons from all
liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is for any reason unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the initial
offering of the Notes or (ii) if the allocation provided by the foregoing clause
(i) is not permitted by applicable law or if the indemnified party failed to
give notice as required in the next succeeding previous paragraph, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers, on the one hand, or such Holder of Registrable
Securities or Participating Broker-Dealer, as the case may be, on the other, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a Holder of
Registrable Securities or Participating Broker-Dealer be required to contribute
any amount in excess of the amount by which proceeds received by such Holder of
Registrable Securities or Participating Broker-Dealer, as the case may be, from
sales of Registrable Securities or Exchange Securities, as the case may be,
exceeds the amount of any damages that such Holder of Registrable Securities or
Participating Broker-Dealer, as the case may be, has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
<PAGE>
-18-
8. Rule 144 and Rule 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time any of the Issuers is not required to file such reports, it will, upon the
request of any Holder of Registrable Securities, provide other information so
long as necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. Each of the Issuers further covenants that it will take such
further reasonable action as any Holder of Registrable Securities may reasonably
request, to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 and Rule 144A under the
Securities Act.
9. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering will be
selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering and reasonably acceptable to
the Company.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements (however the terms applicable to each Holder shall be identical in
all respects) and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements applicable to all Holders.
10. Miscellaneous
(a) Remedies. In the event of a breach by any of the Issuers of any of
its obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Initial Purchaser, in the Purchase Agreement or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement; provided, however, that any such
right to specific performance shall be subject to principles of customary
commercial reasonableness. The Issuers agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. None of the Issuers has, as of the
date hereof, entered into and each shall not, after the date of this Agreement,
enter into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof. None of the
Issuers has entered into and each will not enter into any agreement with respect
to any of its securities which will grant to any Person "piggy-back" rights with
respect to a Registration Statement (other than any such agreement that has been
or, prior to the Filing Date will be, amended or waived).
(c) Adjustments Affecting Registrable Securities. The Issuers shall
not, directly or indirectly, take any action with respect to the Registrable
Securities as a class that would adversely affect the ability of the
<PAGE>
-19-
Holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.
(d) Joint and Several Obligations; Addition of Guarantors. The
Guarantors agree that their obligations under this agreement are joint and
several. So long as any Registrable Securities remain outstanding, the Company
shall cause each of its subsidiaries that becomes a guarantor of the Notes under
the Indenture to execute and deliver an instrument pursuant to which such
subsidiary agrees to be bound by the provisions of this agreement as a
Guarantor.
(e) Amendments and Waivers. Except as provided in paragraph (d) above,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, otherwise than with the prior written consent of (A) the Holders of not
less than a majority in aggregate principal amount of the then outstanding
Registrable Securities and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Securities held by
all Participating Broker-Dealers; provided, however, that Section 7 and this
Section 10(e) may not be amended, modified or supplemented without the prior
written consent of each Holder and each Participating Broker-Dealer (including
any Person who was a Holder or Participating Broker-Dealer of Registrable
Securities or Exchange Securities, as the case may be, disposed of pursuant to
any Registration Statement) affected by any such amendment, modification or
supplement. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
materially affect or impair the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Securities being sold by such Holders pursuant to such
Registration Statement.
(f) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most current
address given by the Trustee to the Company; and
(ii) if to the Issuers, at Polymer Group, Inc., 4838 Jenkins Avenue,
North Charleston, South Carolina 29405, Attention: Chief Financial Officer.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities.
<PAGE>
-20-
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
(k) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.
(m) Securities Held by the Issuers or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by any of the
Issuers or its affiliates (as such term is defined in Rule 405 under the
Securities Act) shall not be deemed to be not outstanding for purposes of
determining whether such consent or approval was given by the Holders of such
required percentage.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
POLYMER GROUP, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
PGI POLYMER, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
PNA CORP.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
FNA POLYMER CORP.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
FABRENE GROUP, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
<PAGE>
-2-
FABRENE CORP.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
FABRENE GROUP, L.L.C.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
FIBERTECH GROUP, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
TECHNETICS GROUP, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
FIBERGOL CORPORATION
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
CHICOPEE HOLDINGS, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
<PAGE>
-3-
CHICOPEE, INC.
By: /s/ James G. Boyd
----------------------------
Name: James G. Boyd
Title: Exec. VP, Treasurer and CFO
CHASE SECURITIES INC.
By: /s/ Mark N. Lightcap
----------------------------
Name: Mark N. Lightcap
Title: Managing Director
<PAGE>
Exhibit 4.5
[Conformed Copy]
File No.: 30641-00200
************************************************************
POLYMER GROUP, INC.
and
SUBSIDIARIES
-------------------------------
SECOND AMENDED, RESTATED AND CONSOLIDATED
CREDIT AGREEMENT
U.S. $325,000,000
Dated as of July 3, 1997
-------------------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
THE BANK OF NOVA SCOTIA,
BHF BANK,
CORESTATES BANK, N.A. and
FIRST UNION NATIONAL BANK
as Co-Agents
************************************************************
[Exhibits G and H are photocopies of the opinions as delivered.]
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions and Accounting Matters............................. 2
1.01 Certain Defined Terms........................................... 2
1.02 Accounting Terms and Determinations............................. 35
1.03 Classes, Types and Currencies of Loans.......................... 36
1.04 Subsidiaries; Designation of Unrestricted Subsidiaries.......... 36
1.05 Interest Act (Canada)........................................... 37
Section 2. Commitments, Loans, Notes and Prepayments...................... 38
2.01 Loans........................................................... 38
2.02 Borrowings...................................................... 41
2.03 Letters of Credit............................................... 41
2.04 Changes of Commitments.......................................... 46
2.05 Commitment Fees................................................. 46
2.06 Lending Offices................................................. 47
2.07 Several Obligations; Remedies Independent....................... 47
2.08 Notes........................................................... 47
2.09 Optional Prepayments and Conversions or Continuations of Loans.. 48
2.10 Mandatory Prepayments and Reductions of Commitments............. 48
Section 3. Payments of Principal and Interest............................. 53
3.01 Repayment of Loans.............................................. 53
3.02 Interest........................................................ 53
Section 4. Payments; Pro Rata Treatment; Computations; Etc................ 54
4.01 Payments........................................................ 54
4.02 Pro Rata Treatment.............................................. 55
4.03 Computations.................................................... 56
4.04 Minimum Amounts................................................. 56
4.05 Certain Notices................................................. 56
4.06 Non-Receipt of Funds by the Administrative Agent................ 58
4.07 Sharing of Payments, Etc........................................ 59
Section 5. Yield Protection, Etc.......................................... 60
5.01 Additional Costs................................................ 60
5.02 Limitation on Eurodollar Loans.................................. 62
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.03 Limitation on Euroguilder Loans................................. 63
5.04 Treatment of Affected Loans..................................... 65
5.05 Compensation.................................................... 65
5.06 Additional Costs in Respect of Letters of Credit................ 66
5.07 U.S. Taxes...................................................... 67
5.08 Foreign Taxes................................................... 68
Section 6. Guarantee...................................................... 69
6.01 The Guarantee................................................... 69
6.02 Obligations Unconditional....................................... 70
6.03 Reinstatement................................................... 70
6.04 Subrogation..................................................... 71
6.05 Remedies........................................................ 71
6.06 Instrument for the Payment of Money............................. 71
6.07 Continuing Guarantee............................................ 71
6.08 Contribution among Certain Obligors............................. 72
6.09 General Limitation on Guarantee Obligations..................... 72
Section 7. Conditions Precedent........................................... 73
7.01 Initial Extension of Credit..................................... 73
7.02 Initial and Subsequent Extensions of Credit..................... 78
Section 8. Representations and Warranties................................. 79
8.01 Corporate Existence............................................. 79
8.02 Financial Condition............................................. 79
8.03 Litigation...................................................... 79
8.04 No Breach....................................................... 80
8.05 Action.......................................................... 80
8.06 Approvals....................................................... 80
8.07 Use of Credit................................................... 81
8.08 ERISA........................................................... 81
8.09 Taxes........................................................... 81
8.10 Investment Company Act.......................................... 81
8.11 Public Utility Holding Company Act.............................. 81
8.12 Material Agreements and Liens................................... 81
8.13 Environmental Matters........................................... 82
8.14 Capitalization.................................................. 84
8.15 Subsidiaries, Etc............................................... 84
8.16 Title to Assets................................................. 85
8.17 True and Complete Disclosure.................................... 85
8.18 Legal Form...................................................... 86
8.19 Ranking......................................................... 86
8.20 Commercial Activity; Absence of Immunity........................ 86
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
8.21 Real Property................................................... 87
8.22 Intercompany Notes.............................................. 87
Section 9. Covenants of the Borrowers..................................... 87
9.01 Financial Statements Etc........................................ 87
9.02 Litigation...................................................... 90
9.03 Existence, Etc.................................................. 90
9.04 Insurance....................................................... 91
9.05 Prohibition of Fundamental Changes.............................. 94
9.06 Limitation on Liens............................................. 96
9.07 Indebtedness.................................................... 98
9.08 Investments..................................................... 100
9.09 Restricted Payments............................................. 102
9.10 Certain Financial Covenants..................................... 103
9.11 Lines of Business............................................... 105
9.12 Transactions with Affiliates.................................... 105
9.13 Use of Proceeds................................................. 106
9.14 Modifications of Certain Documents.............................. 106
9.15 Governmental Approvals.......................................... 107
9.16 Certain Obligations Respecting Subsidiaries..................... 107
9.17 Gainesville Georgia Property.................................... 109
9.18 Subordinated Indebtedness....................................... 109
Section 10. Events of Default............................................. 109
Section 11. The Administrative Agent and the Co-Agents.................... 114
11.01 Appointment, Powers and Immunities............................. 114
11.02 Reliance by the Administrative Agent........................... 115
11.03 Defaults....................................................... 115
11.04 Rights as a Lender............................................. 115
11.05 Indemnification................................................ 116
11.06 Non-Reliance by Lenders........................................ 116
11.07 Failure to Act................................................. 117
11.08 Resignation or Removal of Administrative Agent................. 117
11.09 Consents under Basic Documents................................. 117
11.10 Collateral Sub-Agents.......................................... 118
11.11 Co-Agents...................................................... 118
Section 12. Miscellaneous................................................. 118
12.01 Waiver......................................................... 118
12.02 Notices........................................................ 119
12.03 Expenses, Etc.................................................. 119
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12.04 Amendments, Etc................................................. 120
12.05 Successors and Assigns.......................................... 121
12.06 Assignments and Participations.................................. 121
12.07 Survival........................................................ 124
12.08 Captions........................................................ 124
12.09 Counterparts.................................................... 124
12.10 Governing Law................................................... 124
12.11 Jurisdiction, Service of Process and Venue...................... 124
12.12 Waiver of Jury Trial............................................ 125
12.13 No Immunity..................................................... 125
12.14 Judgment Currency............................................... 126
12.15 Use of English Language......................................... 126
12.16 Treatment of Certain Information................................ 127
12.17 Replacement of Lenders.......................................... 127
12.18 Margin Regulations.............................................. 128
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ANNEX I - Certain Provisions relating to Bankers' Acceptances
SCHEDULE I - Certain Litigation
SCHEDULE II - Material Agreements and Liens
SCHEDULE III - Hazardous Materials
SCHEDULE IV - Capital Structure
SCHEDULE V - Existing Equity Rights
SCHEDULE VI - Subsidiaries and Investments
SCHEDULE VII - Real Property
SCHEDULE VIII - Insurance Deductibles
EXHIBIT A-1 - Form of Facility A Revolving Credit Note
EXHIBIT A-2 - Form of Facility B Revolving Credit Note
EXHIBIT B - Form of Security Agreement
EXHIBIT C - Copy of Bonlam Intercompany Notes Agreement
EXHIBIT D - Copy of Fabrene Intercompany Notes Agreement
EXHIBIT E - Form of Domestic Non-Borrower Guaranty Agreement
EXHIBIT F - Form of Foreign Non-Borrower Guaranty Agreement
EXHIBIT G - Form of Legal Opinion of Special New York Counsel to the
Group Members (Kirkland & Ellis)
EXHIBIT H - Form of Opinion of Special New York Counsel to Chase
(Milbank, Tweed, Hadley & McCloy)
EXHIBIT I - Form of Process Agent Acceptance
EXHIBIT J - Form of Assignment and Acceptance
EXHIBIT K - Form of Confidentiality Agreement
</TABLE>
(iv)
<PAGE>
SECOND AMENDED, RESTATED AND CONSOLIDATED CREDIT AGREEMENT dated as of
July 3, 1997, between:
POLYMER GROUP, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware ("PGI");
CHICOPEE HOLDINGS B.V., a limited liability company duly organized and
validly existing under the laws of the Netherlands and domesticated under
Section 388 of the Delaware Corporation Law under the name Chicopee
Holdings (Netherlands) B.V. Corporation ("Dutch Holding");
PGI NONWOVENS B.V., a limited liability company duly organized and
validly existing under the laws of the Netherlands ("Dutch Operating" and
together with Dutch Holding, the "Dutch Borrowers");
FABRENE INC., a corporation duly organized and validly existing under
the laws of Ontario, Canada ("Fabrene" and together with the Dutch
Borrowers, the "Foreign Borrowers"; the Foreign Borrowers together with PGI
being herein called the "Borrowers");
each of the entities identified under the caption "DOMESTIC NON-
BORROWER GUARANTORS" on the signature pages hereto (individually, together
with any entity that shall become a Domestic Non-Borrower Guarantor
hereunder pursuant to Section 9.16(b) hereof, a "Domestic Non-Borrower
Guarantor", collectively the "Domestic Non-Borrower Guarantors", and
together with the Borrowers, the "Obligors");
each of the lenders that is a signatory hereto identified under the
caption "LENDERS" on the signature pages hereto or which, pursuant to
Section 12.06(b) hereof, shall become a "Lender" hereunder (individually, a
"Lender" and, collectively, the "Lenders"); and
THE CHASE MANHATTAN BANK, a New York State banking association, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
PGI, the Foreign Borrowers, the other "Borrowers" named therein,
certain lenders (the "Existing Lenders"), The Chase Manhattan Bank (as successor
by merger to the Chase Manhattan Bank (National Association)), as the
administrative agent named therein, The Chase Manhattan Bank (as successor by
merger to Chemical Bank), as the operations agent named therein, and the co-
agents named therein, are party to an Amended, Restated and Consolidated Credit
Agreement dated as of May 15, 1996 (as heretofore modified and
Credit Agreement
----------------
<PAGE>
-2-
supplemented and in effect on the date of this Agreement, the "Existing Credit
Agreement") providing, subject to the terms and conditions thereof, for the
extensions of credit to PGI, the Foreign Borrowers and the other Borrowers named
therein.
The parties hereto now wish to further amend and restate the Existing
Credit Agreement in its entirety into a Second Amended, Restated and
Consolidated Credit Agreement, it being the intention of the parties hereto that
any loans and letters of credit outstanding under the Existing Credit Agreement
on the Effective Date (as hereinafter defined), after giving effect to the
application on the Effective Date of the proceeds of the Senior Subordinated
Notes (as so defined), shall not be repaid or canceled on the Effective Date,
but shall be deemed to be continued as loans and letters of credit hereunder as
hereinafter provided.
The Borrowers have in addition requested the Lenders to extend credit
to the Borrowers in U.S. Dollars (as hereinafter defined) and in certain
Alternative Currencies (as hereinafter defined) in an aggregate principal or
face amount that will not exceed U.S. $325,000,000 in the aggregate, the
proceeds of which will be used to provide financing for permitted acquisitions,
to finance ongoing working capital requirements (including loans and letters of
credit of PGI and its Subsidiaries), to pay fees and expenses incurred in
connection with the Refinancing (as hereinafter defined), and to provide funds
for general corporate purposes (including capital expenditures).
Accordingly, the parties hereto hereby agree that the Existing Credit
Agreement shall, as of the Effective Date (the occurrence of which is subject to
satisfaction of the conditions precedent specified in Section 7.01 hereof), be
amended and restated in its entirety as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Acceptance Fee" shall mean, in respect of a Bankers' Acceptance, a
fee calculated on the face amount of such Bankers' Acceptance at a rate per
annum equal to the Applicable Margin that would be payable with respect to a
Eurodollar Loan drawn on the date of acceptance of such Bankers' Acceptance.
"Acquisition" shall mean an acquisition by PGI or any of its
Restricted Subsidiaries of a business and the related assets of any Person
(whether by way of purchase of
Credit Agreement
----------------
<PAGE>
-3-
assets or stock, including any tender for outstanding shares of stock, by merger
or consolidation, by acceptance of a contribution of capital from another
Person, or otherwise).
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Group
Members and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual or one or more members of
such immediate family and any Person who is controlled by any such member or
trust. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person that owns directly or indirectly securities having 10% or more
of the voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee of the Group Members, (b) none of the
Group Members (excluding Group Members which are Unrestricted Subsidiaries)
shall be Affiliates and (c) none of the Lenders shall be Affiliates.
"Agreed Takeover" shall mean any tender for shares of stock of a
corporation that has been approved by a majority of the board of directors of
such corporation.
"Alternative Currency" shall mean, at any time, Dutch Guilders or
Canadian Dollars, so long as at such time, (i) such Currency is freely
transferable and convertible into U.S. Dollars in the London foreign exchange
market, (ii) no central bank or other governmental authorization in the country
of issue of such Currency is required to permit use of such Currency by any
Lender for making any Loan hereunder and/or to permit the relevant Borrower to
borrow and repay the principal thereof and to pay the interest thereon, unless
such authorization has been obtained, and (iii) in the case of Dutch Guilders,
also so long as at such time such Currency is dealt with in the London interbank
deposit market.
"Ancillary Agreements" shall mean, collectively, the License
Agreement, the Technology Agreement, the Supply Agreement and the Shared
Facilities Agreement, in each case as the same shall be modified and
supplemented and in effect from time to time.
"Annex I" shall mean "Annex I" attached hereto and made a part hereof,
which Annex I sets forth certain terms and conditions relating to Bankers'
Acceptances.
"Applicable Lending Office" shall mean, for each Lender and for each
Type and Currency of Loan, the "Lending Office" of such Lender (or of an
affiliate of such
Credit Agreement
----------------
<PAGE>
-4-
Lender) designated for such Type and Currency of Loan on the signature pages
hereof or such other office of such Lender (or of an affiliate of such Lender)
as such Lender may from time to time specify to the Administrative Agent and the
Borrowers as the office by which Loans of such Type and Currency are to be made
and maintained.
"Applicable Margin" shall mean with respect to Eurocurrency Loans,
Base Rate Loans, Canadian Base Rate Loans, letter of credit fees (as such term
is used in Section 2.03(g) hereof) and commitment fees (as such term is used in
Section 2.05 hereof) during any Accrual Period (as defined below), the
respective rates set forth below for such Loans and such fees for such Accrual
Period, which rates shall be based upon the Leverage Ratio for such Accrual
Period:
<TABLE>
<CAPTION>
Base Rate
Loans and
Leverage Eurocurrency Canadian Base Letter of Credit Commitment
Ratio Loans Rate Loans Fees Fees
- --------------- ------------ ------------- ---------------- ----------
<S> <C> <C> <C> <C>
Greater than
or equal to
4.50 2.25% 1.00% 2.25% .50%
Greater than
or equal to
4.25 but less
than 4.50 1.75% .50% 1.75% .375%
Greater than
or equal to
3.75 but less
than 4.25 1.50% .25% 1.50% .375%
Greater than
or equal to
3.00 but less
than 3.75 1.25% 0% 1.25% .30%
Greater than
or equal to
2.50 but less
than 3.00 1.00% 0% 1.00% .25%
Less than
2.50 .75% 0% .75% .20%
</TABLE>
For purposes hereof, an "Accrual Period" shall mean each of the following
successive periods, as applicable:
Credit Agreement
----------------
<PAGE>
-5-
(i) the period commencing during any fiscal quarter on the date (the
"Change Date") that is the second Business Day following the receipt by the
Administrative Agent of the certificate referred to in clause (a) of the
next following paragraph or
(ii) in the event that PGI or any of its Restricted Subsidiaries
makes an Acquisition and borrows hereunder in an amount equal to or greater
than U.S. $25,000,000 (or the Foreign Currency Equivalent thereof) in
connection with such Acquisition, the period commencing during any fiscal
quarter on the second Business Day (the "Acquisition Change Date")
following the date of such Acquisition,
in each case to but not including the earlier of (x) the Change Date in the
immediately following fiscal quarter and (y) the next Acquisition Change Date,
provided, that the initial Accrual Period shall commence on the Effective Date
and continue until the earlier of (x) the Change Date during the fiscal quarter
ending on December 27, 1997 and (y) an Acquisition Change Date, and provided
further, that the Leverage Ratio for any Accrual Period commencing with an
Acquisition Change Date shall be calculated on a pro forma basis, as at the end
of and for the period of four fiscal quarters most recently ended prior to the
date of the related Acquisition for which financial statements of PGI are
available, under the assumption that such Acquisition and the incurrence of any
Indebtedness in connection with such Acquisition, shall have occurred at the
beginning of the applicable period.
The Leverage Ratio for the initial Accrual Period shall be determined
on the basis of the certificate of a senior officer delivered pursuant to
Section 7.01(p) hereof (together with the financial statements for the fiscal
quarter on which such calculation is based). The Leverage Ratio for any Accrual
Period after the initial Accrual Period shall be determined (a) if such Accrual
Period commences with a Change Date, on the basis of a certificate of a senior
officer setting forth a calculation of the Leverage Ratio as at the last day of
the fiscal quarter immediately prior to the first day of such Accrual Period
(together with the financial statements for the fiscal quarter on which such
calculation is based) and (b) if such Accrual Period commences with an
Acquisition Change Date, on the basis of the certificate of a senior officer
delivered pursuant to Section 9.05(d)(iv)(z) hereof in connection with the
related Acquisition.
Anything in this Agreement to the contrary notwithstanding, the
Applicable Margin shall be the highest applicable rate provided for above (i.e.,
2.25% for Eurocurrency Loans, 1.00% for Base Rate Loans and Canadian Base Rate
Loans, 2.25% for letter of credit fees, and .50% for commitment fees) (i) during
any period when an Event of Default shall have occurred and be continuing or
(ii) if the Obligors shall default in the delivery of any financial statements
pursuant to Section 9.01(a) or 9.01(b) hereof, or in the delivery of the
certificate of a senior financial officer pursuant to Section 9.05(d)(iv)(z).
Credit Agreement
----------------
<PAGE>
-6-
"BA Discount Proceeds" shall mean, in respect of any Bankers'
Acceptance to be purchased by a Facility B Revolving Credit Lender on any date
under Section 2.01(b) hereof and Annex I hereto, an amount (rounded to the
nearest whole Canadian cent, and with one-half of one Canadian cent being
rounded up) calculated on such day by dividing:
(a) the face amount of such Bankers' Acceptance; by
(b) the sum of one plus the product of:
(i) the BA Discount Rate (expressed as a decimal) applicable to
such Bankers' Acceptance; and
(ii) a fraction, the numerator of which is the number of days in
the term of such Bankers' Acceptance and the denominator of
which is 365;
with such product being rounded up or down to the fifth decimal
place and .000005 being rounded up.
"BA Discount Rate" shall mean, in respect of a Bankers' Acceptance,
the rate determined by the Administrative Agent at or about 10:00 a.m. (Toronto
time) on the date of acceptance of such Bankers' Acceptance as the average of
the discount rates (rounded to the nearest one-one hundredth of one percent
(.01%)) based on a year of 365 days quoted by the Reference Lenders as the
discount rate at which they would purchase on such date their own bankers'
acceptances having terms equivalent to the terms of such Bankers' Acceptance.
"Bankers' Acceptance" shall mean a non-interest bearing bill of
exchange drawn by Fabrene and accepted by a Facility B Revolving Credit Lender
at Fabrene's request as a Facility B Revolving Credit Loan.
"Bankers' Acceptance Loans" shall mean the creation and discount of
Bankers' Acceptances as contemplated in Section 2.01(b) hereof and Annex I
hereto.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
Credit Agreement
----------------
<PAGE>
-7-
"Base Rate Loans" shall mean Loans that bear interest at rates based
upon the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement, the Notes,
the Letter of Credit Documents, the Intercompany Notes Agreements, the
Intercompany Notes, the Security Documents, the Senior Subordinated Debt
Documents and the Ancillary Agreements.
"Bonlam" shall mean Bonlam, S.A. de C.V., a corporation duly organized
and validly existing under the laws of Mexico.
"Bonlam Intercompany Notes" shall mean, collectively, the promissory
note or notes, each substantially in the form of Exhibit A to the Bonlam
Intercompany Notes Agreement, from time to time executed and delivered by Bonlam
pursuant to the Bonlam Intercompany Notes Agreement to the order of PGI Polymer
to evidence advances made from time to time by PGI Polymer to Bonlam pursuant to
Section 9.08(e) hereof, in each case as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.
"Bonlam Intercompany Notes Agreement" shall mean the Amended and
Restated Intercompany Notes Agreement dated as of May 15, 1996 (a copy of which
is attached as Exhibit C hereto) and amended as of the date hereof between
Bonlam and PGI Polymer, and guaranteed by each Subsidiary of Bonlam, as the same
shall, subject to Section 9.14 hereof, be modified and supplemented and in
effect from time to time.
"Business Day" shall mean (a) any day on which commercial banks are
not authorized or required to close in New York City and (b) if such day relates
to a borrowing of, a payment or prepayment of principal of or interest on, a
Conversion of or into, or an Interest Period for, any Eurocurrency Loan or a
notice by the Borrowers with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, then also any day on which dealings in deposits
are carried out in the London interbank market and (c) if any such Eurocurrency
Loan is denominated in Dutch Guilders, then also any day on which foreign
exchange trading is carried out in the London interbank market and any day on
which banks are open in the Netherlands and (d) if such day relates to a
Facility B Revolving Credit Loan, then also any day on which commercial banks
are not authorized or required to close in Toronto, Ontario.
"Canadian Base Rate" shall mean the greater of (i) the per annum
floating rate of interest established from time to time by Chase Canada as the
base rate it will use to determine rates of interest on Canadian Dollar loans to
its customers in Canada and (ii) the sum of (x) the BA Discount Rate for 30 day
Bankers' Acceptances plus (y) 1%. The Canadian Base Rate is not intended to be
the lowest rate of interest charged by Chase Canada in connection with
extensions of credit in Canadian dollars to debtors.
Credit Agreement
----------------
<PAGE>
-8-
"Canadian Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Canadian Base Rate.
"Canadian Dollars" and "Cdn $" shall mean lawful money of Her Majesty in
Right of Canada.
"Canadian Security Documents" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by Fabrene and its Subsidiaries to provide collateral security for the
obligations of Fabrene and its Subsidiaries hereunder and under the Fabrene
Intercompany Notes Agreement and the Fabrene Intercompany Notes, in each case as
the same shall be modified and supplemented and in effect from time to time.
"Capital Expenditures" shall mean, for any period, expenditures (including,
without limitation, the aggregate amount of Capital Lease Obligations incurred
during such period) made by PGI or any of its Restricted Subsidiaries to acquire
or construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding normal replacements and maintenance which are
properly charged to current operations) during such period computed in
accordance with GAAP. For purposes hereof, the acquisition of any capital asset
by PGI or any of its Restricted Subsidiaries, in the case of a reinvestment of
Net Available Proceeds of any Casualty Event, shall constitute a "Capital
Expenditure" hereunder only to the extent of any consideration paid by PGI and
its Restricted Subsidiaries in excess of such Net Available Proceeds so
reinvested.
"Capital Lease Obligations" shall mean, for any Person, all obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP (including Statement of Financial Accounting Standards No. 13
of the Financial Accounting Standards Board), and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP (including such Statement No. 13).
"Casualty Event" shall mean, with respect to any Property of any Person,
any loss of or damage to, or any condemnation or other taking of, such Property
for which such Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation; provided, that for
purposes of Section 2.10(a) hereof, "Casualty Event" shall not include any such
loss, damage, condemnation or other taking for which proceeds or other
compensation received does not exceed U.S. $2,500,000 (in the aggregate) in any
fiscal year of the Borrowers.
"Chase" shall mean The Chase Manhattan Bank.
Credit Agreement
----------------
<PAGE>
-9-
"Chase Canada" shall mean The Chase Manhattan Bank of Canada.
"Chicopee" shall mean Chicopee, Inc., a corporation duly organized and
validly existing under the laws of the State of Delaware.
"Class" shall have the meaning assigned to such term in Section 1.03
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral Account" shall have the meaning assigned to such term in
Section 4.01 of the Security Agreement.
"Commitments" shall mean the Facility A Revolving Credit Commitments and
the Facility B Revolving Credit Commitments.
"Consolidated Net Income" shall mean, for any period, the consolidated net
income (or loss) for PGI and its Restricted Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) for such period,
adjusted, to the extent included in calculating such net income (loss), by
excluding, without duplication, (i) all extraordinary gains or losses (including
all fees and expenses relating thereto), (ii) the portion of net income (or
loss) of PGI and its Restricted Subsidiaries allocable to minority interests in
unconsolidated Persons owned by PGI and its Restricted Subsidiaries, to the
extent that cash dividends or distributions have not actually been received by
PGI or its Restricted Subsidiaries, (iii) net income (or loss) of any Person
combined with PGI or any of its Restricted Subsidiaries on a "pooling of
interests" basis attributable to any period prior to the date of combination,
(iv) net gains (but not losses), including all fees and expenses relating
thereto, in respect of dispositions of assets other than in the ordinary course
of business, (v) the net income of any Restricted Subsidiary to the extent that
the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders, (vi) the cumulative effect of a
change in accounting principles or (vii) income of Unrestricted Subsidiaries,
except to the extent that cash dividends are received by PGI or any Restricted
Subsidiary from such Unrestricted Subsidiary.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurocurrency Loan from one
Interest Period to the next Interest Period, or of a Bankers' Acceptance Loan as
contemplated by paragraph (f) of Annex I hereto.
Credit Agreement
----------------
<PAGE>
-10-
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.09 hereof (or, in the case of a Bankers' Acceptance Loan,
as contemplated by Annex I hereto) of one Type of Loans into another Type of
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Currency" shall mean U.S. Dollars or any Alternative Currency.
"Debt Issuance" shall mean any issuance or sale of Indebtedness, other than
(i) Indebtedness expressly permitted to be incurred pursuant to Section 9.07
hereof as in effect on the date hereof, (ii) any other Indebtedness to which the
Majority Lenders shall have consented to the extent that each of the Lenders
shall have agreed such Indebtedness shall not constitute a "Debt Issuance" for
purposes hereof and (iii) Future Refinancing Debt to the extent the proceeds
thereof are applied to the payment of the principal of (and accrued interest and
redemption premium, if any, on) the Senior Subordinated Notes.
"Debt Service" shall mean, for any period, the sum, for PGI and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP) of the following: (a) all payments of principal of
Indebtedness scheduled to be made during such period plus (b) to the extent not
already included in clause (a) hereof, all Interest Expense for such period.
"Default" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"Default Interest Period" shall mean, during any period while any
principal of or interest on any Loan denominated in Dutch Guilders is not paid
when due, each successive period as the Administrative Agent shall from time to
time (with the approval of the Majority Lenders) choose; provided that (a) no
such period shall exceed three months, (b) the first such period shall commence
as of the date on which such principal or interest became due and each
succeeding such period shall commence upon the expiry of the immediately
preceding such period and (c) in the absence of or pending such consent from the
relevant Majority Lenders, each Default Interest Period shall have a duration of
one week.
"Disclosure Materials" shall mean, collectively, the Information
Memorandum and the Offering Memorandum.
"Disposition" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by PGI or
any of its Restricted Subsidiaries to any Person, including, without limitation,
any sale of an equity interest in any Restricted Subsidiary, but excluding any
sale, assignment, transfer or other disposition of any Property sold or disposed
of (i) in the ordinary course of business and on ordinary business
Credit Agreement
----------------
<PAGE>
-11-
terms, (ii) not in the ordinary course of business in an aggregate amount not
exceeding U.S. $2,500,000 in any fiscal year of the Borrowers or (iii) transfers
of Property between Wholly Owned Restricted Subsidiaries of PGI.
"Dividend Payment" shall mean, with respect to any Person, dividends
(in cash, Property or obligations) on, or other payments or distributions on
account of, or the setting apart of money for a sinking or other analogous fund
for, or the purchase, redemption, retirement or other acquisition of, any shares
of any class of stock of such Person or of any warrants, options or other rights
to acquire the same (or to make any payments, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market or
equity value of such Person or any of its Subsidiaries), but excluding dividends
payable solely in shares of common stock of such Person.
"Domestic Non-Borrower Guaranty Agreement" shall mean a Domestic Non-
Borrower Guaranty Agreement substantially in the form of Exhibit E hereto
executed by a Domestic Subsidiary (as defined in Section 9.16(b) hereof) of PGI
in favor of the Administrative Agent, as the same shall be modified and
supplemented and in effect from time to time.
"Dutch Guilders" and "GL" shall mean lawful money of the Netherlands.
"Dutch Security Documents" shall mean the guarantees, mortgages and
other security agreements and documents required to be executed and delivered by
Chicopee, Dutch Holding and Dutch Operating pursuant to Section 7.01(j) hereof,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"EBITDA" shall mean, for any period, the sum, for PGI and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (a) operating income (or loss) for
such period, plus (b) depreciation, amortization and other non-cash charges (to
the extent deducted in determining operating income) for such period minus (c)
non-cash income or gains (to the extent included in determining operating
income) for such period minus (d) non-recurring gains (to the extent included in
determining operating income) for such period plus (e) non-recurring losses (to
the extent deducted in determining operating income) for such period plus (f)
expenses relating to employee profit sharing arising in connection with
applicable Mexican statutory requirements. Notwithstanding the foregoing:
(w) except with respect to the entities referred to in clause (y)
below, in determining the components set forth in clauses (a) through (e)
above with respect to any entity that is a Restricted Subsidiary but which
is not a Wholly Owned Restricted Subsidiary, each of such components (to
the extent the net effect thereof shall result in a positive contribution
to EBITDA) shall be calculated to the extent of the percentage
Credit Agreement
----------------
<PAGE>
-12-
of the ownership interest of PGI and its Wholly Owned Restricted
Subsidiaries in such entity, provided that if the net effect of such
components shall result in a negative contribution to EBITDA, then 100% of
each of such components shall be taken into account in determining EBITDA;
(x) if during any period for which EBITDA is being determined PGI or
any of its Restricted Subsidiaries shall have consummated any Acquisition
or Disposition then, for all purposes of this Agreement, EBITDA shall be
determined on a pro forma basis as if such Acquisition or Disposition had
been made or consummated on the first day of such period (and, in
determining pro forma EBITDA pursuant to this clause (x) following any
Acquisition, pro forma effect shall be given to any net cost savings that
PGI reasonably believes in good faith could have been achieved during the
related calculation period as a result of such Acquisition and which cost
savings could then be reflected in pro forma financial statements under
GAAP, provided that (i) such cost savings are identified and quantified in
a certificate of a senior officer of PGI delivered to the Administrative
Agent on or prior to the date of such Acquisition and (ii) actions are
commenced or initiated by PGI within 90 days of such Acquisition to effect
such cost savings identified in such officers' certificate);
(y) in calculating EBITDA following the Acquisition of any entity
pursuant to Section 9.05(d)(iv)(t)(B) during the nine-month period when
such entity is permitted not to be a Wholly Owned Subsidiary of PGI, no
adjustment shall be made for any minority interest in such Subsidiary; and
(z) in calculating EBITDA, there shall be excluded (i) any operating
income (loss) of any Person that is not a Restricted Subsidiary (including
any Person that is an Unrestricted Subsidiary), except (A) to the extent of
cash actually distributed by such Person to PGI and its Restricted
Subsidiaries during the relevant period as a dividend or distribution and
(B) PGI's equity in any operating loss of such Person (other than an
Unrestricted Subsidiary) for such period and (ii) any operating income (but
not loss) of any Restricted Subsidiary if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted Subsidiary,
directly or indirectly, to PGI to the extent of such restrictions.
"Effective Date" shall mean the date upon which the conditions to
effectiveness set forth in Section 7.01 hereof shall have been satisfied or
waived.
"Environmental Claim" shall mean, with respect to any Person, any
written notice, claim, demand or other written communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries,
Credit Agreement
----------------
<PAGE>
-13-
fines or penalties arising out of, based on or resulting from (i) the presence,
or Release into the environment, of any Hazardous Material at any location,
whether or not owned by such Person, or (ii) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and any
claim by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations (including, without
limitation, the laws, rules or regulations of the Netherlands, Canada, Mexico
and the Federal Republic of Germany), and any orders or decrees, in each case as
now or hereafter in effect, relating to the regulation or protection of human
health, safety or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or toxic or hazardous substances or wastes.
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital stock
of any class, or partnership or other ownership interests of any type in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which PGI is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which PGI is a member.
"Eurocurrency Base Rate" shall mean, with respect to any Eurocurrency
Loan in any Currency for any Interest Period (or Default Interest Period)
therefor:
Credit Agreement
----------------
<PAGE>
-14-
(a) the rate per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) appearing on the Reuters Screen LIBO Page for such Currency (or
such other page as may replace that page in that service) at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on the date
two Business Days prior to the first day of such Interest Period (or
Default Interest Period) as the London Interbank Offered Rate for such
Currency having a term comparable to such Interest Period (or Default
Interest Period) and in an amount of U.S. $1,000,000 or more; or
(b) if such rate does not appear on the Reuters Screen LIBO Page, or
if said page shall cease to be publicly available, or if the information
contained on said page, in the reasonable judgment of the Majority Facility
A Revolving Credit Lenders, shall cease accurately to reflect the rate
offered by leading banks in the London interbank market for deposits in the
applicable Currency as reported by any publicly available source of similar
market data selected by such Majority Lenders, the Eurocurrency Base Rate
shall mean, with respect to any Eurocurrency Loan for any Interest Period
(or Default Interest Period) therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/16 of 1%) quoted by Chase at approximately
11:00 a.m. London time (or as soon thereafter as practicable) two Business
Days prior to the first day of such Interest Period (or Default Interest
Period) for the offering by Chase to leading banks in the London interbank
market of deposits in such Currency having a term comparable to such
Interest Period (or Default Interest Period) and in an amount comparable to
the principal amount of the Eurocurrency Loan to be made by Chase for such
Interest Period (or in an amount comparable to the principal or interest to
be outstanding for such Default Interest Period). If Chase is not
participating in any Eurocurrency Loan during any Interest Period (or
Default Interest Period) therefor, the Eurocurrency Base Rate for such Loan
for such Interest Period (or Default Interest Period) shall be determined
by reference to the amount of the Loan that Chase would have made or had
outstanding had it been participating in such Loan during such Interest
Period (or such principal or interest for such Default Interest Period).
"Eurocurrency Loans" shall mean Loans denominated in either U.S.
Dollars or Dutch Guilders, the interest rates on which are determined on the
basis of rates referred to in the definition of "Eurocurrency Base Rate" in this
Section 1.01.
"Eurocurrency Rate" shall mean, for any Eurocurrency Loan for any
Interest Period therefor (or for any principal or interest for any Default
Interest Period therefor), a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurocurrency Base Rate for such Loan for such Interest Period (or the
Eurocurrency Base Rate for such principal or interest for such Default Interest
Period) divided by 1 minus the Reserve Requirement for such Loan for such
Interest Period (or for such principal or interest for such Default Interest
Period).
Credit Agreement
----------------
<PAGE>
-15-
"Eurodollar Loans" shall mean Eurocurrency Loans that are denominated
in U.S. Dollars.
"Euroguilder Loans" shall mean Eurocurrency Loans that are denominated
in Dutch Guilders.
"Event of Default" shall have the meaning assigned to such term in
Section 10 hereof.
"Existing Credit Agreement" shall have the meaning assigned to such
term in the preamble of this Agreement.
"Existing Senior Notes" shall mean the 12-1/4% Senior Notes Due 2002
issued by PGI pursuant to the Existing Senior Notes Indenture.
"Existing Senior Notes Indenture" shall mean the Indenture dated as of
June 24, 1994 between PGI and Harris Trust & Savings Bank, as trustee, providing
for the issuance of the Existing Senior Notes, as the same has heretofore been
amended by a First Supplemental Indenture dated as of March 15, 1995, a Second
Supplemental Indenture dated as of September 14, 1995, a Third Supplemental
Indenture dated as of April 9, 1996 and a Fourth Supplemental Indenture dated as
of August 14, 1996.
"Fabrene Acquisition Intercompany Note" shall mean the promissory note
referred to as the "Acquisition Intercompany Note" in the Fabrene Intercompany
Notes Agreement in the amount of Cdn $27,040,752.00 issued by Fabrene to Fabrene
Holdings, a copy of which Note is attached as Exhibit A to the Fabrene
Intercompany Notes Agreement, as the same shall, subject to Section 9.14 hereof,
be modified and supplemented and in effect from time to time.
"Fabrene Holdings" shall mean Fabrene Group, Inc., a corporation duly
organized and validly existing under the laws of Prince Edward Island, Canada.
"Fabrene Intercompany Notes" shall mean, collectively, the Fabrene
Acquisition Intercompany Note and the Fabrene Operations Intercompany Note.
"Fabrene Intercompany Notes Agreement" shall mean the Amended and
Restated Intercompany Notes Agreement dated as of May 15, 1996 (a copy of which
is attached as Exhibit D hereto) and amended as of the date hereof between
Fabrene, Fabrene Holdings and PGI Polymer, and guaranteed by each Subsidiary of
Fabrene, as the same shall, subject to Section 9.14 hereof, be modified and
supplemented and in effect from time to time.
Credit Agreement
----------------
<PAGE>
-16-
"Fabrene Operations Intercompany Note" shall mean the promissory note
dated as of May 15, 1996, executed and delivered by Fabrene pursuant to the
Fabrene Intercompany Notes Agreement to the order of PGI Polymer to evidence
advances made from time to time by PGI Polymer to Fabrene pursuant to Section
9.08(e) hereof, as the same shall, subject to Section 9.14 hereof, be modified
and supplemented and in effect from time to time.
"Facility A Reserved Commitment Amount" shall have the meaning
assigned to such term in Section 2.01(a) hereof.
"Facility A Revolving Credit Borrowers" shall mean, collectively, PGI
and each Dutch Borrower.
"Facility A Revolving Credit Commitment" shall mean, for each Facility
A Revolving Credit Lender, the obligation of such Lender to make Facility A
Revolving Credit Loans to the Facility A Revolving Credit Borrowers in U.S.
Dollars (in the case of PGI) and Dutch Guilders (in the case of the Dutch
Borrowers) in an aggregate amount at any one time outstanding up to but not
exceeding the amount set opposite the name of such Lender on the signature pages
hereof under the caption "Facility A Revolving Credit Commitment" (as the same
may be reduced from time to time pursuant to Section 2.04 hereof) or, in the
case of any Person that becomes a Facility A Revolving Credit Lender pursuant to
an assignment permitted under Section 12.06(b) hereof, as specified in the
respective instrument of assignment pursuant to which such assignment is
effected (as the same may be reduced from time to time pursuant to Section 2.04
hereof). The original aggregate principal amount of the Facility A Revolving
Credit Commitments on the Effective Date is U.S. $295,000,000; provided that, on
any Test Date (after giving effect to the calculations required to be performed
on such Test Date in accordance with Section 2.10(g) hereof) the aggregate
Revolving Credit Exposure shall not exceed U.S. $325,000,000.
"Facility A Revolving Credit Commitment Percentage" shall mean, with
respect to any Facility A Revolving Credit Lender, the ratio of (a) the amount
of the Facility A Revolving Credit Commitment of such Lender to (b) the
aggregate amount of the Facility A Revolving Credit Commitments of all of the
Facility A Revolving Credit Lenders.
"Facility A Revolving Credit Lenders" shall mean (a) on the date
hereof, the Lenders having Facility A Revolving Credit Commitments on the
signature pages hereof and (b) thereafter, the Lenders from time to time holding
Facility A Revolving Credit Loans and Facility A Revolving Credit Commitments
after giving effect to any assignments thereof permitted by Section 12.06
hereof.
"Facility A Revolving Credit Loans" shall mean the loans provided for
by Section 2.01(a) hereof, which (in the case of Loans to PGI) may be Base Rate
Loans and/or
Credit Agreement
----------------
<PAGE>
-17-
Eurodollar Loans and which (in the case of Loans to the Dutch Borrowers) shall
be Euroguilder Loans.
"Facility A Revolving Credit Notes" shall mean the promissory notes
provided for by Section 2.08(a) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Facility B Reserved Commitment Amount" shall have the meaning
assigned to such term in Section 2.01(b) hereof.
"Facility B Revolving Credit Commitment" shall mean, for each Facility
B Revolving Credit Lender, the obligation of such Lender to make Facility B
Revolving Credit Loans to Fabrene in Canadian Dollars in an aggregate amount at
any one time outstanding up to but not exceeding the amount set opposite the
name of such Lender on the signature pages hereof under the caption "Facility B
Revolving Credit Commitment" (as the same may be reduced from time to time
pursuant to Section 2.04 hereof) or, in the case of any Person that becomes a
Facility B Revolving Credit Lender pursuant to an assignment permitted under
Section 12.06(b) hereof, as specified in the respective instrument of assignment
pursuant to which such assignment is effected (as the same may be reduced from
time to time pursuant to Section 2.04 hereof). The original aggregate principal
amount of the Facility B Revolving Credit Commitments is the Foreign Currency
Equivalent in Canadian Dollars on the Effective Date of U.S. $30,000,000;
provided that, on any Test Date (after giving effect to the calculations
required to be performed on such Test Date in accordance with Section 2.10(g)
hereof) the aggregate Revolving Credit Exposure shall not exceed U.S.
$325,000,000.
"Facility B Revolving Credit Commitment Percentage" shall mean, with
respect to any Facility B Revolving Credit Lender, the ratio of (a) the amount
of the Facility B Revolving Credit Commitment of such Lender to (b) the
aggregate amount of the Facility B Revolving Credit Commitments of all of the
Facility B Revolving Credit Lenders.
"Facility B Revolving Credit Lenders" shall mean (a) on the date
hereof, the Lenders having Facility B Revolving Credit Commitments on the
signature pages hereof and (b) thereafter, the Lenders from time to time holding
Facility B Revolving Credit Loans and Facility B Revolving Credit Commitments
after giving effect to any assignments thereof permitted by Section 12.06
hereof.
"Facility B Revolving Credit Loans" shall mean the loans provided for
by Section 2.01(b) hereof and Annex I hereto, which shall be Canadian Base Rate
Loans and/or Bankers' Acceptance Loans.
Credit Agreement
----------------
<PAGE>
-18-
"Facility B Revolving Credit Notes" shall mean the promissory notes
provided for by Section 2.08(b) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"FiberTech" shall mean FiberTech Group, Inc., a corporation duly
organized and validly existing under the laws of the State of Delaware.
"Fixed Charges Ratio" shall mean, as at any date, the ratio of (a)
EBITDA for the period of four fiscal quarters ending on or most recently ended
prior to such date minus Capital Expenditures for such period (except that for
any period ending on or before the fiscal quarter ending on or nearest to
September 30, 1998, only the portion of Capital Expenditures for the relevant
period in excess of U.S. $20,000,000 shall be so subtracted) to (b) Debt Service
for such period.
"Foreign Currency Equivalent" shall mean, with respect to any amount
in U.S. Dollars, the amount of an Alternative Currency that could be purchased
with such amount of U.S. Dollars using the foreign exchange rate(s) specified in
the definition of the term "U.S. Dollar Equivalent", as determined by the
Administrative Agent.
"Foreign Non-Borrower Guaranty Agreement" shall mean a Foreign Non-
Borrower Guaranty Agreement executed pursuant to Section 9.16(c) hereof by a
Subsidiary of a Foreign Borrower in favor of the Administrative Agent, as the
same shall be modified and supplemented and in effect from time to time.
"Foreign Taxes" shall mean, with respect to any Foreign Borrower, all
present and future income, stamp, registration and other taxes and levies,
imposts, deductions, charges, compulsory loans and withholdings whatsoever, and
all interest, penalties or similar amounts with respect thereto, now or
hereafter imposed, assessed, levied or collected by the Netherlands (in respect
of the Dutch Borrowers) or Canada (in respect of Fabrene), or any political
subdivision or taxing authority thereof or therein, or by any federal or other
Credit Agreement
----------------
<PAGE>
-19-
association of or with which the Netherlands or Canada, as applicable, may be a
member or associated, on or in respect of this Agreement, the Loans made to such
Foreign Borrower, the Notes of such Foreign Borrower, any Hedging Transaction
entered into with any Lender by such Foreign Borrower, the recording,
registration, notarization or other formalization of any thereof, the
enforcement thereof or the introduction thereof in any judicial proceedings, or
on or in respect of any payments of principal, interest, premiums, charges, fees
or other amounts made on, under or in respect of any thereof, excluding, however
(in the case of the Dutch Borrowers) income taxes imposed upon the overall net
income of any Lender organized under the laws of the Netherlands and having an
Applicable Lending Office in the Netherlands and (in the case of Fabrene) income
taxes imposed upon the overall net income of any Lender organized under the laws
of Canada and having an Applicable Lending Office in Canada.
"Future Refinancing Debt" shall mean the Indebtedness and Guarantees
permitted under Section 9.07(h) hereof.
"Future Refinancing Debt Documents" shall mean the agreements and
other instruments relating to the Indebtedness and Guarantees permitted under
Section 9.07(h) hereof, in each case as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.
"GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those which, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"German Security Documents" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by FiberTech to provide collateral security for the obligations of
FiberTech hereunder and required to be executed and delivered by FiberTech
pursuant to Section 7.01(k) hereof, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Golder Thoma" shall mean Golder, Thoma, Cressey Fund III Limited
Partnership, an Illinois limited partnership.
"Group Members" shall mean, collectively, PGI and its Subsidiaries.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services
Credit Agreement
----------------
<PAGE>
-20-
primarily for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb shall have a
correlative meaning.
"Guaranteed Obligations" shall mean with respect to each of the
Obligors listed below:
(i) in the case of PGI, the Domestic Non-Borrower Guarantors
(other than Fabrene Holdings) and Dutch Holding, the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
principal of and interest on the Loans made to each of the Borrowers
hereunder on a joint and several basis, and all other amounts (including,
without limitation, all Reimbursement Obligations) from time to time owing
to the Lenders and the Administrative Agent by each of the other Borrowers
under this Agreement, the Notes evidencing such Loans or under the Security
Documents, or owing to the Lenders (or any of their affiliates) or the
Administrative Agent in respect of Hedging Indebtedness, in each case
strictly in accordance with the terms thereof, and
(ii) in the case of Fabrene Holdings, the prompt payment in full
when due (whether at stated maturity, by acceleration or otherwise) of the
Guaranteed Obligations of PGI Polymer referred to in clause (i) above, in
each case strictly in accordance with the terms thereof.
"Guarantors" shall mean, collectively, PGI, Dutch Holding and the
Domestic Non-Borrower Guarantors.
"Hazardous Material" shall mean, collectively, (a) any petroleum or
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's), (b) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
Credit Agreement
----------------
<PAGE>
-21-
"Hedging Indebtedness" shall mean the obligations of any Borrower in
respect of Hedging Transactions between such Borrower and a Lender permitted
under Section 9.08(j) hereof.
"Hedging Transaction" shall mean, for any Person, any transaction
entered into by such Person that is designed to protect such Person against
fluctuations in interest rates, or currency or raw materials values, including,
without limitation, an interest rate swap, cap or collar agreement or similar
arrangement between such Person and one or more counterparties providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies. The term "Hedging Transaction" shall include, without
limitation, any "swap agreement" as such term is defined in Section 101(53B) of
the Bankruptcy Code.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person. For purposes of this Agreement, obligations created
pursuant to any Hedging Transaction shall not be Indebtedness hereunder.
"Information Memorandum" shall mean the single volume Confidential
Information Memorandum dated June 1997 and prepared on the basis of information
furnished and approved by the Borrowers, copies of which have been supplied by
Chase on behalf of the Borrowers to the Lenders prior to the date hereof.
"Initial Stockholders" shall mean, collectively, (a) Golder Thoma, (b)
Jerry Zucker, (c) James Boyd, (d) The InterTech Group, Inc. and FTG, Inc., so
long as Jerry Zucker and James Boyd continue to hold (directly, or indirectly
through one or more Wholly Owned Subsidiaries) 100% of the issued and
outstanding shares of capital stock of The InterTech Group, Inc. or FTG, Inc.,
as the case may be, (e) The Chase Manhattan Corporation (or any Subsidiary or
affiliate thereof), (f) Leeway & Co. and (g) California Public Employees
Retirement System.
Credit Agreement
----------------
<PAGE>
-22-
"Intercompany Notes" shall mean, collectively, the Bonlam Intercompany
Notes and the Fabrene Intercompany Notes.
"Intercompany Notes Agreements" shall mean, collectively, the Bonlam
Intercompany Notes Agreement and the Fabrene Intercompany Notes Agreement.
"Interest Expense" shall mean, for any period, the sum, for PGI and
its Restricted Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness accrued or capitalized during such period (whether or
not actually paid during such period) plus (b) the net amounts payable (or minus
the net amounts receivable) under interest rate protection agreements
constituting Hedging Transactions accrued during such period (whether or not
actually paid or received during such period).
Notwithstanding the foregoing, (i) if during any period for which
Interest Expense is being determined PGI or any of its Restricted Subsidiaries
shall have consummated any Acquisition or Disposition then, for all purposes of
this Agreement, Interest Expense shall be determined on a pro forma basis as if
such Acquisition or Disposition (and any Indebtedness incurred by PGI or any of
its Subsidiaries in connection with such Acquisition or repaid as a result of
such Disposition) had been made or consummated (and such Indebtedness incurred
or repaid) on the first day of such period (such pro forma determination to take
into account, inter alia, any increases or decreases in the Applicable Margin
that would have occurred had such Acquisition or Disposition, and related
incurrence or repayment of Indebtedness, occurred on the first day of such
period) and (ii) if, as at any date (a "calculation date"), fewer than four
complete consecutive fiscal quarters have elapsed subsequent to the Effective
Date, Interest Expense shall be calculated (after giving effect to the
adjustments contemplated in the foregoing clause (i)) only for the portion of
such period commencing on the Effective Date and ending on the calculation date
and shall then be annualized by multiplying the amount of such Interest Expense
by a fraction, the numerator of which is 365 and the denominator of which is the
number of days during the period commencing on the day immediately following the
Effective Date through and including the calculation date.
"Interest Period" shall mean, with respect to any Eurocurrency Loan,
each period commencing on the date such Eurocurrency Loan is made or Converted
from a Base Rate Loan or the last day of the next preceding Interest Period for
such Loan and ending on the numerically corresponding day in the first, third or
sixth (or, subject to the agreement of each Lender participating in such Loan in
its sole discretion, twelfth) calendar month thereafter, as the Borrowers may
select as provided in Section 4.05 hereof, except that each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
Credit Agreement
----------------
<PAGE>
-23-
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing:
(i) if any Interest Period for any Loan would otherwise end
after the Revolving Credit Termination Date, such Interest Period shall end
on the Revolving Credit Termination Date;
(ii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day
(or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and
(iii) notwithstanding clause (i) above, no Interest Period shall
have a duration of less than one month and, if the Interest Period for any
Loan would otherwise be a shorter period, such Loan shall not be available
hereunder for such period.
"Investment" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
short sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person, but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies sold by such Person in
the ordinary course of business); (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person; or (d) the entering into of any Hedging
Transaction.
"Issuing Lender" shall mean Chase, as the issuer of Letters of Credit
under Section 2.03 hereof, together with its successors and assigns in such
capacity.
"J&J" shall mean Johnson & Johnson, a New Jersey corporation.
"Letter of Credit" shall have the meaning assigned to such term in
Section 2.03 hereof.
"Letter of Credit Documents" shall mean, with respect to any Letter of
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or
Credit Agreement
----------------
<PAGE>
-24-
other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (a) the rights and obligations of
the parties concerned or at risk with respect to such Letter of Credit or (b)
any collateral security for any of such obligations, each as the same shall be
modified and supplemented and in effect from time to time.
"Letter of Credit Interest" shall mean, for each Facility A Revolving
Credit Lender, such Lender's participation interest (or, in the case of the
Issuing Lender, the Issuing Lender's retained interest) in the Issuing Lender's
liability under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations and any and all
collateral and guarantees therefor.
"Letter of Credit Liability" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn face
amount of such Letter of Credit plus (b) the aggregate unpaid principal amount
of all Reimbursement Obligations of PGI at such time due and payable in respect
of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Facility A Revolving Credit Lender (other than the Issuing Lender)
shall be deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.03
hereof, and the Issuing Lender shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the Facility A Revolving Credit
Lenders other than the Issuing Lender of their participation interests under
said Section 2.03.
"Lenders" shall mean, collectively, the Facility A Revolving Credit
Lenders and the Facility B Revolving Credit Lenders.
"Leverage Ratio" shall mean, as at any date, the ratio of Indebtedness
of PGI and its Restricted Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) on such date to EBITDA for the
period of four fiscal quarters ending on or most recently ended prior to such
date.
"License Agreement" shall mean the license agreement dated as of March
15, 1995 between Chicopee and McNeil-PPC, Inc., as the same shall be modified
and supplemented and in effect from time to time.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Basic Documents, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
Credit Agreement
----------------
<PAGE>
-25-
"Loans" shall mean, collectively, the Facility A Revolving Credit
Loans and the Facility B Revolving Credit Loans.
"Majority Facility A Revolving Credit Lenders" shall mean Facility A
Revolving Credit Lenders having at least 51% of the aggregate amount of the
Facility A Revolving Credit Commitments or, if the Facility A Revolving Credit
Commitments shall have terminated, Facility A Revolving Credit Lenders holding
at least 51% of the sum of (a) the aggregate unpaid principal amount of the
Facility A Revolving Credit Loans plus (b) the aggregate amount of all Letter of
Credit Liabilities.
"Majority Facility B Revolving Credit Lenders" shall mean Facility B
Revolving Credit Lenders having at least 51% of the aggregate amount of the
Facility B Revolving Credit Commitments or, if the Facility B Revolving Credit
Commitments shall have terminated, Facility B Revolving Credit Lenders holding
at least 51% of the aggregate unpaid principal amount of the Facility B
Revolving Credit Loans (including, without limitation, Bankers' Acceptance
Loans).
"Majority Lenders" shall mean, subject to the last paragraph of
Section 12.04 hereof, Lenders having at least 51% of the sum of (i) the
aggregate unused amount, if any, of the Commitments at such time plus (ii) the
aggregate outstanding principal amount of the Loans at such time (including,
without limitation, in the case of the Facility B Revolving Credit Lenders,
Bankers' Acceptance Loans).
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations G, U and X.
"Margin Stock Collateral" shall mean, at any time, the Margin Stock
then held in pledge under the Security Agreement and any proceeds then held in
pledge thereunder of the sale or other disposition of Margin Stock theretofore
held in pledge thereunder.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the Property, business, operations, financial condition, prospects, liabilities
or capitalization of the Group Members (excluding Group Members which are
Unrestricted Subsidiaries) taken as a whole, (b) the ability of any Group Member
to perform its obligations under any of the Basic Documents to which it is a
party, (c) the validity or enforceability of any of the Basic Documents, (d) the
rights and remedies of the Lenders and the Administrative Agent under any of the
Basic Documents or (e) the timely payment of the principal of or interest on the
Loans or the Reimbursement Obligations or other amounts payable in connection
therewith.
"Maximum Loan Value" shall mean, at any time, the "maximum loan value"
(as such term is defined in Regulations G and U which value, as of the date of
this Agreement, is 50%) of all Margin Stock owned by the Obligors. All
determinations of
Credit Agreement
----------------
<PAGE>
-26-
Maximum Loan Value pursuant to this Agreement shall be made in accordance with
Regulations G and U.
"Mexican Finco" shall mean a corporation, organized after the
Effective Date under the laws of the Republic of Mexico as a direct Wholly Owned
Subsidiary of PGI Polymer, the sole assets of which will consist of Investments
in Bonlam permitted under Section 9.08(h) hereof.
"Mexican Security Documents" shall mean, collectively, the mortgages,
assignments, security agreements and other instruments from time to time
executed by Bonlam and its respective Subsidiaries, to provide collateral
security for the obligations of Bonlam and its respective Subsidiaries under the
Bonlam Intercompany Notes Agreement and the Bonlam Intercompany Notes, in each
case as the same shall, subject to Section 9.14 hereof, be modified and
supplemented and in effect from time to time.
"Mortgages" shall mean, collectively, the respective Deeds of Trust
and Mortgages executed and delivered by the Borrowers and their Subsidiaries
pursuant to the Existing Credit Agreement, covering the properties of the
respective Mortgagors identified therein, in each case as such Deeds of Trust
and Mortgages have been heretofore modified, as such Deeds of Trust and
Mortgages shall be modified pursuant to instruments of Modification and
Confirmation executed and delivered pursuant to Section 7.01(h) hereof, and as
such Deeds of Trust and Mortgages shall be further modified and supplemented and
in effect from time to time.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by PGI or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Available Proceeds" shall mean:
(i) in the case of any Disposition, the amount of Net Cash
Payments received in connection with such Disposition;
(ii) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Group Members in respect of such Casualty Event net of (A)
reasonable expenses incurred by the Group Members in connection with the
collection of such insurance, condemnation awards and other compensation
and (B) contractually required repayments of Indebtedness to the extent
secured by a Lien on such Property and any income and transfer taxes
payable by the Group Members in respect of such Casualty Event; and
Credit Agreement
-----------------
<PAGE>
-27-
(iii) in the case of any Debt Issuance, the aggregate amount of
all cash received by Group Members in respect of such Debt Issuance (as the
case may be) net of reasonable expenses incurred by the Group Members in
connection with the issuance thereof.
"Net Cash Payments" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any non-cash
consideration, received by the Group Members directly or indirectly in
connection with such Disposition; provided that (a) Net Cash Payments shall be
net of (i) the amount of any legal, title and recording tax expenses,
commissions and other fees and expenses paid by the Group Members in connection
with such Disposition and (ii) any Federal, state, local and foreign income or
other taxes estimated to be payable by the Group Members as a result of such
Disposition (but only to the extent that such estimated taxes are in fact paid
to the relevant Federal, state, local or foreign governmental authority within
three months of the date of such Disposition) and (b) Net Cash Payments shall be
net of any repayments by the Group Members of Indebtedness to the extent that
(i) such Indebtedness is secured by a Lien on the Property that is the subject
of such Disposition and (ii) the transferee of (or holder of a Lien on) such
Property requires that such Indebtedness be repaid as a condition to the
purchase of such Property.
"Net Worth" shall mean, as at any date, the sum for PGI and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP) of the following:
(a) the amount of capital stock (including Qualified Preferred
Stock), plus
(b) the amount of surplus and retained earnings (or, in the case of a
surplus or retained earnings deficit, minus the amount of such deficit),
minus
(c) the sum of the following: cost of treasury shares and any write-
up in the book value of assets resulting from a revaluation thereof
subsequent to December 28, 1996.
Notwithstanding the foregoing, Net Worth shall not include any unrealized
foreign currency transaction gains and losses, including the cumulative
translation adjustment account in the equity portion of the consolidated balance
sheet of PGI and its Restricted Subsidiaries.
"Non-Margin Stock Collateral" shall mean, at any time, all Collateral
under and as defined in the Security Agreement other than Margin Stock
Collateral.
"Notes" shall mean, collectively, the Facility A Revolving Credit
Notes and the Facility B Revolving Credit Notes.
Credit Agreement
----------------
<PAGE>
-28-
"Offering" shall mean the offering on or before the Effective Date by
PGI of its 9% Senior Subordinated Notes due July 1, 2007, in a private placement
and resale made pursuant to Rule 144A of the Securities and Exchange Commission,
as described in the Offering Memorandum.
"Offering Memorandum" shall mean the Offering Memorandum dated June
30, 1997, pursuant to which the Senior Subordinated Notes are being offered for
issuance by PGI.
"Payment Office" shall mean (a) in respect of (i) U.S. Dollars, the
Principal Office, (ii) Dutch Guilders, the office of ABN AMRO Bank, in
Amsterdam, the Netherlands (for account of Chase Manhattan Investment Bank,
Limited) and (iii) Canadian Dollars, the office of Chase Canada, or (b) any
other office in respect of any Currency as the Administrative Agent shall
designate in a notice to the Borrowers and the Lenders.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency or
instrumentality thereof, in either case maturing not more than 90 days from the
date of acquisition thereof; (b) bankers' acceptances created by, certificates
of deposit issued by and time deposits made with, any bank or trust company
organized under the laws of the United States of America or any state thereof,
or the Netherlands, Canada or the Federal Republic of Germany and having
capital, surplus and undivided profits of at least U.S. $250,000,000, maturing
not more than 90 days from the date of acquisition thereof; (c) repurchase
obligations with respect to obligations of the type (but not necessarily the
maturity) described in clause (a) above issued by any bank or trust company
described in clause (b) above and maturing not more than 90 days from the date
of acquisition thereof by any Person; (d) commercial paper rated A-1 or better
or P-1 by Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. or
Moody's Investors Services, Inc., respectively, maturing not more than 90 days
from the date of acquisition thereof; and (e) interests in any money market
mutual fund registered under the Investment Company Act of 1940, as amended, at
least 90% of the portfolio of which is limited to obligations of the type and
maturity described in the foregoing clauses (a) through (d), so long as such
fund has total assets of at least U.S. $500,000,000 and is rated AAAm-G or
better or AAA or better by Standard & Poor's Rating Group or Moody's Investors
Services, Inc., respectively.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
Credit Agreement
----------------
<PAGE>
-29-
"PGI Polymer" shall mean PGI Polymer, Inc., a Delaware corporation.
"Plan" shall mean an employee benefit or other plan established or
maintained by PGI or any ERISA Affiliate and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of any
Loan, any Reimbursement Obligation or any other amount under this Agreement, any
Note or any other Basic Document that is not paid when due (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise),
(a) if the default arises in respect of U.S. Dollar-denominated
obligations or Canadian Dollar-denominated obligations, a rate per annum
(the "Prime-Based Post-Default Rate") during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to 2% plus the Base Rate (in the case of U.S. Dollar-denominated
obligations) or Canadian Base Rate (in the case of Canadian Dollar-
denominated obligations) as in effect from time to time plus the Applicable
Margin for Base Rate Loans or Canadian Base Rate Loans, as applicable,
provided that, if the amount so in default is principal of a Eurocurrency
Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall
be, for the period from and including such due date to but excluding the
last day of such Interest Period, a rate per annum (the "Market-Based Post-
Default Rate") equal to 2% plus the interest rate for such Loan as provided
in Section 3.02(b) hereof and, thereafter, the higher of (i) the Prime-
Based Post-Default Rate and (ii) the Market-Based Post-Default Rate, and
(b) if the default arises in respect of Dutch Guilder- denominated
obligations, a rate per annum, with respect to any Default Interest Period,
equal to the higher of (i) 2% above the interest rate at the time (or most
recently) applicable to the principal of the Loans in such Currency
hereunder and (ii) 2% plus the Applicable Margin plus the Eurocurrency Rate
for such Default Interest Period.
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at its principal office in New York City as its prime
commercial lending rate.
"Principal Office" shall mean the principal office of Chase, located
on the date hereof at 270 Park Avenue, New York, New York 10017.
"Process Agent" shall have the meaning assigned to such term in
Section 12.11(b) hereof.
Credit Agreement
----------------
<PAGE>
-30-
"Process Agent Acceptance" shall mean a letter from the Process Agent
to the Administrative Agent, in substantially the form of Exhibit I hereto.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Qualified Preferred Stock" shall mean shares of preferred stock (a)
that is not subject to mandatory redemption prior to the date which is one year
after the maturity of all Loans and other obligations (including Reimbursement
Obligations) hereunder and (b) that does not require PGI or any of its
Restricted Subsidiaries to make mandatory payments of cash dividends unless such
entities may, at their option, elect to make such payments by issuing additional
shares of such preferred stock (or by having the amount of such payments be
added to the stated liquidation value of such preferred stock and not be paid in
cash).
"Quarterly Dates" shall mean the 20th day of March, June, September
and December in each year, the first of which shall be the first such day after
the date hereof, provided, that if any such day is not a Business Day, then such
Quarterly Date shall be the next preceding Business Day.
"Refinancing" shall mean, collectively, the following transactions,
each of which shall take place prior to or substantially simultaneously on the
Effective Date: (i) the Offering and (ii) the redemption or repurchase of
Existing Senior Notes in an aggregate principal amount of U.S. $100,000,000 for
aggregate consideration (including principal and accrued but unpaid interest and
redemption or repurchase premium) not exceeding U.S. $118,000,000 (and, to the
extent that any such Existing Senior Notes shall not be redeemed, the
modifications of the covenants thereunder so as to substantially relieve PGI and
its Subsidiaries of the restrictions contained therein), as each of such
transactions are more particularly described in the Disclosure Materials.
"Reference Lenders" shall mean Chase Canada and The Bank of Nova
Scotia.
"Regulations A, D, G, U and X" shall mean, respectively, Regulations
A, D, G, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the date of this Agreement in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
Credit Agreement
----------------
<PAGE>
-31-
"Reimbursement Obligations" shall mean, at any time, the obligations
of PGI then outstanding, or which may thereafter arise in respect of all Letters
of Credit then outstanding, to reimburse amounts paid by the Issuing Lender in
respect of any drawings under a Letter of Credit.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"Relevant Obligor" shall have the meaning assigned to such term in
Section 6.08 hereof.
"Reserve Requirement" shall mean, for any Interest Period for any
Eurocurrency Loan (or for any Default Interest Period for any principal of or
interest on any Loan), the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period (or Default Interest
Period) under Regulation D by member banks of the Federal Reserve System in New
York City with deposits exceeding one billion U.S. Dollars against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall include any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change with respect to (i) any category of liabilities that includes
deposits by reference to which the Eurocurrency Base Rate is to be determined as
provided in the definition of "Eurocurrency Base Rate" in this Section 1.01 or
(ii) any category of extensions of credit or other assets that includes
Eurocurrency Loans.
"Reserved Amount" shall mean, with respect to any Disposition, any
appropriate amount provided by PGI or any of its Restricted Subsidiaries, as the
case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Disposition and retained by PGI or such Restricted
Subsidiary, as the case may be, after such Disposition, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Disposition, all as reflected in a certificate
of a senior financial officer of PGI or such Restricted Subsidiary delivered to
the Lenders at the time of such Disposition.
"Reserved Commitment Amount" shall mean, collectively, the Facility A
Reserved Commitment Amount and Facility B Reserved Commitment Amount.
"Restricted Payment" shall mean, collectively, (i) any Dividend
Payment, (ii) any purchase, redemption, retirement or other acquisition for
value of, or the setting apart of
Credit Agreement
----------------
<PAGE>
-32-
any money for a sinking, defeasance or other analogous fund for the purchase,
redemption, retirement or other acquisition of, or the voluntary payment or
prepayment of the principal of or interest on, or any other amount owing in
respect of, any Subordinated Indebtedness, but excluding (x) the refinancing of
the Senior Subordinated Notes to the extent permitted by Section 9.07(h) hereof
and (y) regularly scheduled payments or prepayments of principal and interest in
respect thereof required pursuant to the Senior Subordinated Debt Documents, the
Future Refinancing Debt Documents or the Subordinated Acquisition Debt
Documents, as the case may be, (iii) any Investment by PGI or any of its
Restricted Subsidiaries in any Person (including in any Affiliate), other than
an Investment expressly permitted by the provisions of clauses (a) through (k)
of Section 9.08 hereof and (iv) the amount of any Investment referred to in
clause (ii) of Section 1.04(c) hereof outstanding on the date on which a
Restricted Subsidiary is designated as an Unrestricted Subsidiary hereunder.
"Restricted Subsidiary" shall mean any Subsidiary of PGI other than an
Unrestricted Subsidiary.
"Revolving Credit Exposure" shall mean, on any date, the sum of (a)
the aggregate principal amount of all Loans denominated in U.S. Dollars
outstanding on such date plus (b) the aggregate U.S. Dollar Equivalent of the
principal amount of all Loans denominated in Alternative Currencies outstanding
on such date plus (c) the aggregate amount of Letter of Credit Liabilities
outstanding on such date.
"Revolving Credit Termination Date" shall mean the Quarterly Date
falling on or nearest to June 20, 2003.
"Security Agreement" shall mean the Second Amended, Restated and
Consolidated Security Agreement substantially in the form of Exhibit B hereto
between each Securing Party (as defined therein) and the Administrative Agent,
as the same shall be modified and supplemented and in effect from time to time.
"Security Documents" shall mean, collectively, the Dutch Security
Documents, the Canadian Security Documents, the German Security Documents, the
Mexican Security Documents, the Security Agreement, the Mortgages, the Domestic
Non-Borrower Guaranty Agreements and all Uniform Commercial Code financing
statements (and similar registration instruments in other jurisdictions)
required by this Agreement, the Security Agreement or the Mortgages to be filed
with respect to the security interests in personal Property and fixtures created
pursuant to the Security Agreement or the Mortgages.
"Senior Indebtedness" shall mean all Indebtedness of PGI and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), other than Subordinated Indebtedness.
Credit Agreement
----------------
<PAGE>
-33-
"Senior Leverage Ratio" shall mean, as at any date, the ratio of
Senior Indebtedness on such date to EBITDA for the period of four fiscal
quarters ending on or most recently ended prior to such date.
"Senior Subordinated Debt Documents" shall mean, collectively, the
Senior Subordinated Notes and the Senior Subordinated Notes Indenture.
"Senior Subordinated Notes" shall mean, collectively, (a) the 9%
Senior Subordinated Notes Due July 1, 2007 issued by PGI on or before the
Effective Date pursuant to the Senior Notes Indenture, and (b) any additional
Senior Subordinated Notes issued by PGI after the Effective Date in accordance
with the provisions of Section 9.07(f) hereof.
"Senior Subordinated Notes Indenture" shall mean, collectively, (i)
the Indenture dated as of July 1, 1997 between PGI and Harris Trust & Savings
Bank, as trustee, providing for the issuance on or before the Effective Date of
the Senior Subordinated Notes and (ii) any indenture pursuant to which
additional Senior Subordinated Notes are to be issued by PGI after the Effective
Date in accordance with the provisions of Section 9.07(f) hereof, in each case
as the same shall, subject to Section 9.14 hereof, be modified and supplemented
and in effect from time to time.
"Shared Facilities Agreement" shall mean the Shared Facilities
Agreement dated as of October 23, 1992 between Scott Paper Company and FiberTech
with respect to the Rogers, Arkansas, facility of FiberTech, as the same shall,
subject to Section 9.14 hereof, be modified and supplemented and in effect from
time to time.
"Subordinated Acquisition Debt Documents" shall mean, collectively,
the instruments evidencing or governing any Subordinated Acquisition
Indebtedness.
"Subordinated Acquisition Indebtedness" shall mean Indebtedness
incurred in accordance with the provisions of Section 9.07(i) hereof in
connection with any Acquisition permitted hereunder.
"Subordinated Indebtedness" shall mean, collectively, the Senior
Subordinated Notes, any Future Refinancing Debt and any Subordinated Acquisition
Indebtedness.
"Subsidiary" shall mean, for any Person, any corporation, partnership
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
of such corporation, partnership or other entity (irrespective of whether or not
at the time securities or other ownership interests of any other class or
classes of such corporation, partnership or other entity shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or
Credit Agreement
----------------
<PAGE>
-34-
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"Supply Agreement" shall mean the Supply Agreement dated as of March
15, 1995 between Chicopee and J&J, as the same shall, subject to Section 9.14
hereof, be modified and supplemented and in effect from time to time.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of May 15, 1996 between PGI, PGI Polymer, Inc., FiberTech, Technetics Group,
Inc., Fibergol Corporation, Chicopee Holdings, Inc., Chicopee and Fabrene Corp.,
as the same may be modified and supplemented and in effect from time to time.
"Technology Agreement" shall mean the Technology Agreement dated as of
March 15, 1995 between Chicopee and J&J, as the same shall be modified and
supplemented and in effect from time to time.
"Test Date" shall have the meaning assigned to such term in Section
2.10(g) hereof.
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"Unrestricted Subsidiary" shall mean any Subsidiary of PGI that (a)
shall have been designated as an "Unrestricted Subsidiary" in accordance with
the provisions of Section 1.04 hereof and (b) any Subsidiary of an Unrestricted
Subsidiary.
"U.S. Dollar Equivalent" shall mean, on any day, with respect to any
Loan denominated in an Alternative Currency, the amount of U.S. Dollars that
would be required to purchase the amount of the Alternative Currency of such
Loan on such day, assuming a rate of exchange equal to the New York foreign
exchange selling rate quoted for such Alternative Currency in the Wall Street
Journal for such day (or, for the most recent day on which the Wall Street
Journal shall have been published), provided that if for any reason the Wall
Street Journal shall cease to be published for three or more consecutive
Business Days, "U.S. Dollar Equivalent" shall mean the amount of U.S. Dollars
that would be required to purchase the amount of the Alternative Currency of
such Loan on such day, based upon the spot selling rate at which the
Administrative Agent offers to sell such Alternative Currency for U.S. Dollars
in the London foreign exchange market at approximately 11:00 a.m. London time
for delivery two Business Days later.
"U.S. Dollars" and "U.S. $" shall mean lawful money of the United
States of America.
Credit Agreement
----------------
<PAGE>
-35-
"U.S. Person" shall mean a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America or any State thereof, or any
estate or trust that is subject to United States Federal income taxation
regardless of the source of its income.
"U.S. Taxes" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof.
"Wholly Owned Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person. The term
"Wholly Owned Restricted Subsidiary" shall mean a Wholly Owned Subsidiary of PGI
that is a Restricted Subsidiary.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Lenders hereunder (which, prior to the delivery of
the first financial statements under Section 9.01 hereof, shall mean the
consolidated financial statements referred to in Section 8.02(a) hereof). All
calculations made for purposes of determining compliance with this Agreement
shall (except as otherwise expressly provided herein) be made by application of
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the latest annual or quarterly financial
statements furnished to the Lenders pursuant to Section 9.01 hereof (or, prior
to the delivery of the first financial statements under Section 9.01 hereof,
used in the preparation of the consolidated financial statements referred to in
Section 8.02(a) hereof) unless
(i) the Borrowers shall have objected to determining such
compliance on such basis at the time of delivery of such financial
statements or
(ii) the Majority Lenders shall so object in writing within 30
days after delivery of such financial statements,
Credit Agreement
----------------
<PAGE>
-36-
in either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 9.01 hereof,
shall mean the consolidated financial statements referred to in Section 8.02(a)
hereof).
(b) The Borrowers shall deliver to the Lenders at the same time as
the delivery of any annual or quarterly financial statement under Section 9.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 9 hereof, the Borrowers and their
Subsidiaries will not change the last day of their fiscal year from the Saturday
closest to December 31 of each year (whether or not such last day occurs in the
same calendar year or the next following calendar year), or the last days of the
first three fiscal quarters in each of their fiscal years from the Saturday
closest to March 31, June 30 and September 30 of each year, respectively;
provided that the foregoing shall not apply to Bonlam to the extent that Bonlam
is not permitted under Mexican law to conform its fiscal dates in such manner.
1.03 Classes, Types and Currencies of Loans. Loans hereunder are
distinguished by "Class", "Type" and "Currency". The "Class" of a Loan (or of a
Commitment to make a Loan) refers to whether such Loan is a Facility A Revolving
Credit Loan or a Facility B Revolving Credit Loan, each of which constitutes a
Class. The "Type" of a Loan as used in connection with U.S. Dollar-denominated
Loans refers to whether such Loan is a Base Rate Loan or a Eurocurrency Loan,
each of which constitutes a Type, and, as used in connection with Canadian
Dollar-denominated Loans refers to whether such Loan is a Canadian Base Rate
Loan or a Bankers' Acceptance Loan, each of which constitutes a Type. The
"Currency" of a Loan refers to whether such Loan is to be made in U.S. Dollars,
Dutch Guilders or Canadian Dollars, each of which constitutes a "Currency".
Loans may be identified by Class, Type and Currency.
1.04 Subsidiaries; Designation of Unrestricted Subsidiaries. PGI may
at any time designate any of its Subsidiaries (including any newly acquired or
newly formed Subsidiary, but excluding any Obligor or Bonlam or any Subsidiary
of Bonlam or Fabrene obligated in respect of the Intercompany Notes of Bonlam or
Fabrene) to be an "Unrestricted Subsidiary" for purposes of this Agreement, by
delivering to the Administrative Agent a certificate of a senior financial
officer of PGI (and the Administrative Agent shall promptly
Credit Agreement
----------------
<PAGE>
-37-
forward a copy of such certificate to each Lender) attaching a copy of a
resolution of its Board of Directors setting forth such designation and stating
that the conditions set forth in this Section 1.04 have been satisfied with
respect to such designation, provided that no such designation shall be
effective unless (x) at the time of such designation and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing
and (y) at the time of such designation and at all times thereafter:
(a) neither PGI nor any Restricted Subsidiary is directly or
indirectly liable for any Indebtedness of such Subsidiary;
(b) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any
other Indebtedness of PGI or any Restricted Subsidiary to declare a default
on such other Indebtedness or cause the payment thereof to be accelerated
or payable prior to its stated maturity;
(c) neither PGI nor any Restricted Subsidiary has made an Investment
in such Subsidiary unless either (i) such Investment was permitted under,
and made in accordance with, Section 9.08(l) hereof or (ii) if made on such
date of designation would be permitted under Section 9.08(l) hereof, and
for purposes of this clause (ii), the amount of any such Investment on the
date of any such designation shall be deemed to be equal to the greater of
(x) the amount of the Investments by PGI and its Restricted Subsidiaries in
such Subsidiary (determined in accordance with the last sentence of Section
9.08 hereof) on the date of such designation, and (y) the fair market value
of all Property of such Subsidiary on such date of designation;
(d) neither PGI nor any Restricted Subsidiary has a contract,
agreement, arrangement, understanding or obligation of any kind, whether
written or oral, with such Subsidiary other than those that might be
obtained at the time from Persons who are not Affiliates of the Obligors;
and
(e) neither PGI nor any Restricted Subsidiary has any obligation (i)
to subscribe for additional shares of capital stock or other equity
interest in such Subsidiary or (ii) to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results.
1.05 Interest Act (Canada). For the purposes of this Agreement,
whenever interest to be paid hereunder is to be calculated on the basis of a
year of 365 days, the yearly rate of interest to which the rate determined
pursuant to such calculation is equivalent is the rate so determined multiplied
by the actual number of days in the calendar year in which the same is to be
ascertained and divided by 365.
Credit Agreement
----------------
<PAGE>
-38-
Section 2. Commitments, Loans, Notes and Prepayments.
2.01 Loans.
(a) Facility A Revolving Credit Loans. Each Facility A Revolving
Credit Lender severally agrees, on the terms and conditions of this Agreement
(including, without limitation, compliance with the limitations set forth in
Section 2.10(g) hereof), to make loans to PGI in U.S. Dollars, and to the Dutch
Borrowers in Dutch Guilders, in an aggregate principal amount at any one time
outstanding up to but not exceeding such Lender's Facility A Revolving Credit
Commitment as in effect from time to time, in each case during the period from
and including the Effective Date to but not including the Revolving Credit
Termination Date. During such period, and subject to the terms and conditions
of this Agreement (including, without limitation, paragraph (c) below),
(x) PGI may borrow, repay and reborrow the amount of the Facility A
Revolving Credit Commitments by means of Base Rate Loans and Eurodollar
Loans, and may Convert Facility A Revolving Credit Loans of one Type into
Facility A Revolving Credit Loans of another Type (as provided in Section
2.09 hereof) and may Continue Facility A Revolving Credit Loans of one Type
as Facility A Revolving Credit Loans of the same Type (as provided in
Section 2.09 hereof), and
(y) the Dutch Borrowers may borrow, repay and reborrow the amount of
the Facility A Revolving Credit Commitments by means of Euroguilder Loans
and may Continue Euroguilder Loans from one Interest Period to the next (as
provided in Section 2.09 hereof).
Proceeds of Facility A Revolving Credit Loans shall be available for
any use permitted under Section 9.13 hereof, provided that a portion of the
Facility A Revolving Credit Commitments (such portion being herein called the
"Facility A Reserved Commitment Amount") may be reserved and shall not be
available for borrowings hereunder as follows:
(i) in the event that as contemplated by Section 2.10(c) hereof,
PGI shall prepay Facility A Revolving Credit Loans from the proceeds of a
Disposition, an amount of the Facility A Revolving Credit Commitments equal
to the amount of such prepayment shall be reserved and shall not be
available for borrowings of Facility A Revolving Credit Loans hereunder
except and to the extent that the proceeds of such borrowings are to be
applied to investments in replacement assets as contemplated by Section
2.10(c) hereof; and
(ii) in the event that PGI shall fail to redeem all of the
Existing Senior Notes in connection with the Refinancing, then, for each
whole multiple of U.S.
Credit Agreement
----------------
<PAGE>
-39-
$5,000,000 aggregate principal amount of Existing Senior Notes not so
redeemed on the Effective Date, an amount of the Facility A Revolving
Credit Commitments equal to U.S. $5,000,000 shall be reserved and shall not
be available for borrowings of Facility A Revolving Credit Loans hereunder
except and to the extent that the proceeds of such borrowings are to be
applied to make redemptions, or repurchases in the open market, of
outstanding Existing Senior Notes at a price not in excess of 115% of par
plus accrued and unpaid interest.
PGI agrees, upon the occasion of any borrowing of Facility A Revolving Credit
Loans hereunder that is to constitute a utilization of any Facility A Reserved
Commitment Amount, to advise the Administrative Agent in writing of such fact at
the time of such borrowing, identifying the amount of such borrowing that is to
constitute such utilization, the replacement assets or redemption or repurchase
of Existing Senior Notes in respect of which the proceeds of such borrowing are
to be applied and the reduced Facility A Reserved Commitment Amount to be in
effect after giving effect to such borrowing. Any Facility A Reserved
Commitment Amount shall be deemed to reserve first the U.S. Dollar portion of
the Facility A Revolving Credit Commitments and second the Dutch Guilder portion
of the Facility A Revolving Credit Commitments.
(b) Facility B Revolving Credit Loans. Each Facility B Revolving
Credit Lender severally agrees, on the terms and conditions of this Agreement
(including, without limitation, compliance with the limitations set forth in
Section 2.10(g) hereof), to make loans to Fabrene in Canadian Dollars, during
the period from and including the Effective Date to but not including the
Revolving Credit Termination Date in an aggregate principal amount up to but not
exceeding such Lender's Facility B Revolving Credit Commitment, such loans to be
made by each Facility B Revolving Credit Lender either by means of (x) Canadian
Base Rate Loans in Canadian Dollars or (y) the creation and discount of Bankers'
Acceptances in Canadian Dollars on the terms and conditions provided for herein
and in Annex I hereto. After the Effective Date, and subject to the terms and
conditions of this Agreement (including, without limitation, paragraph (c)
below), during such period Fabrene may borrow, repay and reborrow the amount of
the Facility B Revolving Credit Commitments by means of Canadian Base Rate Loans
and Bankers' Acceptances, and may Convert Facility B Revolving Credit Loans of
one Type into Facility B Revolving Credit Loans of another Type (as provided in
Section 2.09 hereof and Annex I hereto) and may Continue Facility B Revolving
Credit Loans of one Type as Facility B Revolving Credit Loans of the same Type
(as provided in Section 2.09 hereof and Annex I hereto).
Proceeds of Facility B Revolving Credit Loans shall be available for
any use permitted under Section 9.13 hereof, provided that, in the event that as
contemplated by Section 2.10(c) hereof, Fabrene shall prepay Facility B
Revolving Credit Loans from the proceeds of a Disposition hereunder, then an
amount of Facility B Revolving Credit Commitments equal to the amount of such
prepayment (herein the "Facility B Reserved
Credit Agreement
----------------
<PAGE>
-40-
Commitment Amount") shall be reserved and shall not be available for borrowings
of Facility B Revolving Credit Loans hereunder except and to the extent that the
proceeds of such borrowings are to be applied to investments in replacement
assets as contemplated by Section 2.10(c) hereof. Fabrene agrees, upon the
occasion of any borrowing of Facility B Revolving Credit Loans hereunder that is
to constitute a utilization of any Facility B Reserved Commitment Amount, to
advise the Administrative Agent in writing of such fact at the time of such
borrowing, identifying the amount of such borrowing that is to constitute such
utilization and the replacement assets in respect of which the proceeds of such
borrowing are to be applied and the reduced Facility B Reserved Commitment
Amount to be in effect after giving effect to such borrowing.
(c) Limit on Eurocurrency Loans and Bankers' Acceptance Loans.
Notwithstanding the foregoing provisions of this Section 2.01, in no event shall
(A) the Revolving Credit Exposure after giving effect to any borrowing on any
date of Loans hereunder exceed U.S. $325,000,000, (B) the Revolving Credit
Exposure attributable to Facility A Revolving Credit Loans and Letters of
Credit, after giving effect to any borrowing on any date of Facility A Revolving
Credit Loans hereunder, exceed the aggregate outstanding principal amount of the
Facility A Revolving Credit Commitments on such date, (C) the aggregate U.S.
Dollar Equivalent of the principal amount of all Facility A Revolving Credit
Loans denominated in Dutch Guilders and made to Dutch Holding after giving
effect to any borrowing exceed U.S. $40,000,000, (D) the aggregate U.S. Dollar
Equivalent of the principal amount of all Facility A Revolving Credit Loans
denominated in Dutch Guilders and made to Dutch Operating after giving effect to
any borrowing exceed U.S. $15,000,000, (E) the Revolving Credit Exposure
attributable to Facility B Revolving Credit Loans, after giving effect to any
borrowing on any date of Facility B Revolving Credit Loans hereunder, exceed the
aggregate outstanding principal amount of the Facility B Revolving Credit
Commitments on such date, (F) more than twelve separate Interest Periods in
respect of Eurocurrency Loans from each Lender be outstanding at any one time
and (G) more than six different maturity dates for all Bankers' Acceptance Loans
be outstanding at any one time.
Facility A Revolving Credit Loans made to PGI shall be either Base
Rate Loans or Eurodollar Loans. Facility A Revolving Credit Loans made to
either Dutch Borrower shall be Euroguilder Loans and may not be of any other
Type or Currency. Facility B Revolving Credit Loans shall be either Canadian
Base Rate Loans or Bankers' Acceptances.
(d) Treatment of Loans Outstanding under Existing Credit Agreement.
In the event that any loans under the Existing Credit Agreement shall remain
outstanding on the Effective Date after giving effect to the application on the
Effective Date of the proceeds of the Senior Subordinated Notes, then such loans
shall be continued as Facility A Revolving Credit or Facility B Revolving Credit
Loans hereunder, as applicable, in the corresponding currency in which
outstanding under the Existing Credit Agreement and the Lenders hereunder shall,
on the Effective Date, take such actions, and make such adjustments among
Credit Agreement
----------------
<PAGE>
-41-
themselves, as shall be necessary so that such loans are held hereunder pro rata
in accordance with their respective Facility A Revolving Credit Commitments and
Facility B Revolving Credit Commitments, as applicable. On the Effective Date,
PGI shall cause to be paid to each Lender party to the Existing Credit
Agreement, all amounts that would be owing to such Lender under Section 5.06 of
the Existing Credit Agreement as if the "Loans" of such Lender under the
Existing Credit Agreement were being repaid on the Effective Date, whether or
not any such loans are actually repaid on the Effective Date.
2.02 Borrowings. Each Borrower shall give the Administrative Agent
(which shall promptly notify the respective Lenders) notice of each borrowing to
be made to such Borrower hereunder as provided in Section 4.05 hereof. Not
later than 2:00 p.m. New York time (in the case of Loans denominated in U.S.
Dollars) or 10:00 a.m. local time in the location of the relevant Payment Office
(in the case of Loans denominated in an Alternative Currency) on the date
specified for each borrowing hereunder, each Facility A or Facility B Revolving
Credit Lender, as applicable, shall make available the amount of the Loan or
Loans to be made by it on such date to the Administrative Agent, at the Payment
Office for the Currency of such Loans in immediately available funds, for
account of the respective Borrower that requested such borrowing. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the respective Borrower by depositing
the same, in immediately available funds, in an account of such Borrower
designated by such Borrower.
2.03 Letters of Credit. Subject to the terms and conditions of this
Agreement, the Facility A Revolving Credit Commitments may be utilized, upon the
request of PGI, in addition to the Facility A Revolving Credit Loans provided
for by Section 2.01(a) hereof, by the issuance by the Issuing Lender of letters
of credit (collectively, "Letters of Credit") for account of PGI or any of its
Subsidiaries (as specified by PGI), provided that in no event shall (i) the
Revolving Credit Exposure after giving effect to any issuance on any date of a
Letter of Credit hereunder exceed the aggregate outstanding principal amount of
the Commitments on such date, (ii) the Revolving Credit Exposure attributable to
Facility A Revolving Credit Loans and Letters of Credit, after giving effect to
any issuance of a Letter of Credit on any date hereunder, exceed the aggregate
outstanding principal amount of the Facility A Revolving Credit Commitments on
such date, (iii) the outstanding aggregate amount of all Letter of Credit
Liabilities exceed U.S. $20,000,000 or (iv) the expiration date of any Letter of
Credit extend beyond the earlier of the Revolving Credit Termination Date and
the date one year following the issuance of such Letter of Credit. The
following additional provisions shall apply to Letters of Credit:
(a) PGI shall give the Administrative Agent at least five Business
Days' irrevocable prior notice (effective upon receipt) specifying the
Business Day (which shall be no later than thirty days preceding the
Revolving Credit Termination Date) each Letter of Credit is to be issued on
behalf of PGI and the account party or parties
Credit Agreement
----------------
<PAGE>
-42-
therefor and describing in reasonable detail the proposed terms of such
Letter of Credit (including the beneficiary thereof) and the nature of the
transactions or obligations proposed to be supported thereby. Upon receipt
of any such notice, the Administrative Agent shall advise the Issuing
Lender of the contents thereof.
(b) On each day during the period commencing with the issuance by the
Issuing Lender of any Letter of Credit and until such Letter of Credit
shall have expired or been terminated, the Facility A Revolving Credit
Commitment of each Facility A Revolving Credit Lender shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to such
Lender's Facility A Revolving Credit Commitment Percentage of the then
undrawn face amount of such Letter of Credit. Each Facility A Revolving
Credit Lender (other than the Issuing Lender) agrees that, upon the
issuance of any Letter of Credit hereunder, it shall automatically acquire
its Letter of Credit Interest with respect to such Letter of Credit in an
amount equal to such Lender's Facility A Revolving Credit Commitment
Percentage of such liability, and each Facility A Revolving Credit Lender
(other than the Issuing Lender) thereby shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as surety, and shall be
unconditionally obligated to the Issuing Lender to pay and discharge when
due, its Facility A Revolving Credit Commitment Percentage of the Issuing
Lender's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Lender shall
promptly notify PGI (through the Administrative Agent) of the amount to be
paid by the Issuing Lender as a result of such demand and the date on which
payment is to be made by the Issuing Lender to such beneficiary in respect
of such demand. Notwithstanding the identity of the account party of any
Letter of Credit, PGI hereby unconditionally agrees to pay and reimburse
the Administrative Agent for account of the Issuing Lender for the amount
of each demand for payment under the Letter of Credit at or prior to the
date on which payment is to be made by the Issuing Lender to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in paragraph
(c) of this Section 2.03, PGI shall advise the Administrative Agent whether
or not PGI intends to borrow hereunder to finance its obligation to
reimburse the Issuing Lender for the amount of the related demand for
payment and, if it does, submit a notice of such borrowing as provided in
Section 4.05 hereof. In the event that PGI fails to so advise the
Administrative Agent, or if PGI fails to reimburse the Issuing Lender for a
demand for payment under a Letter of Credit by the date of such payment,
the Administrative Agent shall give each Facility A Revolving Credit Lender
prompt notice of the amount of the demand for payment, specifying such
Lender's Facility A Revolving Credit Commitment Percentage of the amount of
the related demand for payment.
Credit Agreement
----------------
<PAGE>
-43-
(e) Each Facility A Revolving Credit Lender (other than the Issuing
Lender) shall pay to the Administrative Agent for account of the Issuing
Lender at the Principal Office in U.S. Dollars and in immediately available
funds, the amount of such Lender's Facility A Revolving Credit Commitment
Percentage of any payment under a Letter of Credit upon notice by the
Issuing Lender (through the Administrative Agent) to such Revolving Credit
Lender requesting such payment and specifying such amount. Each such
Facility A Revolving Credit Lender's obligation to make such payments to
the Administrative Agent for account of the Issuing Lender under this
paragraph (e), and the Issuing Lender's right to receive the same, shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever (except as provided in the proviso at the end of this sentence),
including, without limitation, (i) the failure of any other Facility A
Revolving Credit Lender to make its payment under this paragraph (e), (ii)
the financial condition of PGI (or any other account party), (iii) the
existence of any Default or (iv) the termination of the Commitments;
provided that, no Facility A Revolving Credit Lender shall be obligated to
make any payment to the Administrative Agent for the account of the Issuing
Lender under any Letter of Credit to the extent that PGI shall not be
required to indemnify any Lender or the Administrative Agent in the
circumstances provided in clause (x) of the penultimate sentence of the
last paragraph of this Section 2.03. Each such payment to the Issuing
Lender shall be made without any offset, abatement, withholding or
reduction whatsoever.
(f) Subject to the making of each payment by a Facility A Revolving
Credit Lender to the Issuing Lender pursuant to paragraph (e) above in
respect of any Letter of Credit, upon receipt by the Issuing Lender from or
for account of PGI of any payment in respect of any Reimbursement
Obligation or any such interest or other amount (including by way of setoff
or application of proceeds of any collateral security) the Issuing Lender
shall promptly pay to the Administrative Agent for account of each Facility
A Revolving Credit Lender entitled thereto, such Facility A Revolving
Credit Lender's Facility A Revolving Credit Commitment Percentage of such
payment, each such payment by the Issuing Lender to be made in the same
money and funds in which received by the Issuing Lender. In the event any
payment received by the Issuing Lender and so paid to the Facility A
Revolving Credit Lenders hereunder is rescinded or must otherwise be
returned by the Issuing Lender, each Facility A Revolving Credit Lender
shall, upon the request of the Issuing Lender (through the Administrative
Agent), repay to the Issuing Lender (through the Administrative Agent) the
amount of such payment paid to such Lender, with interest, if any, at the
rate required to be paid by the Issuing Lender upon any return of such
funds.
(g) PGI shall pay to the Administrative Agent for account of each
Facility A Revolving Credit Lender (ratably in accordance with their
respective Facility A
Credit Agreement
----------------
<PAGE>
-44-
Revolving Credit Commitment Percentages) a letter of credit fee in respect
of each Letter of Credit issued on behalf of PGI at a rate per annum equal
to the product of the relevant Applicable Margin and the daily average
undrawn face amount of such Letter of Credit for the period from and
including the date of issuance of such Letter of Credit (i) in the case of
a Letter of Credit that expires in accordance with its terms, to and
including such expiration date and (ii) in the case of a Letter of Credit
that is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date such
Letter of Credit is drawn in full or is terminated (such fee to be non-
refundable, to be paid in arrears on each Quarterly Date and on the
Revolving Credit Commitment Termination Date and to be calculated for any
day after giving effect to any payments made under such Letter of Credit on
such day).
In addition, PGI shall pay to the Administrative Agent for account of
the Issuing Lender a fronting fee in respect of each Letter of Credit
issued on behalf of PGI in an amount equal to .25% per annum of the daily
average undrawn face amount of such Letter of Credit for the period from
and including the date of issuance of such Letter of Credit (i) in the case
of a Letter of Credit that expires in accordance with its terms, to and
including such expiration date and (ii) in the case of a Letter of Credit
that is drawn in full or is otherwise terminated other than on the stated
expiration date of such Letter of Credit, to but excluding the date such
Letter of Credit is drawn in full or is terminated (such fee to be non-
refundable, to be paid in arrears on each Quarterly Date and on the
Revolving Credit Commitment Termination Date and to be calculated for any
day after giving effect to any payments made under such Letter of Credit on
such day) plus all commissions, charges, costs and expenses in the amounts
customarily charged by the Issuing Lender from time to time in like
circumstances with respect to the issuance of each Letter of Credit and
drawings and other transactions relating thereto.
(h) Promptly following the end of each calendar month, the Issuing
Lender shall deliver (through the Administrative Agent) to each Facility A
Revolving Credit Lender and to PGI a notice describing the aggregate stated
amount of all Letters of Credit issued on behalf of PGI outstanding at the
end of such month. Upon the request of any Facility A Revolving Credit
Lender from time to time, the Issuing Lender shall deliver any other
information reasonably requested by such Lender with respect to each Letter
of Credit then outstanding.
(i) The issuance by the Issuing Lender of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 7
hereof, be subject to the conditions precedent that (i) such Letter of
Credit shall be in such form, contain such terms and support such
transactions as shall be satisfactory to the Issuing Lender consistent with
its then current practices and procedures with respect to Letters of
Credit Agreement
----------------
<PAGE>
-45-
Credit of the same type and (ii) PGI shall have executed and delivered such
applications, agreements and other instruments relating to such Letter of
Credit as the Issuing Lender shall have reasonably requested consistent
with its then current practices and procedures with respect to Letters of
Credit of the same type, provided that in the event of any conflict between
any such application, agreement or other instrument and the provisions of
this Agreement or any Security Document, the provisions of this Agreement
and the Security Documents shall control.
(j) To the extent that any Facility A Revolving Credit Lender fails
to pay any amount required to be paid pursuant to paragraph (e) or (f) of
this Section 2.03 on the due date therefor, such Lender shall pay interest
to the Issuing Lender (through the Administrative Agent) on such amount
from and including such due date to but excluding the date such payment is
made (i) during the period from and including such due date to but
excluding the date three Business Days thereafter, at a rate per annum
equal to the Federal Funds Rate (as in effect from time to time) and (ii)
thereafter, at a rate per annum equal to the Base Rate (as in effect from
time to time) plus 2%.
(k) The issuance by the Issuing Lender of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.03 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (x) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (y) each Facility
A Revolving Credit Lender shall have consented thereto.
(l) On the Effective Date, the Letters of Credit outstanding under
the Existing Credit Agreements for the account of PGI or any of its
Subsidiaries that is a "Letter of Credit Borrower" under the Existing
Credit Agreement shall automatically, and without any action on the part of
any Person, become Letters of Credit hereunder.
PGI hereby indemnifies and holds harmless each Facility A Revolving Credit
Lender and the Administrative Agent from and against any and all claims and
damages, losses, liabilities, costs or expenses which such Lender or the
Administrative Agent may incur (or which may be claimed against such Lender or
the Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Lender under any Letter of Credit issued on behalf of PGI; provided
that PGI shall not be required to indemnify any Lender or the Administrative
Agent for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (x) the willful misconduct or gross
negligence of the Issuing Lender in determining whether a request presented
under any Letter of Credit issued on behalf of PGI complied with the terms of
the Letter of Credit or (y) in the case of the Issuing Lender, such Lender's
failure to pay under any Letter of Credit issued on behalf of PGI after the
presentation to it of
Credit Agreement
----------------
<PAGE>
-46-
a request strictly complying with the terms and conditions of such Letter of
Credit. Nothing in this Section 2.03 is intended to limit the other obligations
of PGI, any Lender or the Administrative Agent under this Agreement.
2.04 Changes of Commitments.
(a) The aggregate amount of the Commitments shall be automatically
reduced to zero on the Revolving Credit Termination Date.
(b) The Facility A Revolving Credit Borrowers shall have the right at
any time and from time to time (x) to terminate the Facility A Revolving Credit
Commitments (but only so long as no Facility A Revolving Credit Loans or Letter
of Credit Liabilities are outstanding at such time) and (y) to reduce the
aggregate unused amount of the Facility A Revolving Credit Commitments (for
which purpose use of the Facility A Revolving Credit Commitments shall be deemed
to include the aggregate amount of Letter of Credit Liabilities).
Fabrene shall have the right at any time and from time to time (x) to
terminate the Facility B Revolving Credit Commitments (but only so long as no
Facility B Revolving Credit Loans are outstanding at such time) and (y) to
reduce the aggregate unused amount of the Facility B Revolving Credit
Commitments.
In connection with any such termination, (i) the Facility A Revolving
Credit Borrowers and Fabrene, as applicable, shall give notice of each such
termination or reduction as provided in Section 4.05 hereof, (ii) each partial
reduction shall be in an aggregate amount at least equal to U.S. $2,000,000 or
in multiples of U.S. $1,000,000 in excess thereof and (iii) upon any termination
of the Facility A Revolving Credit Commitments, the Facility B Revolving Credit
Commitments shall automatically terminate.
(c) The Commitments once terminated or reduced may not be reinstated.
2.05 Commitment Fees. The Borrowers shall pay to the Administrative
Agent for account of each Lender, a commitment fee on the daily average unused
amount of such Lender's Facility A and Facility B Revolving Credit Commitments
(for which purpose, outstanding Letters of Credit shall be deemed to constitute
a use of Commitment but Reserved Commitment Amounts shall not be deemed to
constitute a use of Commitment) for the period from and including the Effective
Date to but not including the earlier of the date such Commitments are
terminated and the Revolving Credit Termination Date, at a rate per annum equal
to the relevant Applicable Margin. Accrued commitment fees shall be payable on
each Quarterly Date and on the earlier of the date the relevant Commitments are
terminated and the Revolving Credit Termination Date. Accrued commitment fees
in respect of the Facility A Revolving Credit Commitments shall be payable in
U.S. Dollars; accrued commitment fees in respect of the Facility B Revolving
Credit Commitments shall be payable in Canadian Dollars.
Credit Agreement
----------------
<PAGE>
-47-
2.06 Lending Offices. The Loans of each Type and Currency made by
each Lender shall be made and maintained at such Lender's Applicable Lending
Office for Loans of such Type and Currency.
2.07 Several Obligations; Remedies Independent. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender, and
no Lender shall have any obligation to the Administrative Agent or any other
Lender for the failure by such Lender to make any Loan required to be made by
such Lender. The amounts payable by the Borrowers at any time hereunder and
under the Notes to each Lender shall be a separate and independent debt and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and the Notes, and it shall not be necessary for any other Lender or
the Administrative Agent to consent to, or be joined as an additional party in,
any proceedings for such purposes.
2.08 Notes.
(a) The Facility A Revolving Credit Loans made by each Facility A
Revolving Credit Lender to each Facility A Revolving Credit Borrower shall be
evidenced by a single promissory note of each Facility A Revolving Credit
Borrower substantially in the form of Exhibit A-1 hereto, dated the date hereof,
payable to such Lender in a principal amount equal to the amount of its Facility
A Revolving Credit Commitment as originally in effect (or, in the case of either
Dutch Borrower, in the amount of the Facility A Revolving Credit Loans made to
it) and otherwise duly completed.
(b) The Facility B Revolving Credit Loans made by each Facility B
Revolving Credit Lender to Fabrene shall be evidenced by a single promissory
note of Fabrene substantially in the form of Exhibit A-2 hereto, dated the date
hereof, payable to such Lender in a principal amount equal to the amount of the
Facility B Revolving Credit Loans made to it and otherwise duly completed.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) and maturity (in the case of a Bankers' Acceptance Loan)
of each Loan of each Class made by each Lender to the Borrowers, and each
payment made on account of the principal thereof, shall be recorded by such
Lender on its books and, prior to any transfer of any Note evidencing the Loans
of such Class held by it, endorsed by such Lender on the schedule attached to
such Note or any continuation thereof; provided that the failure of such Lender
to make any such recordation or endorsement shall not affect the obligations of
the Borrowers to make a payment when due of any amount owing hereunder or under
such Note in respect of the Loans to be evidenced by such Note.
Credit Agreement
----------------
<PAGE>
-48-
(d) No Lender shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Lender's
relevant Commitment, Loans and Notes pursuant to Section 12.06(b) hereof.
2.09 Optional Prepayments and Conversions or Continuations of Loans.
Subject to Section 4.04 hereof and paragraph (h) of Annex I hereto, each
Borrower shall have the right, with respect to the Loans made to it, to prepay
Loans, or (in the case of Loans denominated in U.S. Dollars or Canadian Dollars)
to Convert Loans of one Type into Loans of another Type or (in the case of all
Loans) to Continue Loans of one Type as Loans of the same Type, at any time or
from time to time, provided that: (a) such Borrower shall give the
Administrative Agent notice of each such prepayment, Conversion or Continuation
as provided in Section 4.05 hereof (and, upon the date specified in any such
notice of prepayment, the amount to be prepaid shall become due and payable
hereunder) and (b) upon any prepayment or Conversion of Eurocurrency Loans or
Bankers' Acceptance Loans other than on the last day of an Interest Period for
such Loans (or, in the case of Bankers' Acceptance Loans, the maturity dates for
the underlying Bankers' Acceptances), such Borrower shall pay any amounts owing
under Section 5.05 hereof as a result of such prepayment or Conversion.
Notwithstanding the foregoing, and without limiting the rights and
remedies of the Lenders under Section 10 hereof, in the event that any Event of
Default shall have occurred and be continuing, the Administrative Agent may (and
at the request of the Majority Lenders shall) (x) with respect to Loans
denominated in U.S. Dollars, suspend the right of the Borrowers to Convert any
Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar Loan, in
which event all such Loans shall be Converted (on the last day(s) of the
respective Interest Periods therefor) or Continued, as the case may be, as Base
Rate Loans and (y) with respect to Loans denominated in Canadian Dollars,
suspend the right of the Borrowers to Convert any Loan into a Bankers'
Acceptance Loan, or to Continue any Loan as a Bankers' Acceptance Loan, in which
event all such Loans shall be Converted (on the maturity date therefor) or
Continued, as the case may be, as Canadian Base Rate Loans and (z) with respect
to Loans denominated in Dutch Guilders, require that any such Loans be Continued
only as Euroguilder Loans with Interest Periods of one-month's duration.
2.10 Mandatory Prepayments and Reductions of Commitments.
(a) Casualty Events. On the date 45 days following the receipt by
the Group Members of the proceeds of any insurance, condemnation award or other
compensation in respect of any Casualty Event affecting any Property of any
Group Member (excluding any Group Member which is an Unrestricted Subsidiary)
(or upon such earlier date as the respective Group Member shall have determined
not to repair or replace (with either identical or substantially similar
Property) the Property affected by such Casualty Event), PGI shall,
Credit Agreement
----------------
<PAGE>
-49-
and shall cause the other Borrowers to, prepay the Loans (and/or provide cover
for Letter of Credit Liabilities as specified in paragraph (f) below), and the
Commitments shall be subject to automatic reduction, in an aggregate amount, if
any, equal to 100% of the Net Available Proceeds of such Casualty Event not
theretofore promptly applied to the repair or replacement of such Property, such
prepayment and reduction to be effected in each case in the manner and to the
extent specified in paragraph (e) below. Notwithstanding the foregoing, in the
event that a Casualty Event shall occur with respect to Property covered by the
Mortgages, PGI (or the respective Mortgagor) shall prepay the Loans (and/or
provide cover for Letter of Credit Liabilities as specified in paragraph (f)
below), and the Commitments shall be subject to automatic reduction, on the
dates, and in the amounts of the required prepayments, specified in the
Mortgages. Nothing in this paragraph (a) shall be deemed to limit any
obligation of the Group Members pursuant to any of the Security Documents to
remit to a collateral or similar account (including, without limitation, the
Collateral Account) maintained by the Administrative Agent pursuant to any of
the Security Documents the proceeds of insurance, condemnation award or other
compensation received in respect of any Casualty Event.
(b) Debt Issuance. Without limiting the obligation of the Obligors
to obtain the consent of the Majority Lenders pursuant to Section 12.04 hereof
to any Debt Issuance not otherwise permitted hereunder, upon any Debt Issuance,
PGI shall, and shall cause the other Borrowers to, prepay the Loans (and/or
provide cover for Letter of Credit Liabilities as specified in paragraph (f)
below), in an aggregate amount equal to 100% of the Net Available Proceeds
thereof, such prepayment and reduction to be effected in each case in the manner
and to the extent specified in paragraph (e) below, provided that no prepayment
need be made pursuant to this Section 2.10(b) on the occasion of any Debt
Issuance to the extent that (i) the proceeds of such Debt Issuance are applied
to the prepayment of the Fabrene Acquisition Intercompany Note (and PGI complies
with the requirements of paragraph (d) below in respect of such prepayment) and
(ii) the proceeds of such Debt Issuance in excess of the amount so applied to
the Fabrene Acquisition Intercompany Note is applied to make the prepayments
required by this paragraph (b).
(c) Sale of Assets. Without limiting the obligation of the Obligors
to obtain the consent of the Majority Lenders pursuant to Section 12.04 hereof
to any Disposition not otherwise permitted hereunder, no later than five
Business Days prior to the occurrence of any such Disposition, PGI will deliver
to the Lenders a statement, certified by its chief financial officer, in form
and detail satisfactory to the Administrative Agent, of the amount of the Net
Available Proceeds of such Disposition and, to the extent such Net Available
Proceeds (when taken together with the Net Available Proceeds of all prior
Dispositions as to which a prepayment has not yet been made under this paragraph
(c)) shall exceed U.S. $10,000,000, PGI shall, and shall cause the other
Borrowers to, prepay the Loans (and/or provide cover for Letter of Credit
Liabilities as specified in paragraph (f) below), and the Commitments shall be
subject to automatic reduction, in an aggregate amount equal to 100% of the Net
Available
Credit Agreement
----------------
<PAGE>
-50-
Proceeds of such Disposition (together with 100% of the Net Available Proceeds
of all prior Dispositions as to which a prepayment has not yet been made under
this paragraph (c)), such prepayment and reduction to be effected in each case
in the manner and to the extent specified in paragraph (e) below.
Notwithstanding the foregoing, PGI (and the other Borrowers) shall not
be required to make a prepayment pursuant to this paragraph (c) with respect to
the Net Available Proceeds from any Disposition in the event that PGI advises
the Administrative Agent at the time the Net Available Proceeds from such
Disposition are received that PGI or one or more of its Subsidiaries intends to
reinvest such Net Available Proceeds into replacement assets (and for these
purposes the payment of Reserved Amounts arising in connection with any
Disposition shall be deemed to be a reinvestment in replacement assets), so long
as:
(i) such Net Available Proceeds are either (x) held by the
Administrative Agent in the Collateral Account pending such reinvestment
(and in that connection, the Administrative Agent need not release such Net
Available Proceeds except upon presentation of evidence satisfactory to it
that such Net Available Proceeds are to be so reinvested in compliance with
the provisions of this Agreement) or (y) applied to the prepayment of
Facility A or Facility B Revolving Credit Loans hereunder (in which event
PGI agrees to advise the Administrative Agent in writing at the time of
such prepayment that such prepayment is being made from the proceeds of a
Disposition and that, as contemplated by Section 2.01(a) or 2.01(b) hereof,
as applicable, a portion of the Facility A or Facility B Revolving Credit
Commitments hereunder equal to the amount of such prepayment gives rise to
a Facility A or Facility B Reserved Commitment Amount that shall be
available hereunder only for purposes of making investments in replacement
assets as contemplated hereby),
(ii) the Net Available Proceeds from any Disposition are in fact
so reinvested within 265 days of such Disposition, it being understood
that, in the event Net Available Proceeds from more than one Disposition
are paid into the Collateral Account or applied to the prepayment of Loans
as provided in clause (i) above, such Net Available Proceeds shall be
deemed to be released (or, as the case may be, Loans utilizing the related
Reserved Commitment Amount shall be deemed to be made) in the same order in
which such Dispositions occurred and, accordingly, (A) any such Net
Available Proceeds so held for more than 265 days shall be forthwith
applied to the prepayment of Loans and reductions of Commitments as
provided above and (B) any Reserved Commitment Amount that remains so
unutilized for more than 265 days shall result in an automatic reduction of
Facility A or Facility B Revolving Credit Commitments, as applicable, in an
amount equal to such Reserved Commitment Amount not so utilized (and, upon
any such reduction, PGI agrees to advise the Administrative Agent in
writing of such fact at the time of such reduction, identifying
Credit Agreement
----------------
<PAGE>
-51-
the reduced Reserved Commitment Amount to be in effect after giving effect
to such reduction), and
(iii) the aggregate amount of Net Available Proceeds (together
with investment earnings thereon) so held at any time by the Administrative
Agent pending reinvestment as contemplated by this sentence, together with
the aggregate amount of the Reserved Commitment Amounts, shall not at any
time exceed U.S. $30,000,000 or such greater amount as the Majority Lenders
may otherwise agree.
As contemplated by Section 4.01 of the Security Agreement, nothing in this
paragraph (c) shall be deemed to obligate the Administrative Agent to release
any of such proceeds from the Collateral Account to PGI for purposes of
reinvestment as aforesaid upon the occurrence and during the continuance of any
Event of Default.
(d) Fabrene Intercompany Note. Concurrently with the receipt by
Fabrene Holdings or PGI Polymer (including, without limitation, amounts
deposited with Chase pursuant to the applicable provisions of the Fabrene
Intercompany Notes Agreement, but excluding amounts paid pursuant to the Fabrene
Intercompany Notes Agreement in respect of a Casualty Event or Disposition that
give rise to a prepayment pursuant to paragraphs (a) or (c) above) of any
payment or prepayment of principal in respect of the Fabrene Acquisition
Intercompany Notes, PGI shall prepay the Loans (and/or provide cover for Letter
of Credit Liabilities as specified in paragraph (f) below), and the Commitments
shall be subject to automatic reduction, in an aggregate amount equal to the
amount of such payment or prepayment, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in paragraph (e)
below.
(e) Application. Prepayments and reductions of Commitments described
in the above paragraphs of this Section 2.10 shall be effected as follows:
(i) in the case of paragraphs (a), (c) and (d) above, the amount
of the prepayment specified in such paragraphs shall be applied, to the
Loans (or to provide cover for Letter of Credit Liabilities) and to the
reduction of the Commitments (such prepayments to be applied first to
Facility A Revolving Credit Loans denominated in U.S. Dollars and to the
reduction of Facility A Revolving Credit Commitments in the amount of each
such prepayment, second, to Facility A Revolving Credit Loans denominated
in Dutch Guilders and to the reduction of Facility A Revolving Credit
Commitments in the U.S. Dollar Equivalent of the amount of each such
prepayment, and third, after all outstanding Facility A Revolving Credit
Loans have been paid in full, to the Facility B Revolving Credit Loans and
to the simultaneous reduction of first the Facility A Revolving Credit
Commitments and second the Facility B Revolving Credit Commitments in the
amount of each such prepayment of Facility B Revolving Credit Loans), and
Credit Agreement
----------------
<PAGE>
-52-
(ii) in the case of paragraph (b) above, the amount of the prepayment
specified in such paragraph shall be applied to the Loans (or to provide
cover for Letter of Credit Liabilities), but not to the reduction of the
Commitments (such prepayments to be applied first to Facility A Revolving
Credit Loans denominated in U.S. Dollars, second to Facility A Revolving
Credit Loans denominated in Dutch Guilders and third to Facility B
Revolving Credit Loans).
(f) Cover for Letter of Credit Liabilities. In the event that PGI
(or any other Borrower) shall be required pursuant to this Section 2.10
(including, without limitation, pursuant to Section 2.10(g) below) to provide
cover for Letter of Credit Liabilities, PGI (or such other Borrower) shall
effect the same by paying to the Administrative Agent immediately available
funds in an amount equal to the required amount, which funds shall be retained
by the Administrative Agent in the Collateral Account (as provided in the
Security Agreement as collateral security in the first instance for the Letter
of Credit Liabilities) until such time as the Letters of Credit shall have been
terminated and all of the Letter of Credit Liabilities paid in full.
(g) Applicable Incurrence Limitation. Anything herein to the
contrary notwithstanding, if after giving effect to the making of any Loan (or
the issuance of any Letter of Credit pursuant to Section 2.03 hereof), or after
giving effect to any Conversion or Continuation of any Loan pursuant to Section
2.09 hereof, the Revolving Credit Exposure would otherwise exceed the Applicable
Incurrence Limitation (as defined below), the Borrowers will make such
prepayments of Loans (and/or provide cover for Letters of Credit) in such
amounts as shall be necessary so that such sum does not exceed the Applicable
Incurrence Limitation (such prepayments to be applied to the Loans hereunder, as
the Borrowers shall elect, in the manner specified for optional prepayments
pursuant to Section 2.09 hereof).
For purposes hereof, the "Applicable Incurrence Limitation" shall
mean, on any date on which a Loan is made or a Letter of Credit is issued or on
which a Loan is Converted or Continued in accordance with Section 2.09 hereof
(the "Test Date"), (x) U.S. $325,000,000 minus (y) the amount by which the
Commitments of the Lenders hereunder shall have been permanently reduced during
the period commencing on the Effective Date through and including the Test Date
pursuant to paragraph (c) above.
(h) Change of Control. In the event that any "Change of Control" or
similar event shall occur under the Senior Subordinated Notes Indenture or any
Future Refinancing Debt Documents and, as a result thereof, PGI shall be
required to offer to repurchase any portion of the Senior Subordinated Notes or
Future Refinancing Debt, then, prior to making any such offer, PGI shall prepay
the Loans in full (and/or provide full cover for Letter of Credit Liabilities as
specified in paragraph (f) above), and the Commitments shall be automatically
reduced to zero.
Credit Agreement
----------------
<PAGE>
-53-
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
(a) Each Facility A Revolving Credit Borrower hereby promises to pay
to the Administrative Agent in U.S. Dollars (or, in the case of each Dutch
Borrower, in Dutch Guilders) for account of each Facility A Revolving Credit
Lender the entire outstanding principal amount of the Facility A Revolving
Credit Loans made by such Lender to such Borrower, and each such Facility A
Revolving Credit Loan shall mature on the Revolving Credit Termination Date.
(b) Fabrene hereby promises to pay to the Administrative Agent in
Canadian Dollars for account of each Facility B Revolving Credit Lender the
entire outstanding principal amount of the Facility B Revolving Credit Loans
made by such Lender to such Borrower, and each such Facility B Revolving Credit
Loan shall mature (i) in the case of Canadian Base Rate Loans, on the Revolving
Credit Termination Date and (ii) in the case of Bankers' Acceptance Loans, on
the maturity date(s) of the corresponding Bankers' Acceptance(s) which shall in
any event be no later than the Revolving Credit Termination Date.
3.02 Interest. Each Borrower hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender to such Borrower for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan or a
Canadian Base Rate Loan, the Base Rate (in the case of Base Rate Loans) or
the Canadian Base Rate (in the case of Canadian Base Rate Loans) as such
Rates are in effect from time to time plus the Applicable Margin for such
Loan and
(b) during such periods as such Loan is a Eurocurrency Loan, for each
Interest Period relating thereto, the Eurocurrency Rate for such Loan for
such Interest Period plus the Applicable Margin for such Loan.
Notwithstanding the foregoing, each Borrower hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable Post-
Default Rate on any principal of any Loan made by such Lender to such Borrower,
on any Reimbursement Obligation of such Borrower held by such Lender and (to the
fullest extent permitted under applicable law) on any other amount payable by
such Borrower hereunder or under the Notes of such Borrower held by such Lender,
which shall not be paid in full when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), for the period from and
including the due
Credit Agreement
----------------
<PAGE>
-54-
date thereof to but excluding the date the same is paid in full. Accrued
interest on each Loan shall be payable (i) in the case of a Base Rate Loan or a
Canadian Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of a
Eurocurrency Loan, on the last day of each Interest Period therefor and, if such
Interest Period is longer than three months, at three-month intervals following
the first day of such Interest Period, and (iii) in the case of any Loan, upon
the payment or prepayment thereof or the Conversion of such Loan to a Loan of
another Type (but only on the principal amount so paid, prepaid or Converted),
except that interest payable at the Post-Default Rate shall be payable from time
to time on demand. Promptly after the determination of any interest rate
provided for herein or any change therein, the Administrative Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Borrowers.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts (other than the
principal of and interest on Loans made in an Alternative Currency) to be made
by the Borrowers under this Agreement and the Notes, and, except to the extent
otherwise provided therein, all payments to be made by the Obligors under any
other Basic Document, shall be made in U.S. Dollars, and all payments of
principal and interest on Loans made in an Alternative Currency shall be made in
such Alternative Currency, in each case in immediately available funds, without
deduction, set-off or counterclaim, to the Payment Office for the applicable
Currency, not later than 1:00 p.m. New York time (in the case of such payments
to be made in U.S. Dollars) or 10:00 a.m. local time in the location of the
relevant Payment Office (in the case of payments to be made in an Alternative
Currency) on the date on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have been made on the next
succeeding Business Day and interest shall be payable in respect of any
principal so extended for the period of such extension).
If, as a result of the implementation of European monetary union, (i)
Dutch Guilders cease to be lawful currency of the Netherlands and are replaced
by a European common currency, or (ii) Dutch Guilders and a European common
currency are at the same time recognized by the central bank or comparable
authority of the Netherlands as lawful currency of the Netherlands, and the
Administrative Agent or the Majority Facility A Revolving Credit Lenders shall
so request in a notice delivered to PGI, then any amount payable hereunder by
any party hereto in Dutch Guilders shall instead be payable in the European
common currency and the amount so payable shall be determined by translating the
amount payable in Dutch Guilders to such European common currency at the
exchange rate recognized by the European Central Bank for the purpose of
implementing the European monetary union. Prior to the occurrence of
Credit Agreement
----------------
<PAGE>
-55-
the event or events described in clause (i) or (ii) of the preceding sentence,
each amount payable hereunder in Dutch Guilders will continue to be payable only
in Dutch Guilders. The Dutch Borrowers agree, at the request of the Majority
Facility A Revolving Credit Lenders, at the time of or at any time following the
implementation of European monetary union, to enter into an agreement amending
this Agreement in such manner as the Majority Facility A Revolving Credit
Lenders shall specify in order to reflect the implementation of such monetary
union and to place the parties hereto in the position they would have been in
had such monetary union not be implemented.
(b) Any Lender for whose account any such payment by any Borrower is
to be made may (but shall not be obligated to) debit the amount of any such
payment that is not made by the time referred to in paragraph (a) above to any
ordinary deposit account of such Borrower with such Lender (with prompt notice
to such Borrower and the Administrative Agent).
(c) The Borrowers shall, at the time of making each payment under
this Agreement or any Note for account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans, Reimbursement Obligations or other amounts payable by the Borrowers
hereunder to which such payment is to be applied (and in the event that the
Borrowers fail to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(d) Each payment received by the Administrative Agent under this
Agreement or any Note for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(e) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing of Loans of a particular Class from the Lenders
under Section 2.01 hereof shall be made from the relevant Lenders, each payment
of commitment fees under Section 2.05 hereof in respect of Commitments of a
particular Class shall be made for account of the relevant Lenders, and each
termination or reduction of the amount of the Commitments of a particular Class
under Section 2.04 hereof shall be applied to the respective Commitments of such
Class of the relevant Lenders, pro rata according to the amounts of their
respective Commitments of such Class; (b) the making, Conversion and
Continuation of Loans of a particular Type and Currency (other than Conversions
provided for by Section 5.04 hereof) shall be made pro rata among the
Credit Agreement
----------------
<PAGE>
-56-
relevant Lenders according to the amounts of their respective Commitments (in
the case of the making of Loans) or their respective Loans (in the case of
Conversions and Continuations of Loans) and the then current Interest Period for
each Eurocurrency Loan, as applicable, shall be coterminous; (c) each payment or
prepayment of principal of Loans of a particular Class by the Borrowers shall be
made for account of the relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans of such Class held by them; and
(d) each payment of interest on Loans of a particular Class by the Borrowers
shall be made for account of the relevant Lenders pro rata in accordance with
the amounts of interest on such Loans then due and payable to the respective
Lenders.
4.03 Computations. Interest on Eurocurrency Loans and Reimbursement
Obligations and commitment fees and letter of credit fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable and
interest on Base Rate Loans, Canadian Base Rate Loans and Acceptance Fees shall
be computed on the basis of a year of 365 or 366, as the case may be, days and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Notwithstanding the foregoing, for
each day that the Base Rate is calculated by reference to the Federal Funds
Rate, interest on Base Rate Loans shall be computed on the basis of a year of
360 days and actual days elapsed.
4.04 Minimum Amounts. Except for Conversions made pursuant to
Section 5.04 hereof and Bankers' Acceptances issued at the request of Fabrene in
accordance with this Agreement and Annex I hereto, each borrowing or Conversion
of (i) Base Rate Loans shall be in an aggregate amount at least equal to U.S.
$500,000 or in multiples of U.S. $100,000 in excess thereof, (ii) Canadian Base
Rate Loans shall be in an aggregate amount at least equal to Cdn. $300,000 and
(iii) Eurocurrency Loans shall be in an aggregate amount at least equal to U.S.
$1,000,000 (or, in the case of Euroguilder Loans, the Foreign Currency
Equivalent thereof) or in multiples of U.S. $500,000 (or, in the case of
Euroguilder Loans, the Foreign Currency Equivalent thereof) in excess thereof;
borrowings or Conversions of or into Loans of different Types or, in the case of
Eurocurrency Loans, having different Interest Periods at the same time hereunder
shall be deemed separate borrowings and Conversions for purposes of the
foregoing, one for each Type or Interest Period.
Except for mandatory prepayments made pursuant to Section 2.10 hereof,
each partial prepayment of principal of Loans shall be in an aggregate amount at
least equal to U.S. $500,000 or in multiples of U.S. $500,000 in excess thereof
(prepayments of Loans of different Types or, in the case of Eurocurrency Loans,
having different Interest Periods at the same time hereunder to be deemed
separate prepayments for purposes of the foregoing, one for each Type or
Interest Period).
4.05 Certain Notices. Notices by the Borrowers to the Administrative
Agent of terminations or reductions of the Commitments, of borrowings,
Conversions, Continuations
Credit Agreement
----------------
<PAGE>
-57-
and optional and mandatory prepayments of Loans and of Classes of Loans, of
Types and Currencies of Loans and of the duration of Interest Periods shall be
irrevocable (except that notices of a mandatory prepayment pursuant to Section
2.10 hereof may be revoked if the respective event giving rise to such
prepayment does not occur, subject, however, to the obligation of the Borrowers
to compensate the Lenders for any loss, cost or expense incurred in connection
with such revoked notice pursuant to Section 5.05 hereof) and shall be effective
only if received by the Administrative Agent not later than 12:00 noon New York
time on the number of Business Days prior to the date of the relevant
termination, reduction, borrowing, Conversion, Continuation or prepayment or the
first day of such Interest Period specified below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Termination or reduction
of Commitments 3
Borrowings of, or
Conversions into,
Base Rate Loans same day
Borrowings of, or
Conversions into,
Canadian Base Rate Loans 1
Borrowings of, Conversions
into, Continuations
as, or duration of Interest
Period for, Eurocurrency Loans
or Bankers' Acceptances Loans 3
Optional Prepayments of Loans 3
Mandatory Prepayments of Loans 1
</TABLE>
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Borrower to which such Loan is to be made, the Class of Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 4.04 hereof)
and Type and Currency (and, in the case of a request for a Bankers' Acceptance
Loan, the maturity date of the respective Bankers' Acceptance) of each
Credit Agreement
----------------
<PAGE>
-58-
Loan to be borrowed, Converted, Continued or prepaid and the date of borrowing,
Conversion, Continuation or optional prepayment (which shall be a Business Day).
Each such notice of the duration of an Interest Period shall specify the Loans
to which such Interest Period is to relate. The Administrative Agent shall
promptly notify the relevant Lenders of the contents of each such notice. In
the event that the Borrowers fail to select the Type of Loan, or the duration of
any Interest Period for any Eurocurrency Loan or the maturity date of any
Bankers' Acceptance, within the time period and otherwise as provided in this
Section 4.05, such Loan (if outstanding as a Eurodollar Loan or Bankers'
Acceptance Loan) will be automatically Converted into a Base Rate Loan (if such
Loan is denominated in U.S. Dollars) or a Canadian Base Rate Loan (if such Loan
is denominated in Canadian Dollars) on the last day of the then current Interest
Period for such Loan or the maturity date of such Bankers' Acceptance, as the
case may be, or (if outstanding as a Eurocurrency Loan denominated in Dutch
Guilders) will be automatically Continued as a Euroguilder Loan having an
Interest Period of one month denominated in such Currency on the last day of the
then current Interest Period for such Loan or (if outstanding as a Base Rate
Loan or a Canadian Base Rate Loan) will remain as, or (if not then outstanding)
will be made as, a Base Rate Loan or a Canadian Base Rate Loan (as the case may
be).
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or a Borrower (the
"Payor") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender, or a participation in a Letter of Credit drawing acquired
by such Lender hereunder or (in the case of a Borrower) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
Credit Agreement
----------------
<PAGE>
-59-
(i) if the Required Payment shall represent a payment to be made
by a Borrower to the Lenders, such Borrower and the recipient(s) shall each
be obligated retroactively to the Advance Date to pay interest in respect
of the Required Payment at the Post-Default Rate (without duplication of
the obligation of such Borrower under Section 3.02 hereof to pay interest
on the Required Payment at the Post-Default Rate), it being understood that
the return by the recipient(s) of the Required Payment to the
Administrative Agent shall not limit such obligation of such Borrower under
said Section 3.02 to pay interest at the Post-Default Rate in respect of
the Required Payment and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Lenders to a Borrower, the Payor and such Borrower shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment pursuant to Section 3.02 hereof, it being
understood that the return by such Borrower of the Required Payment to the
Administrative Agent shall not limit any claim such Borrower may have
against the Payor in respect of such Required Payment.
4.07 Sharing of Payments, Etc.
-------------------------
(a) Each Borrower agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be entitled, at its option, to offset balances held by
it for account of such Borrower at any of its offices, in U.S. Dollars or in any
other Currency or currency, against any principal of or interest on any of the
Loans, Reimbursement Obligations or other amounts payable by such Borrower to
such Lender hereunder, that is not paid when due (regardless of whether such
balances are then due to such Borrower), in which case it shall promptly notify
such Borrower and the Administrative Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Borrower payment of any
principal of or interest on any Loan of any Class or Letter of Credit Liability
owing to it or payment of any other amount under this Agreement or any other
Basic Document through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise (other than from the Administrative
Agent as provided herein), and, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on the Loans
of such Class or Letter of Credit Liabilities or such other amounts then due
hereunder or thereunder by such Borrower to such Lender than the percentage
received by any other Lender, it shall promptly purchase from such other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Loans of such Class of such Borrower or Letter of Credit
Liabilities or such other amounts, respectively, owing to such other Lenders (or
in interest due thereon, as the case may be) in such amounts, and make such
other adjustments from time to time as shall be equitable, to the end that all
the Lenders shall share
Credit Agreement
----------------
<PAGE>
-60-
the benefit of such excess payment (net of any expenses that may be incurred by
such Lender in obtaining or preserving such excess payment) pro rata in
accordance with the unpaid principal of and/or interest on the Loans of such
Class of such Borrower or Letter of Credit Liabilities or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise, together with interest, if any, required to be paid by the
Lender returning such funds) if such payment is rescinded or must otherwise be
restored.
(c) The Borrowers agree that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Borrower. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
----------------------
5.01 Additional Costs.
----------------
(a) Each Borrower shall pay to the Administrative Agent (to the
fullest extent permitted by applicable law) for the account of each Lender from
time to time such amounts as such Lender may determine to be necessary to
compensate such Lender for any costs that such Lender determines are
attributable to its making or maintaining of any Eurocurrency Loans to such
Borrower or its obligation to make any Eurocurrency Loans to such Borrower
hereunder, or any reduction in any amount receivable by such Lender hereunder in
respect of any of such Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change that:
(i) shall subject any Lender (or its Applicable Lending Office
for any of such Loans) to any tax, duty or other charge in respect of such
Loans or its Notes or changes the basis of taxation of any amounts payable
to such Lender under this Agreement or its Notes in respect of any of such
Loans (excluding changes in the rate of tax on the overall net income of
such Lender or of such Applicable Lending Office
Credit Agreement
----------------
<PAGE>
-61-
by the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurocurrency Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurocurrency Base
Rate" in Section 1.01 hereof), or any commitment of such Lender (including,
without limitation, the Commitments of such Lender hereunder); or
(iii) imposes any other condition affecting this Agreement or
its Notes (or any of such extensions of credit or liabilities) or its
Commitments.
With respect to any Loans denominated in U.S. Dollars, if any Lender requests
compensation from any Borrower under this Section 5.01(a), the Borrowers may, by
notice to such Lender (with a copy to the Administrative Agent), suspend the
obligation of such Lender thereafter to make or Continue Eurodollar Loans, or to
Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 5.04 hereof shall be applicable), provided that such suspension shall
not affect the right of such Lender to receive the compensation so requested.
(b) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), each Borrower (to the extent allocable
to it) shall pay to the Administrative Agent for the account of each Lender from
time to time on request such amounts as such Lender may determine to be
necessary to compensate such Lender (or, without duplication, the bank holding
company of which such Lender is a subsidiary) for any costs that it determines
are attributable to the maintenance by such Lender (or any Applicable Lending
Office or such bank holding company), pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any court or
governmental or monetary authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or other requirement (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basel Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based
Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R.
Part 3, Appendix A)), of capital in respect of its Commitments or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
Credit Agreement
----------------
<PAGE>
-62-
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request). For
purposes of this Section 5.01(b) and Section 5.06 hereof, "Basel Accord" shall
mean the proposals for risk-based capital framework described by the Basel
Committee on Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
(c) The Dutch Borrowers agree, at the request of any Facility A
Revolving Credit Lender, to compensate such Lender for any loss, cost, expense
or reduction in return that shall be incurred or sustained by such Lender as a
result of the implementation of European monetary union and that would not have
been incurred or sustained but for the transactions provided for herein.
(d) Each Lender shall notify the Borrowers of any event occurring
after the date of this Agreement entitling such Lender to compensation under
paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but in any
event within 45 days, after such Lender obtains actual knowledge thereof;
provided that (i) if any Lender fails to give such notice within 45 days after
it obtains actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice and (ii) each Lender will designate a different
Applicable Lending Office for the Loans of such Lender affected by such event if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender will furnish to the Borrowers a certificate setting forth
the basis and amount of each request by such Lender for compensation under
paragraph (a) or (b) of this Section 5.01. Determinations and allocations by
any Lender for purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to paragraph (a) of this Section 5.01, of the effect of capital
maintained pursuant to paragraph (b) of this Section 5.01, or of the amounts
necessary to compensate such Lender under paragraph (c) of this Section 5.01, on
its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Lender under this Section 5.01, shall be conclusive,
provided that such determinations and allocations are made on a reasonable
basis.
5.02 Limitation on Eurodollar Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurocurrency Base
Rate for any Eurodollar Loans for any Interest Period:
Credit Agreement
----------------
<PAGE>
-63-
(a) the Administrative Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in paragraph (b) of the definition of "Eurocurrency Base Rate"
in Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest
for Eurodollar Loans as provided herein; or
(b) the Majority Facility A Revolving Credit Lenders determine (which
determination shall be conclusive), and notify the Administrative Agent
that the relevant rates of interest referred to in the definition of
"Eurocurrency Base Rate" in Section 1.01 hereof upon the basis of which the
rate of interest for Eurodollar Loans for such Interest Period is to be
determined are not likely to adequately cover the cost to such Lenders of
making or maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrowers and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Borrowers shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof.
5.03 Limitation on Euroguilder Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any
Eurocurrency Base Rate for any Loan denominated in Dutch Guilders for any
Interest Period (or Default Interest Period):
(a) the Administrative Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in paragraph (b) of the definition of "Eurocurrency Base Rate"
in Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest
for such Loans as provided herein; or
(b) the Majority Facility A Revolving Credit Lenders determine (which
determination shall be conclusive), and notify the Administrative Agent
that the relevant rates of interest referred to in the definition of
"Eurocurrency Base Rate" in Section 1.01 hereof upon the basis of which the
rate of interest for such Loans for such Interest Period (or Default
Interest Period) is to be determined are not likely to adequately cover the
cost to such Lenders of making or maintaining Eurocurrency Loans for such
Interest Period (or Default Interest Period); or
(c) any Lender shall determine (which determination shall be
conclusive) and notify the Administrative Agent that Dutch Guilders are not
available in the relevant amounts or for the relevant periods, or that a
change in national or international financial, political or economic
conditions or exchange controls has occurred which
Credit Agreement
----------------
<PAGE>
-64-
would, in the opinion of such Lender, make it impracticable or illegal for
such Lender to make, fund or maintain its Loans to be made in such Currency
or for the relevant Borrower to pay the principal of or interest on such
Loans as provided in this Agreement;
then the Administrative Agent shall give the Borrowers and each Lender prompt
notice thereof and:
(i) during the twenty-one-Business Day period next succeeding
the date of any such notice (the "Negotiation Period"), the Administrative
Agent (in consultation with the affected Lender(s)) and the Borrowers will
negotiate in good faith for the purpose of agreeing upon an alternative,
mutually acceptable basis (the "Substitute Basis") for determining the rate
of interest to be applicable to such Loans for such Interest Period (or
Default Interest Period);
(ii) if at the expiry of the Negotiation Period, the Majority
Facility A Revolving Credit Lenders (in the case of clauses (a) and (b)
above), or the affected Lender(s) (in the case of clause (c) above), and
the Borrowers have agreed upon a Substitute Basis, the Substitute Basis
shall be retroactive to, and take effect from, the beginning of such
Interest Period (or Default Interest Period, as the case may be);
(iii) if at the expiry of the Negotiation Period, a Substitute
Basis shall not have been agreed upon as aforesaid, the Administrative
Agent shall forthwith notify the affected Lender(s) of such failure to
agree and, within five Business Days after receipt of such notice (or as
soon thereafter as practicable), each affected Lender shall notify the
Borrowers through the Administrative Agent of the cost to such Lender (as
determined by it in good faith) of funding and maintaining such Loan for
such Interest Period (or Default Interest Period); and the interest payable
to such Lender on such Loan for such Interest Period (or Default Interest
Period) shall be a rate per annum equal to the Applicable Margin above the
cost to such Lender of funding and maintaining such Loan for such Interest
Period (or Default Interest Period) as so notified by such Lender (or, as
to any principal of such Loan or, to the extent permitted by applicable
law, other amount payable to such Lender on or in respect of such Loan that
is then past due, 2% plus the Applicable Margin above such cost); and
(iv) the procedures specified in clauses (i), (ii) and (iii)
above shall apply to each Interest Period (or Default Interest Period)
succeeding the first Interest Period (or Default Interest Period) to which
they were applied unless and until the Administrative Agent shall determine
in consultation with the Majority Facility A Revolving Credit Lenders (in
the case of clauses (a) and (b) above), or the affected Lender(s) (in the
case of clause (c) above), that the conditions referred to in clause (a),
(b) or (c) above no longer exist and so notifies the Borrowers and the
affected
Credit Agreement
----------------
<PAGE>
-65-
Lender(s), whereupon interest on such Loans shall again be determined in
accordance with the provisions of Section 3.02 hereof commencing on the
first day of the Interest Period (or Default Interest Period) next
succeeding the date of such notice.
5.04 Treatment of Affected Loans. If the obligation of any Lender to
make Eurocurrency Loans or to Continue, or to Convert Base Rate Loans into,
Eurocurrency Loans shall be suspended pursuant to Section 5.01 hereof, such
Lender's Eurocurrency Loans shall be automatically Converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) ((or Default
Interest Period(s)) for Eurocurrency Loans and, unless and until such Lender
gives notice as provided below that the circumstances specified in Section 5.01
hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurocurrency Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurocurrency Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurocurrency Loans shall be made or Continued instead as Base
Rate Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurocurrency Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrowers with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 hereof that gave rise to
the Conversion of such Lender's Eurocurrency Loans pursuant to this Section 5.04
no longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurocurrency Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) (or Default Interest
Period(s)) for such outstanding Eurocurrency Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Lenders holding
Eurocurrency Loans and by such Lender are held pro rata (as to principal
amounts, Types, Interest Periods and Default Interest Periods, as applicable) in
accordance with their respective Commitments.
5.05 Compensation. Each Borrower shall pay to the Administrative
Agent for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of a
Eurocurrency Loan, as applicable, made by such Lender to such Borrower for
any reason (including, without limitation, the acceleration of the Loans
pursuant to
Credit Agreement
----------------
<PAGE>
-66-
Section 10 hereof) on a date other than the last day of the Interest Period
for such Loan; or
(b) any failure by such Borrower for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a Eurocurrency Loan, as
applicable, from such Lender on the date for such borrowing specified in
the relevant notice of borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for U.S. Dollar
or the applicable Alternative Currency deposits of leading banks.
5.06 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of Borrowers under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basel Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Lender hereunder in
respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or Lenders (through the Administrative
Agent), PGI shall pay immediately to the Administrative Agent for account of
such Lender or Lenders, from time to time as specified by such Lender or Lenders
(through the Administrative Agent), such additional amounts as shall be
sufficient to compensate such Lender or Lenders (through the Administrative
Agent) for such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by any such Lender or Lenders,
submitted by such Lender or Lenders to the Borrowers shall be conclusive in the
absence of manifest error as to the amount thereof.
Credit Agreement
----------------
<PAGE>
-67-
5.07 U.S. Taxes.
(a) Each Borrower agrees to pay to each Lender that is not a U.S.
Person such additional amounts as are necessary in order that the net payment of
any amount due by such Borrower to such non-U.S. Person hereunder after
deduction for or withholding in respect of any U.S. Tax imposed with respect to
such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S.
Person), will not be less than the amount stated herein to be then due and
payable, provided that the foregoing obligation to pay such additional amounts
shall not apply:
(i) to any payment to a Lender hereunder unless such Lender is,
on the date hereof (or on the date it becomes a Lender as provided in
Section 12.06(b) hereof) and on the date of any change in the Applicable
Lending Office of such Lender, entitled to submit and does submit pursuant
to Section 5.07(c) either a Form 1001 (relating to such Lender and
entitling it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or a Form 4224 (relating
to all interest to be received by such Lender hereunder in respect of the
Loans), or
(ii) to any U.S. Tax imposed solely by reason of the failure by
such non-U.S. Person (or, if such non-U.S. Person is not the beneficial
owner of the relevant Loan, such beneficial owner) to comply with
applicable certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or connections
with the United States of America of such non-U.S. Person (or beneficial
owner, as the case may be) to the extent it is legally entitled to do so if
such compliance is required by statute or regulation of the United States
of America as a precondition to relief or exemption from such U.S. Tax.
For the purposes of this Section 5.07(a), (x) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, and (y) "Form 4224" shall mean Form
4224 (Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates).
(b) Within 30 days after any Borrower shall pay any amount to the
Administrative Agent or any Lender from which it is required by law to make any
deduction or withholding, and within 30 days after it is required by law to
remit such deduction or withholding to any relevant taxing or other authority,
such Borrower shall deliver to the
Credit Agreement
----------------
<PAGE>
-68-
Administrative Agent for delivery to such non-U.S. Person evidence satisfactory
to such Person of such deduction, withholding or payment (as the case may be).
(c) Each Lender that is not a U.S. Person agrees, to the extent it is
entitled to an exemption from (or reduction of) the amount of withholding of
U.S. Taxes from interest payments hereunder, to furnish to the Borrowers on or
prior to the date hereof (or the date on which it becomes a Lender as provided
in Section 12.06(b) hereof) and when a lapse in time or change in circumstance
renders the previous certification obsolete or inaccurate two original signed
copies of Form 1001 or Form 4224 (as applicable), and any other form reasonably
requested by the Borrowers which such Lender may lawfully deliver that is
necessary or required to establish such exemption (or reduction).
(d) If U.S. Taxes withheld from or imposed upon any payment hereunder
are incorrectly or illegally paid or assessed, and if any Lender contests the
payment or assessment of such U.S. Taxes, such Lender shall refund, to the
extent of any refund made to such Lender, any amount paid by any Borrower under
this Section 5.07 in respect of such U.S. Taxes. Amounts payable pursuant to
this Section 5.07(d) shall be paid within 30 days from the date of receipt of
the refund by such Lender.
5.08 Foreign Taxes.
-------------
(a) All payments on account of the principal of and interest on the
Loans, fees and all other amounts payable hereunder by a Foreign Borrower to or
for the account of the Administrative Agent or any Lender, including, without
limitation, amounts payable under paragraph (b) of this Section 5.08, shall be
made free and clear of and without reduction or liability for Foreign Taxes.
Each Foreign Borrower will pay all Foreign Taxes applicable to it, without
charge to or offset against any amount due to the Administrative Agent or any
Lender, prior to the date on which penalties attach thereto, except for any such
Foreign Taxes (other than Foreign Taxes imposed on or in respect of any amount
payable by such Foreign Borrower hereunder or under the Notes) the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained, so long as no claim for such
Foreign Taxes is made on the Administrative Agent or any Lender.
(b) Each Foreign Borrower shall indemnify the Administrative Agent
and each Lender against, and reimburse the Administrative Agent and each Lender
on demand for, any Foreign Taxes applicable to it and any loss, liability, claim
or expense, including interest, penalties and legal fees, that the
Administrative Agent or such Lender may incur at any time arising out of or in
connection with any failure of such Foreign Borrower to make any payment of
Foreign Taxes when due.
(c) In the event that a Foreign Borrower is required by applicable
law, decree or regulation to deduct or withhold Foreign Taxes from any amounts
payable on, under or in
Credit Agreement
----------------
<PAGE>
-69-
respect of this Agreement or the Loans made to such Foreign Borrower, such
Foreign Borrower shall (to the fullest extent permitted by applicable law)
promptly pay the Person entitled to such amount such additional amounts as may
be required, after the deduction or withholding of Foreign Taxes, to enable such
Person to receive from such Foreign Borrower on the due date thereof, an amount
equal to the full amount stated to be payable to such Person under this
Agreement. Each Lender shall provide to a Foreign Borrower such forms or
certificates as the Foreign Borrower may reasonably request to establish such
Lender's entitlement to an exemption from or reduction of Foreign Taxes, but no
Lender shall be required to provide any form or certificate if it determines in
its discretion that the provision of such form or certificate could adversely
affect it or it is not legally entitled to provide such form or certificate.
(d) Each Foreign Borrower shall furnish to the Administrative Agent,
upon the request of any Lender (through the Administrative Agent), together with
sufficient certified copies for distribution to each Lender requesting the same
(identifying the Lenders that have so requested), original official tax receipts
(or certified copies thereof) in respect of each payment of Foreign Taxes
required under this Section 5.08 made by such Foreign Borrower or such other
information, documents and receipts that the Administrative Agent or such Lender
may reasonably require to establish to its satisfaction that full and timely
payment has been made of all Foreign Taxes required to be paid under this
Section 5.08 within 30 days after the date such payment is made.
(e) Each Foreign Borrower represents and warrants to the
Administrative Agent and each Lender that, on and as of the date hereof, neither
this Agreement nor the execution or delivery by such Foreign Borrower of this
Agreement, is subject to any Foreign Taxes, and no payment to be made by such
Foreign Borrower under this Agreement is subject to any Foreign Taxes.
Section 6. Guarantee.
6.01 The Guarantee. Each Guarantor hereby guarantees to each Lender
(and its affiliates, as the case may be), the Administrative Agent and their
respective successors and assigns the Guaranteed Obligations of such Guarantor,
which guarantee, in the case of Guaranteed Obligations common to more than one
of the Guarantors, is joint and several. Each Guarantor hereby further agrees
that if any Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations in
respect of which such Guarantor is obligated, such Guarantor will promptly pay
the same, without any demand or notice whatsoever, and that in the case of any
extension of time of payment or renewal of any of such Guaranteed Obligations,
the same will be promptly paid in full when due (whether at extended maturity,
by acceleration or otherwise) in accordance with the terms of such extension or
renewal.
Credit Agreement
----------------
<PAGE>
-70-
6.02 Obligations Unconditional. The obligations of the Guarantors
under Section 6.01 hereof are absolute and unconditional, joint and several (to
the extent of common Guaranteed Obligations), irrespective of the value,
genuineness, validity, regularity or enforceability of the obligations of the
Borrowers under this Agreement, the Notes or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 6.02 that the obligations of the Guarantors hereunder shall be absolute
and unconditional, joint and several (to the extent of common Guaranteed
Obligations), under any and all circumstances. Without limiting the generality
of the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Guarantors hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or the Notes or any other agreement or instrument referred to
herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or the Notes or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of,
the Administrative Agent or any Lender or Lenders as security for any of
the Guaranteed Obligations shall fail to be perfected.
The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that either Agent or any
Lender exhaust any right, power or remedy or proceed against any Borrower under
this Agreement or the Notes or any other agreement or instrument referred to
herein or therein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
6.03 Reinstatement. The obligations of the Guarantors under this
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on
Credit Agreement
----------------
<PAGE>
-71-
behalf of any Borrower in respect of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise and the Guarantors jointly and severally (to the extent of common
Guaranteed Obligations) agree that they will indemnify the Administrative Agent
and each Lender on demand for all reasonable costs and expenses (including,
without limitation, fees of counsel) incurred by the Administrative Agent or
such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
6.04 Subrogation. Each Guarantor hereby waives all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under the Bankruptcy
Code) or otherwise by reason of any payment by it pursuant to the provisions of
this Section 6 and further agrees with each Borrower for the benefit of each of
its creditors (including, without limitation, each Lender and the Administrative
Agent) that any such payment by such Guarantor shall constitute a contribution
of capital by such Guarantor to such Borrower (or an investment in the equity
capital of such Borrower by such Guarantor).
6.05 Remedies. The Guarantors jointly and severally (to the extent
of common Guaranteed Obligations) agree that, as between the Guarantors and the
Lenders, the obligations of the Borrowers under this Agreement and the Notes may
be declared to be forthwith due and payable as provided in Section 10 hereof
(and shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 10) for purposes of Section 6.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrowers and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrowers) shall forthwith
become due and payable by the Guarantors for purposes of said Section 6.01.
6.06 Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Section 6 constitutes an instrument for
the payment of money, and consents and agrees that any Lender or the
Administrative Agent, at its sole option, in the event of a dispute by such
Guarantor in the payment of any moneys due hereunder, shall have the right to
bring motion-action under New York CPLR Section 3213.
6.07 Continuing Guarantee. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising until such time as all Guaranteed Obligations (including, without
limitation, all Letter of Credit Liabilities) shall have been paid in full and
the Commitments terminated.
Credit Agreement
----------------
<PAGE>
-72-
6.08 Contribution among Certain Obligors. The Obligors other than
Dutch Operating and Fabrene (such Obligors, i.e. excluding Dutch Operating and
Fabrene, being herein called the "Relevant Obligors") hereby agree, as between
themselves, that if any Relevant Obligor shall become an Excess Funding Obligor
(as defined below) by reason of the payment by such Relevant Obligor of any
Guaranteed Obligations, each other Relevant Obligor shall, on demand of such
Excess Funding Obligor (but subject to the next sentence), pay to such Excess
Funding Obligor an amount equal to such Relevant Obligor's Pro Rata Share (as
defined below and determined, for this purpose, without reference to the
Properties, debts and liabilities of such Excess Funding Obligor) of the Excess
Payment (as defined below) in respect of such Guaranteed Obligations. The
payment obligation of a Relevant Obligor to any Excess Funding Obligor under
this Section 6.08 shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of such Relevant Obligor under the
other provisions of this Section 6 and such Excess Funding Obligor shall not
exercise any right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations.
For purposes of this Section 6.08, (i) "Excess Funding Obligor" shall
mean, in respect of any Guaranteed Obligations, a Relevant Obligor that has paid
an amount in excess of its Pro Rata Share of such Guaranteed Obligations, (ii)
"Excess Payment" shall mean, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Obligor in excess of its Pro Rata Share of such
Guaranteed Obligations and (iii) "Pro Rata Share" shall mean, for any Relevant
Obligor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all Properties of such Relevant Obligor
(excluding any shares of stock of any other Relevant Obligor) exceeds the amount
of all the debts and liabilities of such Relevant Obligor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Relevant Obligor hereunder and any obligations of any other
Relevant Obligor that have been Guaranteed by such Relevant Obligor) to (y) the
amount by which the aggregate fair saleable value of all Properties of all of
the Relevant Obligors exceeds the amount of all the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of the Relevant Obligors hereunder) of all of the
Relevant Obligors, all as of the Effective Date. If any entity becomes a
Domestic Non-Borrower Guarantor pursuant to Section 9.16(b) hereof (and thus a
Relevant Obligor hereunder) subsequent to the Effective Date, then for purposes
of this Section 6.08 such subsequent Relevant Obligor shall be deemed to have
been a Guarantor as of the Effective Date and the aggregate present fair
saleable value of the Properties, and the amount of the debts and liabilities,
of such Relevant Obligor as of the Effective Date shall be deemed to be equal to
such value and amount on the date such Relevant Obligor becomes a Relevant
Obligor hereunder.
6.09 General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law (including the law of any
foreign jurisdiction) affecting the rights
Credit Agreement
----------------
<PAGE>
-73-
of creditors generally, if the obligations of any Guarantor under Section 6.01
hereof would otherwise, taking into account the provisions of Section 6.08
hereof, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under said Section 6.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Guarantor, any Lender, the Administrative Agent or any other
Person, be automatically limited and reduced to the highest amount that is valid
and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding.
Section 7. Conditions Precedent.
7.01 Initial Extension of Credit. The effectiveness of this
Agreement (and the amendment and restatement of the Existing Credit Agreement to
be effected hereby), and the obligation of any Lender to make its initial
extension of credit hereunder (whether by making a Loan, creating and
discounting Bankers' Acceptance, or issuing a Letter of Credit) is subject to
(i) the condition that such effectiveness shall have occurred on or before July
11, 1997, and (ii) the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory to the Administrative Agent (and
to the extent specified below, to each Lender) in form and substance:
(a) Corporate Documents. Certified copies of the charter and by-laws
(or equivalent documents) of each Group Member and of all corporate
authority for each Group Member (including, without limitation, board of
director resolutions and evidence of the incumbency of officers) with
respect to the execution, delivery and performance of such Basic Documents
to which such Group Member is or is intended to be a party and each other
document to be delivered by such Group Member from time to time in
connection herewith and the Loans hereunder (and the Administrative Agent
and each Lender may conclusively rely on such certificate until it receives
notice in writing from such Group Member).
(b) Officer's Certificate. A certificate of a senior financial
officer of PGI, dated the Effective Date, to the effect set forth in
paragraphs (a) and (b) of the first sentence of Section 7.02 hereof.
(c) Opinions of Counsel to the Group Members. Opinions, dated the
Effective Date, of (i) Kirkland & Ellis, special New York counsel to the
Group Members, in substantially the form of Exhibit G hereto and (ii)
special Canadian, Dutch, German and Mexican counsel covering such matters
with respect to the Canadian, Dutch, German and Mexican Security Documents,
respectively, and the other Basic Documents being executed and delivered by
the respective Group Members in such countries, and in each case covering
such other matters as the Administrative Agent or
Credit Agreement
----------------
<PAGE>
-74-
any Lender may reasonably request (and each Obligor hereby instructs such
counsel to deliver each such opinion to the Lenders and to the
Administrative Agent).
(d) Opinions of Local Counsel. Opinions, dated the Effective Date,
of special local counsel in the respective states in which the properties
covered by the Mortgages are located covering such matters with respect to
such Mortgages and covering such other matters as the Administrative Agent
or any Lender may reasonably request.
(e) Opinion of Special New York Counsel to Chase. An opinion, dated
the Effective Date, of Milbank, Tweed, Hadley & McCloy, special New York
counsel to Chase, substantially in the form of Exhibit H hereto (and Chase
hereby instructs such counsel to deliver such opinion to the Lenders and
the Administrative Agent).
(f) Notes. The Notes, duly completed and executed.
(g) Security Agreement; Collateral Account. The Security Agreement,
duly executed and delivered by each Securing Party and the Administrative
Agent. In addition, (i) each Securing Party shall have taken such other
action (including, without limitation, delivering to the Administrative
Agent (w) for filing, appropriately completed and duly executed copies of
Uniform Commercial Code financing statements, (x) instruments and other
documents in connection with the foreign patents and trademarks, (y) the
Intercompany Notes outstanding on the date hereof, to the extent not
previously delivered to the Administrative Agent, and (z) certificates
representing all shares of stock pledged by the Obligors hereunder, in each
case together with undated stock powers or other instruments of assignment)
as the Administrative Agent shall have requested in order to perfect the
security interests created pursuant to the Security Agreement and (ii) the
Collateral Account contemplated by Section 4.01 of the Security Agreement
and the Intercompany Notes Account contemplated by Section 5.04(d)(1) of
the Security Agreement shall have been established and there shall have
been executed and delivered to the Administrative Agent such lock-box or
similar agreements (and there shall have been taken such other action,
including establishment of accounts in the name of the Administrative
Agent, in connection therewith) with respect to Accounts (as such term is
defined in the Security Agreement) to be remitted to banks other than the
Administrative Agent as contemplated by Section 4.02 of the Security
Agreement.
(h) Mortgages and Title Insurance. The following documents each of
which shall be executed (and, where appropriate, acknowledged) by Persons
satisfactory to the Administrative Agent:
(i) with respect to each Mortgage, an instrument of
Modification and Confirmation pursuant to which such Mortgage shall
have been amended in
Credit Agreement
----------------
<PAGE>
-75-
form and substance satisfactory to the Administrative Agent to spread
the Lien thereof to secure the obligations under this Agreement, in
each case duly executed, acknowledged and delivered by the respective
parties thereto, in recordable form (in such number of copies as the
Administrative Agent shall have requested);
(ii) mortgagee down-date continuation reports for, and
modification/date-down endorsements to, existing title policies issued
pursuant to the Existing Credit Agreement (or any predecessor Credit
Agreement), subject only to such exceptions as shall be satisfactory
to the Majority Lenders;
(iii) for filing in the appropriate county land offices,
Uniform Commercial Code financing statements covering fixtures, in
each case appropriately completed and duly executed; and
(iv) such other documents as may be reasonably requested by
the title companies to record the instruments of Modification and
Confirmation and to issue the modification/date-down endorsements.
In addition, the respective Mortgagors shall have paid to the title
companies all expenses of such title companies in connection with the
issuance of the down-date continuation reports and modification date-down
endorsements and the recording of the instruments of Modification and
Confirmation and in addition shall have paid to such title companies an
amount equal to the recording and stamp taxes payable in connection with
recording the respective instruments of Modification and Confirmation in
the appropriate county land offices.
(i) Consummation of the Refinancing. Evidence that the Refinancing
shall have been (or concurrently with the satisfaction of the other
conditions precedent set forth in this Section 7 and the making of the
initial extensions of credit hereunder, will be) consummated in a manner
satisfactory to the Majority Lenders (including the form, terms and
conditions of the Senior Subordinated Notes Indenture, and the modification
of the covenants with respect to the Existing Senior Notes), that the
Administrative Agent shall have received copies of all documents in
connection therewith, and that PGI shall have received gross proceeds from
the Offering of not less than U.S. $350,000,000.
(j) Dutch Security Documents. Such documents, each in form and
substance satisfactory to each Lender, duly executed and delivered by
Chicopee, Dutch Holding and Dutch Operating, as the case may be, as any
Lender shall have requested in order to create the equivalent under Dutch
law of first priority Liens (or to confirm the Liens created or confirmed
pursuant to the Existing Credit Agreement) in favor of the
Credit Agreement
----------------
<PAGE>
-76-
Administrative Agent and the Lenders (i) in the case of Chicopee, on all of
the issued and outstanding shares of Dutch Holding, (ii) in the case of
Dutch Holding, on such number of shares of Dutch Operating as represent 65%
of the aggregate voting stock of Dutch Operating and on substantially all
of its other assets, and (iii) in the case of Dutch Operating, on
substantially all of its assets located, or arising out of its operations
conducted, in Cuijk, Netherlands, in each case as collateral security for
the respective obligations of Chicopee, Dutch Holding and Dutch Operating,
as the case may be, hereunder.
(k) German Security Documents. Such documents, each in form and
substance satisfactory to each Lender, duly executed and delivered by
FiberTech, as any Lender shall have requested in order to create first
priority Liens (or to confirm the Liens created or confirmed pursuant to
the Existing Credit Agreement) in favor of the Administrative Agent and the
Lenders in all of the assets of FiberTech located, or arising out of its
operations conducted, in Neunkirchen, Germany.
(l) Mexican Security Documents. Such documents, each in form and
substance satisfactory to each Lender, duly executed and delivered by
Bonlam and its Subsidiaries, as any Lender shall have requested in order to
create first priority Liens (or to confirm the Liens created or confirmed
pursuant to the Existing Credit Agreement) in favor of PGI Polymer in all
of the assets of Bonlam located, or arising out of its operations
conducted, in Mexico, as collateral security for the obligations of Bonlam
and its Subsidiaries to PGI Polymer arising from time to time under the
Bonlam Intercompany Notes Agreement and the Bonlam Intercompany Notes,
together with evidence that such action as shall be necessary to perfect or
record such Liens under applicable law shall have been taken.
(m) Canadian Security Documents. Such documents, each in form and
substance satisfactory to each Lender, duly executed and delivered by
Fabrene and its Subsidiaries, as any Lender shall have requested in order
to create first priority Liens (or to confirm the Liens created or
confirmed pursuant to the Existing Credit Agreement) in all of the assets
of Fabrene and its Subsidiaries located, or arising out of its operations
conducted, in Canada, in favor of (i) the Administrative Agent and the
Lenders, as collateral security for the obligations of Fabrene and its
Subsidiaries hereunder and (ii) Fabrene Holdings as collateral security for
the obligations of Fabrene and its Subsidiaries to Fabrene Holdings arising
from time to time under the Fabrene Intercompany Notes Agreement and the
Fabrene Intercompany Notes, together with evidence that such action as
shall be necessary to perfect or record such Liens under applicable law
shall have been taken.
(n) Insurance. Certificates of insurance evidencing the existence of
all insurance required to be maintained by the Obligors and their
Subsidiaries pursuant to
Credit Agreement
----------------
<PAGE>
-77-
Section 9.04 hereof and the designation of the Administrative Agent as the
loss payee thereunder to the extent required by said Section 9.04 in
respect of all insurance covering tangible Property, such certificates to
be in such form and contain such information as is specified in said
Section 9.04. In addition, the Obligors shall have delivered (i) a
certificate of the chief financial officer of PGI setting forth the
insurance obtained by it in accordance with the requirements of Section
9.04 and stating that such insurance is in full force and effect and that
all premiums then due and payable thereon have been paid and (ii) a written
report, dated reasonably near the Effective Date, of Reliable Insurance
Group, Inc., or any other firm of independent insurance brokers of
nationally recognized standing, as to such insurance and stating that, in
their opinion, such insurance adequately protects the interests of the
Administrative Agent and the Lenders, is in compliance with the provisions
of said Section 9.04, and is comparable in all respects with insurance
carried by responsible owners and operators of Properties similar to those
covered by the Mortgages.
(o) Environmental Reviews. The Group Members shall have completed
(and delivered to the Administrative Agent) environmental risk
questionnaires with respect to all facilities owned, operated or leased by
the Group Members and covered by environmental surveys and assessments
delivered pursuant to the Existing Credit Agreement (or any predecessor
Credit Agreement), and the responses to such questionnaires (and the
underlying facts and circumstances shown thereby) shall be in form and
substance satisfactory to the Majority Lenders.
(p) Leverage Ratio. A certificate of the chief financial officer of
PGI setting forth the Leverage Ratio as at the Effective Date (determined
so as to give effect to the aggregate amount of Loans and Letters of Credit
outstanding on the Effective Date, after giving effect to the transactions
contemplated hereunder to occur on the Effective Date).
(q) Process Agent Acceptances. A Process Agent Acceptance (in
respect of the Dutch Borrowers, Fabrene and Fabrene Holdings), duly
executed and delivered by the Process Agent in substantially the form of
Exhibit I attached hereto, and process agent acceptances (in respect of
Bonlam and Fabrene), duly executed and delivered by process agents in
substantially the form attached as an Exhibit to the Intercompany Notes
Agreements (to the extent not previously delivered pursuant to the Existing
Credit Agreement).
(r) Capitalization Statement. A balance sheet setting forth an
estimate of the capitalization of PGI and its Subsidiaries (determined on a
consolidated basis, without duplication, in accordance with GAAP) as of the
Effective Date after giving effect to the Refinancing (including an
estimate of all Indebtedness of PGI and its consolidated
Credit Agreement
----------------
<PAGE>
-78-
Subsidiaries expected to be in existence on the Effective Date after giving
effect to the Refinancing).
(s) Other Documents. Such other documents as the Administrative
Agent, any Lender or special New York counsel to Chase may reasonably
request.
The effectiveness of this Agreement (and the amendment and restatement of the
Existing Credit Agreement contemplated hereby), and the obligation of any Lender
to make its initial extension of credit hereunder (whether by making a Loan,
creating and discounting Bankers' Acceptances, or issuing a Letter of Credit),
is also subject to the payment by the Borrowers of such fees as the Borrowers
shall have agreed to pay or deliver to any Lender or the Administrative Agent in
connection herewith, including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase
in connection with the negotiation, preparation, execution and delivery of this
Agreement and the Notes and the other Basic Documents and the extensions of
credit hereunder (to the extent that statements for such fees and expenses have
been delivered to the Borrowers).
7.02 Initial and Subsequent Extensions of Credit. The obligation of
the Lenders to make any Loan, including, without limitation, the obligation to
create and discount any Bankers' Acceptance, or otherwise extend any credit to
the Borrowers upon the occasion of each borrowing or other extension of credit
hereunder (including the initial borrowing) is subject to the further conditions
precedent that, both immediately prior to the making of such Loan or creation
and discount of such Bankers' Acceptance or other extension of credit and also
after giving effect thereto and to the intended use thereof:
(a) no Default shall have occurred and be continuing;
(b) the representations and warranties made by the Obligors in
Section 8 hereof, and by each of the Group Members in each of the other
Basic Documents to which it is a party, shall be true and complete on and
as of the date of the making of such Loan or other extension of credit with
the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date); and
(c) PGI shall not have requested a release of any Collateral as
contemplated in the German Security Documents.
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Borrowers hereunder shall constitute a certification by the Borrowers to the
effect set forth in the preceding sentence (both as of the date of such notice
or request and, unless the Borrowers otherwise notify the Administrative Agent
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
Credit Agreement
----------------
<PAGE>
-79-
Section 8. Representations and Warranties. Each Obligor hereby
represents and warrants to the Lenders that:
8.01 Corporate Existence. Each Group Member: (a) is a corporation,
partnership, limited liability company, or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could have a Material
Adverse Effect.
8.02 Financial Condition. PGI has heretofore furnished to each of
the Lenders the following financial statements:
(a) the audited consolidated balance sheets of PGI and its
consolidated Subsidiaries and the related audited consolidated statements
of operations, shareholders' equity (deficit) and cash flows of PGI and its
consolidated Subsidiaries for the fiscal year ended December 28, 1996,
reported on by Ernst & Young LLP; and
(b) the unaudited consolidated balance sheets of PGI and its
consolidated Subsidiaries and the related unaudited consolidated statements
of operations, shareholders' equity (deficit) and cash flows of PGI and its
consolidated Subsidiaries for the three-month period ended March 29, 1997.
All such financial statements fairly present the respective financial condition
of PGI and its consolidated Subsidiaries as at the respective dates, and the
respective results of operations for the respective periods ended on said
respective dates, all in accordance with generally accepted accounting
principles and practices applied on a consistent basis. None of PGI or any of
its Subsidiaries has on the date hereof any material contingent liabilities,
material liabilities for taxes, material unusual forward or long-term
commitments or material unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
respective balance sheets as at said respective dates. Since December 28, 1996,
there has been no material adverse change in the financial condition, operation,
business or prospects of PGI and its consolidated Subsidiaries taken as a whole
from that set forth in the respective financial statements as at such date.
8.03 Litigation. Except as set forth in Schedule I hereto, there are
no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of any Obligor) threatened against any
Credit Agreement
----------------
<PAGE>
-80-
Group Member which, if adversely determined could reasonably be expected to have
a Material Adverse Effect.
8.04 No Breach. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the organizational documents of any Group Member, or
any applicable law or regulation (including, without limitation, regulations of
the Central Bank of the Netherlands and comparable regulations in Mexico, Canada
and Germany), or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which any
Group Member is a party or by which any of them or any of their Property is
bound or to which any of them is subject, or constitute a default under any such
agreement or instrument, or (except for the Liens created pursuant to the
Security Documents) result in the creation or imposition of any Lien upon any
Property of any Group Member pursuant to the terms of any such agreement or
instrument.
8.05 Action. Each Obligor has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Basic Documents to which it is a party; the execution,
delivery and performance by each Obligor of each of the Basic Documents to which
it is a party have been duly authorized by all necessary corporate or other
action on its part (including, without limitation, any required shareholder
approvals); and this Agreement has been duly and validly executed and delivered
by each Obligor and constitutes, and each of the Notes and the other Basic
Documents to which any Obligor is a party when executed and delivered by such
Obligor (in the case of the Notes, for value), will constitute, its legal, valid
and binding obligation, enforceable against such Obligor in accordance with its
terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
8.06 Approvals. No authorizations, approvals or consents of
(including any exchange control approval), and no filings or registrations with,
any governmental or regulatory authority or agency, or any securities exchange
(including, without limitation, the Central Bank of the Netherlands and any
comparable institutions in Mexico, Canada and Germany), are necessary for the
execution, delivery or performance by any Obligor of the Basic Documents to
which it is a party or for the legality, validity or enforceability hereof or
thereof, except for filings and recordings in respect of the Liens created
pursuant to the Security Documents.
Credit Agreement
----------------
<PAGE>
-81-
8.07 Use of Credit. None of the Group Members is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying Margin Stock, and no part of the proceeds of any extension of credit
hereunder will be used to buy or carry any Margin Stock in violation of the
applicable provisions of Regulations G, U and X.
8.08 ERISA. Each Plan, and, to the knowledge of each Obligor, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which any Obligor would be
under an obligation to furnish a report to the Lenders under Section 9.01(e)
hereof.
8.09 Taxes. The Group Members (other than Bonlam, Fabrene, Dutch
Operating and their respective Subsidiaries) are members of an affiliated group
of corporations filing consolidated returns for Federal income tax purposes, of
which PGI is the "common parent" (within the meaning of Section 1504 of the
Code) of such group. There is no tax sharing, tax allocation or similar
agreement (other than the Tax Sharing Agreement) currently in effect providing
for the manner in which tax payments owing by the members of such affiliated
group (whether in respect of Federal, state or foreign income or other taxes)
are allocated among the members of the group. The Group Members have filed
(either directly, or indirectly through PGI or PGI Polymer) all United States
Federal, and all foreign, income tax returns and all other material tax returns
that are required to be filed by them and have paid (either directly, or
indirectly through PGI or PGI Polymer) all taxes due pursuant to such returns or
pursuant to any assessment received by any Group Member. The charges, accruals
and reserves on the books of the Group Members in respect of taxes and other
governmental charges are, in the opinion of the Obligors, adequate.
8.10 Investment Company Act. None of the Group Members is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
8.11 Public Utility Holding Company Act. None of the Group Members is
a "holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
8.12 Material Agreements and Liens.
(a) Part A of Schedule II hereto is a complete and correct list, as
of the date of this Agreement (and after giving effect to the transactions
contemplated to occur on the Effective Date), of each credit agreement, loan
agreement, indenture, purchase agreement,
Credit Agreement
----------------
<PAGE>
-82-
lease, guarantee, letter of credit or other arrangement (excluding this
Agreement) providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, any Group Member, the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) U.S. $100,000, and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Part A of said Schedule II.
(b) Part B of Schedule II hereto is a complete and correct list, as
of the date of this Agreement (and after giving effect to the transactions
contemplated to occur on the Effective Date), of each Lien securing Indebtedness
of any Person (excluding the Security Documents) the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed) U.S. $100,000 and
covering any Property of any Group Member, and the aggregate Indebtedness
secured (or which may be secured) by each such Lien and the Property covered by
each such Lien is correctly described in Part B of said Schedule II.
8.13 Environmental Matters. Each Group Member has obtained all
environmental, health and safety permits, licenses and other authorizations
required under all Environmental Laws to carry on its business as now being or
as proposed to be conducted, except to the extent failure to have any such
permit, license or authorization would not have a Material Adverse Effect. Each
of such permits, licenses and authorizations is in full force and effect and
each Group Member is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect.
In addition, except as set forth in Schedule III hereto:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by any Group Member to have any environmental, health or safety
permit, license or other authorization required under any Environmental Law
in connection with the conduct of the business of any Group Member or with
respect to any generation, treatment, storage, recycling, transportation,
discharge or disposal, or any Release of any Hazardous Materials generated
by any Group Member which alleged failure, generation, treatment, storage,
recycling, transportation, discharge or disposal or Release would have a
Material Adverse Effect.
(b) Except to the extent the same could not reasonably be expected to
have a Material Adverse Effect:
Credit Agreement
----------------
<PAGE>
-83-
(i) no Group Member owns, operates or leases a treatment,
storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act of 1976, as amended, or under any
comparable state or local statute;
(ii) no polychlorinated biphenyls (PCB's) is or has been
present at any site or facility now or previously owned, operated or
leased by any Group Member;
(iii) no asbestos or asbestos-containing materials is or
has been present at any site or facility now or previously owned,
operated or leased by any Group Member;
(iv) there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or abandoned, at any site
or facility now or previously owned, operated or leased by any Group
Member;
(v) no Hazardous Materials have been Released at, on or
under any site or facility now or previously owned, operated or leased
by any Group Member in a reportable quantity established by statute,
ordinance, rule, regulation or order; and
(vi) no Hazardous Materials have been otherwise Released
at, on or under any site or facility now or previously owned, operated
or leased by any Group Member.
(c) No Group Member has transported or arranged for the
transportation of any Hazardous Material to any location that is listed on
the National Priorities List ("NPL") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
listed for possible inclusion on the NPL by the Environmental Protection
Agency in the Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. (S) 300.5 ("CERCLIS"), or
on any similar state, local or foreign list or that is the subject of
Federal, state, local or foreign enforcement actions or other
investigations that may lead to Environmental Claims against any Group
Member, in each case to the extent such Environmental Claims could
reasonably be expected to have a Material Adverse Effect.
(d) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of any Group Member and no site or
facility now or previously owned, operated or leased by any Group Member is
listed or proposed for
Credit Agreement
----------------
<PAGE>
-84-
listing on the NPL, CERCLIS or any similar state or foreign list of sites
requiring investigation or clean-up.
(e) No Liens have arisen under or pursuant to any Environmental Laws
on any site or facility owned, operated or leased by any Group Member, and
none of the Group Members has received any notification (or otherwise has
any knowledge) of any government action that has been taken or is in
process that could subject any such site or facility to such Liens, and no
Group Member would be required to place any notice or restriction relating
to the presence of Hazardous Materials at any site or facility owned by it
in any deed to the real property on which such site or facility is located.
(f) There have been no so-called "Phase I" or "Phase II"
environmental investigations or other analyses conducted by or that are in
the possession of any Group Member in relation to any site or facility now
or previously owned, operated or leased by any Group Member which have not
been made available to the Lenders.
8.14 Capitalization.
(a) The authorized capital stock of each of the Subsidiaries of PGI
will consist as of the Effective Date, after giving effect to the transactions
contemplated to occur on or before such Date, of the aggregate number of shares
of common and preferred stock, having the respective par values and series, in
each case as listed in Schedule IV hereto. On the Effective Date, after giving
effect to the transactions contemplated to occur on or before the Effective
Date, the number of shares of common stock and each series of preferred stock of
each of the Subsidiaries of PGI will be duly and validly issued and outstanding
as listed in said Schedule IV and will be owned beneficially and of record by
the Persons as listed in said Schedule IV.
(b) As of the Effective Date, after giving effect to the transactions
contemplated to occur on or before such Date, except as set forth in Schedule V
hereto, (i) there will be no outstanding Equity Rights with respect to any Group
Member and (ii) there will be no outstanding obligations of any Group Member to
repurchase, redeem, or otherwise acquire any shares of capital stock of PGI or
any other Group Member nor will there be any outstanding obligations of any
Group Member to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of any Group Member.
8.15 Subsidiaries, Etc.
(a) Set forth in Part A of Schedule VI hereto is a complete and
correct list of all of the Subsidiaries of PGI as of the Effective Date,
together with, for each such Subsidiary, (i) the jurisdiction of organization of
such Subsidiary, (ii) each Person holding
Credit Agreement
----------------
<PAGE>
-85-
ownership interests in such Subsidiary and (iii) the nature of the ownership
interests held by each such Person and the percentage of ownership of such
Subsidiary represented by such ownership interests. Except as disclosed in Part
A of Schedule VI hereto, (x) PGI and its Subsidiaries owns, or will own on the
Effective Date, free and clear of Liens (other than Liens created pursuant to
the Security Documents), and has the unencumbered right to vote, all outstanding
ownership interests in each Person shown to be held by it in Part A of Schedule
VI hereto, (y) all of the issued and outstanding capital stock of each such
Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) (except as disclosed in Schedule V) there are no
outstanding Equity Rights with respect to such Person.
(b) Set forth in Part B of Schedule VI hereto is a complete and
correct list of all Investments (other than Investments disclosed in Part A of
said Schedule VI hereto and other than Investments referred to in clause (b)
through (j), inclusive, of Section 9.08 hereof) held by any Group Member in any
Person on the date hereof, or that will be held on the Effective Date, and, for
each such Investment, (x) the identity of the Person or Persons holding such
Investment and (y) the nature of such Investment. Except as disclosed in Part B
of Schedule VI hereto, each Group Member owns, or will own, free and clear of
all Liens (other than Liens created pursuant to the Security Documents), all
such Investments.
(c) Except as provided for in the Intercompany Notes Agreements, no
Group Member is, on the date hereof, subject to any indenture, agreement,
instrument or other arrangement of the type described in Section 9.16(e) hereof.
8.16 Title to Assets. Each Group Member on the Effective Date will
own and have good and marketable title (subject only to Liens permitted by
Section 9.06 hereof) to the material Properties shown to be owned in the most
recent financial statements referred to in Section 8.02(c) hereof (other than
Properties disposed of in the ordinary course of business or otherwise permitted
to be disposed of pursuant to Section 9.05 hereof). Each Group Member on the
Effective Date will own (or have available for use under lease, license or other
arrangements entered into with any other Person) good and marketable title to,
and enjoy on the date hereof, and will enjoy on the Effective Date, peaceful and
undisturbed possession of, all Properties (subject only to Liens permitted by
Section 9.06 hereof) that are necessary for the operation and conduct of their
businesses.
8.17 True and Complete Disclosure. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Administrative Agent or any Lender in connection
with the negotiation, preparation or delivery of this Agreement and the other
Basic Documents or included herein or therein or delivered pursuant hereto or
thereto, when taken as a whole (together with the Disclosure Materials) do not
contain any untrue statement of material fact or omit to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading, provided that, as to
projections, the Obligors represent
Credit Agreement
----------------
<PAGE>
-86-
only that such projections have been prepared in good faith based on estimates
and assumptions believed by the Obligors to be reasonable as of the date such
projections were prepared. All written information furnished after the date
hereof by the Obligors to the Administrative Agent and the Lenders in connection
with this Agreement and the other Basic Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable estimates,
on the date as of which such information is stated or certified. There is no
fact known to the Obligors that could have a Material Adverse Effect that has
not been disclosed herein, in the other Basic Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Lenders for use in connection with the transactions
contemplated hereby or thereby.
8.18 Legal Form. This Agreement, the Notes, the Security Documents
and any other instruments or documents referred to herein or therein are in
proper legal form under the law of the Netherlands and the law of Canada for the
enforcement thereof against the Obligors under such law, and if this Agreement,
the Notes, the Security Documents and such other documents or instruments were
stated to be governed by such law, they would constitute legal, valid and
binding obligations of the Obligors under such law, enforceable in accordance
with their respective terms. All formalities required in the Netherlands or
Canada for the validity and enforceability of this Agreement, the Notes, the
Security Documents and any other instruments or documents referred to herein or
therein (including, without limitation, any necessary registration, recording or
filing with any court or other authority in the Netherlands) have been
accomplished, and no Foreign Taxes are required to be paid for the validity and
enforceability thereof.
8.19 Ranking. This Agreement and the Notes and the obligations
evidenced hereby are and will at all times be direct and unconditional general
obligations of the Obligors, and rank and will at all times rank in right of
payment and otherwise at least pari passu with any unsecured Indebtedness of the
Obligors, whether now existing or hereafter outstanding. There exists no Lien
(including any Lien arising out of any attachment, judgment or execution), nor
any segregation or other preferential arrangement of any kind, on, in or with
respect to any of the Property or revenues of the Obligors or any of their
Subsidiaries, except as expressly permitted by Section 9.06 hereof.
8.20 Commercial Activity; Absence of Immunity. The Foreign Borrowers
are subject to civil and commercial law with respect to their obligations under
this Agreement, the Notes, the Security Documents and any other instrument or
document referred to herein or therein. The execution, delivery and performance
by the Foreign Borrowers of this Agreement, the Notes and such other instruments
and documents constitute private and commercial acts rather than public or
governmental acts. Neither the Foreign Borrowers nor any of their Properties or
revenues is entitled to any right of immunity in any jurisdiction from suit,
court jurisdiction, judgment, attachment (whether before or after judgment),
set-off
Credit Agreement
----------------
<PAGE>
-87-
or execution of a judgment or from any other legal process or remedy relating to
the obligations of the Foreign Borrowers under this Agreement, the Notes, the
Security Documents or any other instrument or document referred to herein or
therein.
8.21 Real Property. Set forth on Schedule VII attached hereto is a
list of all of the real property interests of the Group Members on the Effective
Date, indicating in each case whether the respective Property is owned or
leased, the identity of the owner or lessee and the location of the respective
Property. All such leases necessary for the conduct of the business of the Group
Members are valid and subsisting and are in full force and effect, except for
such failures to be valid, subsisting and in full force and effect as would not,
individually or in the aggregate, have a Material Adverse Effect. Each of the
Group Members enjoys peaceful and undisturbed possession under all such leases,
and each of the Group Members has complied with all material obligations under
all leases to which it is a party, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
8.22 Intercompany Notes. On the date hereof, the only "Intercompany
Notes" under and as defined in the Existing Credit Agreement that have been
executed and delivered by either Bonlam or Fabrene are the Fabrene Acquisition
Intercompany Note, the Fabrene Operations Intercompany Note and the Bonlam
Intercompany Notes.
Section 9. Covenants of the Borrowers. Each Obligor hereby covenants
and agrees with the Lenders and the Administrative Agent that, so long as any
Commitment, Loan or Letter of Credit Liability is outstanding and until payment
in full of all amounts payable by the Borrowers hereunder:
9.01 Financial Statements Etc. The Obligors shall deliver to the
Administrative Agent (and the Administrative Agent will promptly forward copies
of the same to each Lender):
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the Borrowers
(unless such quarterly fiscal period ends on the end of a fiscal year, in
which case the financial statements required to be delivered pursuant to
this clause (a) may be delivered within 90 days), consolidated statements
of income, retained earnings and cash flows of PGI and its Subsidiaries
(and, separately stated, of PGI and its Restricted Subsidiaries) for such
period and for the period from the beginning of the respective fiscal year
to the end of such period, and the related consolidated balance sheets of
PGI and its Subsidiaries as at the end of such period (and, separately
stated, of PGI and its Restricted Subsidiaries), setting forth in each case
in comparative form the corresponding consolidated figures for the
corresponding period in the preceding fiscal year,
Credit Agreement
----------------
<PAGE>
-88-
accompanied by a certificate of a senior financial officer of PGI, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of
PGI and its Subsidiaries (or of PGI and its Restricted Subsidiaries, as the
case may be), in each case in accordance with generally accepted accounting
principles, consistently applied, as at the end of, and for, such period
(subject to the absence of footnote disclosures and to normal year-end
audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrowers, consolidated statements of
income, retained earnings and cash flows of PGI and its Subsidiaries (and,
separately stated, of PGI and its Restricted Subsidiaries) for such fiscal
year and the related consolidated balance sheets of PGI and its
Subsidiaries (and, separately stated, of PGI and its Restricted
Subsidiaries) as at the end of such fiscal year, setting forth in each case
in comparative form the corresponding consolidated figures for the
preceding fiscal year, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which opinion
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of PGI and its
Subsidiaries (or of PGI and its Restricted Subsidiaries, as the case may
be) as at the end of, and for, such fiscal year in accordance with
generally accepted accounting principles, and a certificate of such
accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of any
Default;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which any of
the Group Members shall have filed with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any
national securities exchange;
(d) promptly upon the mailing thereof to the holders of any publicly-
traded debt or equity securities of any of the Group Members, copies of all
financial statements, certificates, reports, proxy statements and other
notices or information so mailed;
(e) as soon as possible, and in any event within ten days after any
Obligor knows or has reason to believe that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan has occurred
or exists, a statement signed by a senior financial officer of such Obligor
setting forth details respecting such event or condition and the action, if
any, that the Obligors and their ERISA Affiliates propose to take with
respect thereto (and a copy of any report or notice required to be filed
with or given to PBGC by PGI or an ERISA Affiliate with respect to such
event or condition):
Credit Agreement
----------------
<PAGE>
-89-
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which the PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the Code
for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by PGI or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by the PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by PGI or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by the PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by PGI or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by PGI or any ERISA Affiliate of notice from a
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 of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against PGI or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30
days;and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA,
would result in the loss of tax-exempt status of the trust of which
such Plan is a part if PGI or an ERISA Affiliate fails to timely
provide security to the Plan in accordance with the provisions of said
Sections;
(f) as soon as available and in any event within 30 days after the
end of the third fiscal quarter of each fiscal year of the Borrowers, (i) a
projection (setting forth an itemization of the principal assumptions
relating thereto) for the next fiscal year of
Credit Agreement
----------------
<PAGE>
-90-
the Borrowers of the anticipated income statement, cash flow statement and
changes in financial position of the Borrowers, and the related balance
sheets and (ii) promptly after any material change in such projections
(either positive or negative) becomes known, notice of such change;
(g) promptly after any Obligor has reason to believe that any Default
has occurred, a notice of such Default describing the same in reasonable
detail and, together with such notice or as soon thereafter as possible, a
description of the action that such Obligor has taken or propose to take
with respect thereto; and
(h) from time to time such other information regarding the financial
condition, operations, business or prospects of any Group Member
(including, without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA) as any
Lender or either Agent may reasonably request.
PGI will furnish to the Administrative Agent (and the Administrative Agent will
promptly forward copies of the same to each Lender), at the time it furnishes
each set of financial statements pursuant to clause (a) or (b) above, a
certificate of a senior financial officer of PGI (i) to the effect that no
Default has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that PGI has taken or proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the computations necessary to determine whether the
Obligors are in compliance with Sections 9.07 through 9.10 hereof, inclusive, as
of the end of the respective quarterly fiscal period or fiscal year.
9.02 Litigation. The Obligors will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting any Group Member,
except proceedings which, if adversely determined, would not have a Material
Adverse Effect. Without limiting the generality of the foregoing, the Obligors
will give to each Lender notice of the assertion of any Environmental Claim by
any Person against, or with respect to the activities of, any Group Member and
notice of any alleged violation of or non-compliance with any Environmental Laws
or any permits, licenses or authorizations, other than any Environmental Claim
or alleged violation which, if adversely determined, would not have a Material
Adverse Effect.
9.03 Existence, Etc. Each Obligor will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (provided that nothing in this
Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.05 hereof);
Credit Agreement
----------------
<PAGE>
-91-
(b) comply with the requirements of all applicable laws (including,
without limitation, all Environmental Laws), rules, regulations and orders
of governmental or regulatory authorities if failure to comply with such
requirements could reasonably be expected to have a Material Adverse
Effect;
(c) pay and discharge all taxes, assessments and governmental charges
or levies in excess of U.S. $250,000 imposed on it or on its income or
profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained in accordance with
GAAP;
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted, except
to the extent the failure to maintain the same would have a Material
Adverse Effect;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Lender or the Administrative Agent
during normal business hours, to examine, copy and make extracts from its
books and records, to visit any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably
requested by such Lender or the Administrative Agent (as the case may be).
9.04 Insurance. Each Obligor will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations, provided that in any
event each Obligor will maintain (with respect to itself and its Restricted
Subsidiaries):
(1) Casualty Insurance -- insurance against loss or damage covering
all of the tangible real and personal Property and improvements of the
Obligors and each of their Restricted Subsidiaries by reason of any Peril
(as defined below) in such amounts (subject to the respective deductibles
for insurance indicated in Schedule VII hereto) as shall be reasonable and
customary and sufficient to avoid the insured named therein from becoming a
co-insurer of any loss under such policy but in any event in an amount (i)
in the case of fixed assets and equipment (including, without limitation,
vehicles), at least equal to 100% of the actual replacement cost of such
assets (including, without limitation, foundation, footings and excavation
costs), subject to
Credit Agreement
----------------
<PAGE>
-92-
deductibles as aforesaid and (ii) in the case of inventory, not less than
the fair market value thereof, subject to deductibles as aforesaid.
(2) Automobile Liability Insurance for Bodily Injury and Property
Damage -- insurance against liability for bodily injury and property damage
in respect of all vehicles (whether owned, hired or rented by any Obligor
or any of its Restricted Subsidiaries) at any time located at, or used in
connection with, its Properties or operations in such amounts as are then
customary for vehicles used in connection with similar Properties and
businesses, but in any event to the extent required by applicable law.
(3) Comprehensive General Liability Insurance -- insurance against
claims for bodily injury, death or Property damage occurring on, in or
about the Properties (and adjoining streets, sidewalks and waterways) of
any Obligor and its Restricted Subsidiaries, in such amounts as are then
customary for Property similar in use in the jurisdictions where such
Properties are located.
(4) Workers' Compensation Insurance -- workers' compensation
insurance (including, without limitation, employers' liability insurance)
to the extent required by applicable law.
(5) Product Liability Insurance -- insurance against claims for
bodily injury, death or Property damage resulting from the use of products
sold by any Obligor or any of its Restricted Subsidiaries in such amounts
as are then customarily maintained by responsible persons engaged in
businesses similar to that of such Obligor and its Restricted Subsidiaries.
(6) Business Interruption Insurance -- insurance against loss of
operating income (up to an aggregate amount equal to U.S. $80,000,000 and
subject to a deductible, or self-insured amount, not in excess of U.S.
$500,000) by reason of any Peril.
(7) Other Insurance -- such other insurance, including, without
limitation, War-Risk Insurance when and to the extent obtainable from the
United States Government, in each case as generally carried by owners of
similar Properties in the jurisdictions where such Properties are located,
in such amounts and against such risks as are then customary for Property
similar in use.
Such insurance shall be written by financially responsible companies selected by
the Obligors and having an A. M. Best rating of "A" or better and being in a
financial size category of XIV or larger, or by other companies acceptable to
the Majority Lenders, and (other than workers' compensation) shall name the
Administrative Agent as additional insured, or loss
Credit Agreement
----------------
<PAGE>
-93-
payee, as its interests may appear. Each policy referred to in this Section
9.04 shall provide that it will not be canceled or reduced, or allowed to lapse
without renewal, except after not less than 30 days' notice to the
Administrative Agent and shall also provide that the interests of the
Administrative Agent and the Lenders shall not be invalidated by any act or
negligence of the Obligors or any Person having an interest in any Property
covered by the Mortgages nor by occupancy or use of any such Property for
purposes more hazardous than permitted by such policy nor by any foreclosure or
other proceedings relating to such Property. The Obligors will advise the
Administrative Agent promptly of any policy cancellation, reduction or
amendment.
On or before the Effective Date, the Obligors will deliver to the
Administrative Agent certificates of insurance satisfactory to the
Administrative Agent evidencing the existence of all insurance required to be
maintained by the Obligors hereunder setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage and showing
that such insurance will remain in effect through December 31, 1997 subject only
to the payment of premiums as they become due (and attaching original copies of
any policies with respect to casualty insurance). Thereafter, on each November
15 in each year (commencing with November 15, 1997), the Obligors will deliver
to the Administrative Agent certificates of insurance evidencing that all
insurance required to be maintained by the Obligors hereunder will be in effect
through December 31 of the calendar year following the calendar year of the
current November 15, subject only to the payment of premiums as they become due.
In addition, the Obligors will not modify any of the provisions of any policy
with respect to casualty insurance without delivering the original copy of the
endorsement reflecting such modification to the Administrative Agent accompanied
by a written report of Reliable Insurance Group, Inc. or any other firm of
independent insurance brokers of nationally recognized standing, stating that,
in their opinion, such policy (as so modified) adequately protects the interests
of the Lenders and the Administrative Agent, is in compliance with the
provisions of this Section 9.04, and is comparable in all respects with
insurance carried by responsible owners and operators of Properties similar to
those covered by the Mortgages. The Obligors will not obtain or carry separate
insurance concurrent in form or contributing in the event of loss with that
required by this Section 9.04 unless the Administrative Agent is the named
insured thereunder, with loss payable as provided herein. The Obligors will
immediately notify the Administrative Agent whenever any such separate insurance
is obtained and shall deliver to the Administrative Agent the certificates
evidencing the same.
Without limiting the obligations of the Obligors under the foregoing
provisions of this Section 9.04, in the event the Obligors shall fail to
maintain in full force and effect insurance as required by the foregoing
provisions of this Section 9.04, then the Administrative Agent may, but shall
have no obligation so to do, procure insurance covering the interests of the
Lenders and the Administrative Agent in such amounts and against such risks as
the
Credit Agreement
----------------
<PAGE>
-94-
Majority Lenders shall deem appropriate, and the Obligors shall reimburse the
Administrative Agent in respect of any premiums paid by the Administrative Agent
in respect thereof.
For purposes hereof, the term "Peril" shall mean, collectively, fire,
lightning, flood, windstorm, hail, earthquake, explosion, riot and civil
commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and all other perils covered by the "all-risk" endorsement then in use in
the jurisdictions where the Properties of the Borrowers and their Restricted
Subsidiaries are located.
9.05 Prohibition of Fundamental Changes.
(a) Mergers, etc. No Obligor will, nor will any Obligor permit any
of its Restricted Subsidiaries to, enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution).
(b) Dispositions. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, any part of its business or
Property, whether now owned or hereafter acquired, including, without
limitation, receivables and leasehold interests, but excluding (i) any inventory
or other Property sold or disposed of in the ordinary course of business and on
ordinary business terms, (ii) the use or lease of certain facilities of Chicopee
located in Quebec, Canada, Little Rock, Arkansas and Dayton, New Jersey, (iii)
direct or indirect sales by Bonlam of non-Mexican accounts receivable to Banco
de National de Comercio Exterior, S.N.C. pursuant to the Export Sales Program
(as described in Section 9.07(j) hereof) and (iv) other sales of Property
(including sales of obsolete or worn-out Property, tools or equipment no longer
used or useful), so long as the aggregate amount thereof sold by the Obligors
and their Restricted Subsidiaries during the term of this Agreement shall not
exceed U.S. $30,000,000.
(c) Acquisitions. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, acquire any business or Property from, or capital
stock of, or be a party to any acquisition of, any Person except for purchases
of inventory and other Property to be sold or used in the ordinary course of
business and Investments permitted under Section 9.08 hereof.
(d) Certain Exceptions. Notwithstanding the foregoing provisions of
this Section 9.05,
(i) any of PGI's Restricted Subsidiaries may merge into PGI or
any of its Restricted Subsidiaries, so long as in any such merger to which
a Borrower is a party, such Borrower shall be the continuing or surviving
entity and in any such
Credit Agreement
----------------
<PAGE>
-95-
merger to which a Wholly Owned Subsidiary of PGI is a party, a Wholly Owned
Subsidiary of PGI shall be the continuing or surviving entity, provided
that in no event shall more than one Borrower be a party to any such
merger;
(ii) any of PGI's Restricted Subsidiaries may transfer any of
its Property to any other Restricted Subsidiary of PGI, so long as any such
transfer by a Wholly Owned Subsidiary of PGI shall be to a Wholly Owned
Subsidiary of PGI;
(iii) PGI or any of its Restricted Subsidiaries may make the
Investments permitted under Section 9.08(k) hereof; and
(iv) PGI or any of its Restricted Subsidiaries may make any
Acquisition, so long as
(s) at the time of such Acquisition and after giving effect
thereto, no Default shall have occurred and be continuing,
(t) the entity to be acquired will be either (A) a Wholly Owned
Restricted Subsidiary of PGI, or the assets to be acquired will be
acquired through a Wholly Owned Restricted Subsidiary of PGI, and the
provisions of Section 9.16 will have been (or concurrently with any
such Acquisition will be) complied with or (B) a Subsidiary as to
which PGI and its other Subsidiaries own a sufficient percentage of
each class of outstanding capital stock to enable PGI and its
Subsidiaries to effect, without the approval of any other holders of
capital stock, a merger or consolidation of such Subsidiary with a
Wholly Owned Restricted Subsidiary of PGI within nine months of the
date of such Acquisition (and such merger is in fact effected, and the
provisions of Section 9.16 hereof complied with, within nine months of
the date of such Acquisition),
(u) after giving effect to such Acquisition (A) the Leverage
Ratio shall not exceed the then-applicable requirement under Section
9.10(a) hereof, (B) the Fixed Charges Ratio shall not be less than the
then-applicable requirement under Section 9.10(c) hereof and (C) Net
Worth shall not be less than the then-applicable requirement under
Section 9.10(d), the determination of such compliance (in the case of
each of the foregoing clauses (A), (B) and (C)) to be calculated on a
pro forma basis, as at the end of and for the period of four fiscal
quarters most recently ended prior to the date of such Acquisition for
which financial statements of PGI are available, under the assumption
that such Acquisition and the incurrence of any Indebtedness in
connection with such Acquisition, shall have occurred at the beginning
of the applicable period,
Credit Agreement
----------------
<PAGE>
-96-
(v) after giving effect to any such Acquisition the Senior
Leverage Ratio shall not exceed the then-applicable requirement under
Section 9.10(b) hereof, calculated on a pro forma basis, as at the end
of and for the period of four fiscal quarters most recently ended
prior to the date of such Acquisition for which financial statements
of PGI are available, under the assumption that such Acquisition and
the incurrence of any Indebtedness in connection with such
Acquisition, shall have occurred at the beginning of the applicable
period,
(w) after giving effect to any such Acquisition there shall be
unutilized Commitments aggregating at least U.S. $25,000,000,
(x) the entity or assets acquired in such Acquisition is in a
similar or related line of business as the Obligors,
(y) in the event that such Acquisition consists in whole or in
part of a tender for shares of stock in a transaction that does not
constitute an Agreed Takeover, and any portion of the financing for
such Acquisition will be provided by Loans to be made under this
Agreement, each of the Facility A Revolving Credit Lenders (if such
Acquisition is to be financed in whole or in part by Loans made
hereunder in U.S. Dollars or Dutch Guilders), or Facility B Revolving
Credit Lenders (if such Acquisition is to be financed in whole or in
party by Loans made hereunder in Canadian Dollars), shall have
consented thereto prior to the date upon which any such Loans are to
be made; provided, that PGI shall, pursuant to Section 12.17 hereof,
have the right to replace any Lender that does not so consent, and
(z) at least three Business Days (but not more than ten Business
Days) prior to the date of any such Acquisition, PGI shall have
delivered to the Lenders a certificate of a senior financial officer
of PGI setting forth calculations in form and detail satisfactory to
the Administrative Agent demonstrating compliance with the
requirements of the foregoing clauses (u), (v) and (w) after giving
effect to such Acquisition, and setting forth a calculation on a pro
forma basis of the Leverage Ratio in accordance with the requirements
of the definition of "Applicable Margin" in Section 1.01 hereof (i.e.,
under the assumption that such Acquisition and the incurrence of any
Indebtedness in connection with such Acquisition, shall have occurred
at the beginning of the period of four fiscal quarters most recently
ended prior to the date of such Acquisition for which financial
statements of PGI are available).
9.06 Limitation on Liens. No Obligor will, nor will it permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:
Credit Agreement
----------------
<PAGE>
-97-
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B of
Schedule II hereto;
(c) Liens on Non-Mexican accounts receivable sold by Bonlam directly
(or indirectly through other institutions) to Banco de National de Comercio
Exterior, S.N.C. pursuant to its export sales program as described in
Section 9.07(j) hereof;
(d) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of such Obligor or the affected
Restricted Subsidiary, as the case may be, in accordance with GAAP;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of such Obligor or the affected
Restricted Subsidiary, as the case may be, in accordance with GAAP, and
Liens securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section 10(h) hereof;
(f) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(g) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Obligors or any
of their Restricted Subsidiaries;
(i) Liens upon real and/or tangible personal Property acquired after
the date hereof (by purchase, construction or otherwise) by any Obligor or
any of its
Credit Agreement
----------------
<PAGE>
-98-
Subsidiaries, each of which Liens either (A) existed on such Property
before the time of its acquisition and was not created in anticipation
thereof, or (B) was created within 90 days of such acquisition solely for
the purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of such
Property; provided that no such Lien shall extend to or cover any Property
of any Obligor or any such Subsidiary other than the Property so acquired
and improvements thereon;
(j) additional Liens (including, without limitation, any extensions,
renewals or replacements thereof permitted under the following clause (k)),
so long as the aggregate principal amount of Indebtedness secured thereby
shall not exceed U.S. $10,000,000 at any one time outstanding; and
(k) any extension, renewal or replacement of the foregoing, provided
(A) that the Liens permitted hereunder shall not be spread to cover any
additional Indebtedness or Property (other than a substitution of like
Property) and (B) the aggregate amount of the obligations secured by such
extension, renewal or replacement does not exceed the amount then being
secured by the Lien being extended, renewed or replaced.
9.07 Indebtedness. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the date hereof and listed in Part A
of Schedule II hereto, excluding, however, any Indebtedness in respect of
the Intercompany Notes (which shall be governed by clause (d) below) and
any Indebtedness in respect of the Existing Senior Notes (which shall be
governed by clause (g) below);
(c) Indebtedness of any Restricted Subsidiary to PGI or any other
Restricted Subsidiary, except for any such Indebtedness of Bonlam or
Fabrene as to which clause (d) and (e) below shall apply;
(d) Indebtedness (x) of Bonlam and its Subsidiaries under the Bonlam
Intercompany Notes Agreement in an aggregate amount of up to U.S.
$10,000,000 and (y) of Fabrene and its Subsidiaries under the Fabrene
Intercompany Notes Agreement in an aggregate amount of up to the Foreign
Currency Equivalent in Canadian Dollars of U.S. $19,001,367 (in respect of
the Fabrene Acquisition Intercompany Note) and U.S. $10,000,000 (in respect
of the Fabrene Operations Intercompany Note), as the case may be;
Credit Agreement
----------------
<PAGE>
-99-
(e) Indebtedness of Bonlam to the Mexican Finco;
(f) Indebtedness of PGI in respect of the Senior Subordinated Notes
(and of any other Group Member, other than a Group Member that does not
Guarantee the obligations of PGI hereunder, in respect of a Guarantee of
the Senior Subordinated Notes, so long as any such Guarantee is
subordinated to the Guarantee hereunder), either (i) issued on or before
the Effective Date in an aggregate principal amount up to but not exceeding
U.S. $400,000,000 or (ii) issued after the Effective Date so long as, in
the case of any additional Senior Subordinated Notes issued after the
Effective Date:
(w) the respective indenture pursuant to which such additional
Senior Subordinated Notes are to be issued does not (except in respect
of rate of interest) materially vary from the Senior Subordinated
Notes Indenture as in effect on the Effective Date (or as most
recently modified pursuant to a supplement consented to by the
Majority Lenders pursuant to Section 9.14 hereof), whether in respect
of prepayments, covenants, events of default or otherwise, provided
that in any event the terms of subordination set forth in such
indenture shall not vary in any respect from the terms of
subordination set forth in the Senior Subordinated Notes Indenture as
in effect on the Effective Date (or as most recently modified pursuant
to a supplement consented to by the Majority Lenders pursuant to
Section 9.14 hereof),
(x) after giving effect to such issuance, no Default or Event of
Default shall have occurred and be continuing, and PGI shall be in
compliance with the provisions of Section 9.10(a) and 9.10(b) hereof
(determined on a pro forma basis as if such additional Senior
Subordinated Notes had been issued on the first day of the period of
four fiscal quarters most recently ended prior to the date of such
issuance for which financial statements of PGI are available),
(y) the maturity of such additional Senior Subordinated Notes
shall not be earlier than the maturity date of the Senior Subordinated
Notes issued on or before the Effective Date (and such additional
Senior Subordinated Notes shall not be subject to amortization or
sinking fund requirements) and
(z) the rate of interest on such additional Senior Subordinated
Notes shall not exceed 18% per annum;
(g) Indebtedness of PGI in respect of the Existing Senior Notes and
of any other Group Member (other than a Group Member that does not
Guarantee the obligations of PGI hereunder) in respect of a Guarantee of
the Existing Senior Notes;
Credit Agreement
----------------
<PAGE>
-100-
(h) unsecured subordinated Indebtedness incurred by PGI (and by any
other Group Member (other than a Group Member that does not Guarantee the
obligations of PGI hereunder) in respect of a Guarantee in respect of such
unsecured subordinated Indebtedness), so long as (i) the proceeds of such
Indebtedness are either applied to the prepayment of the principal of (and
accrued interest and redemption premium, if any, on) the Senior
Subordinated Notes, or the prepayment of Indebtedness hereunder pursuant to
Section 2.10(b) hereof, (ii) such Indebtedness is incurred pursuant to
instruments and agreements which contain terms (including, without
limitation, interest, amortization, covenants and events of default and
terms of subordination) which are in each case in form and substance
reasonably satisfactory to the Majority Lenders and (iii) after giving
effect to such incurrence, no Default or Event of Default shall have
occurred and be continuing, and PGI shall be in compliance with the
provisions of Section 9.10(a) and 9.10(b) hereof (determined on a pro forma
basis as if such additional Indebtedness had been incurred on the first day
of the period of four fiscal quarters most recently ended prior to the date
of such incurrence for which financial statements of PGI are available);
(i) unsecured subordinated Indebtedness incurred by PGI in connection
with an Acquisition permitted under Section 9.05(d)(iv) hereof (and in
respect of which no other Group Member is directly or indirectly
obligated), so long as (i) such Indebtedness is payable to the respective
seller (or an affiliate thereof) from whom the respective Property is being
acquired in such Acquisition, (ii) such Indebtedness is incurred pursuant
to instruments and agreements which contain terms (including, without
limitation, interest, amortization, covenants and events of default and
terms of subordination) which are in each case in form and substance
reasonably satisfactory to the Majority Lenders and (iii) after giving
effect to such incurrence, no Default or Event of Default shall have
occurred and be continuing, and PGI shall be in compliance with the
provisions of Section 9.10(a) and 9.10(b) hereof (determined on a pro forma
basis as if such additional Indebtedness had been incurred on the first day
of the period of four fiscal quarters most recently ended prior to the date
of such incurrence for which financial statements of PGI are available);
(j) Indebtedness of Bonlam arising in respect of the sale of non-
Mexican accounts receivable by Bonlam directly (or indirectly through other
institutions) to Banco de National de Comercio Exterior, S.N.C. pursuant to
its export sales program, so long as the aggregate outstanding principal
amount thereof shall not exceed U.S. $2,000,000 at any one time; and
(k) additional Indebtedness of the Borrowers (including Indebtedness
secured by Liens permitted under Section 9.06(i) hereof and, to the extent
relating to Liens described in Section 9.06(i), under 9.06(j) hereof) so
long as the aggregate principal amount thereof does not exceed U.S.
$25,000,000 at any one time outstanding.
Credit Agreement
----------------
<PAGE>
-101-
9.08 Investments. No Obligor will, nor will it permit any of its
Restricted Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) Investments outstanding on the date hereof and identified in
Schedule VI hereto;
(b) operating deposit accounts with banks located in any country
where operations are conducted by the Borrowers and their Subsidiaries;
(c) Permitted Investments;
(d) Investments by any Group Member in any Wholly Owned Restricted
Subsidiary (other than in Bonlam, Fabrene or their respective Subsidiaries,
as to which clauses (e), (f), (g) and (h) below shall apply);
(e) Investments (x) in the case of Fabrene Holdings and PGI Polymer,
evidenced by the Fabrene Intercompany Notes and constituting Indebtedness
of Fabrene to Fabrene Holdings and PGI Polymer permitted under Section
9.07(d) hereof and (y) in the case of PGI Polymer, evidenced by the Bonlam
Intercompany Notes and constituting Indebtedness of Bonlam to PGI Polymer
permitted under Section 9.07(d) hereof, so long as in the case of both of
the foregoing clauses (x) and (y) such Intercompany Notes shall have been
delivered in pledge to the Administrative Agent pursuant to the Security
Agreement on the Effective Date (or, in the case of any such Intercompany
Notes executed and delivered after the Effective Date, promptly following
such execution and delivery);
(f) Investments (in each case as additional equity capital) by PGI in
PGI Polymer and by PGI Polymer in Fabrene, from the proceeds of a Debt
Issuance permitted to be applied to the prepayment of the Fabrene
Acquisition Intercompany Note pursuant to Section 2.10(b) hereof, so long
as each such Investment occurs immediately following receipt by PGI of the
proceeds of such Debt Issuance and such proceeds are in fact applied to the
prepayment of the Fabrene Acquisition Intercompany Note (and to the
prepayment of Loans hereunder) as contemplated by Section 2.10(d) hereof;
(g) Investments by Bonlam in one or more Restricted Subsidiaries of
Bonlam;
(h) Investments by the Mexican Finco in Bonlam consisting of an
unsecured receivable, so long as the Mexican Finco shall be a Restricted
Subsidiary;
(i) Investments permitted under Section 9.05(d)(iv) hereof;
Credit Agreement
----------------
<PAGE>
-102-
(j) Hedging Transactions entered into in the ordinary course of
business and not for speculative purposes;
(k) Investments by PGI (which may include transfers of cash or other
Property, determined in each case at the fair market value thereof), either
directly or through one or more Restricted Subsidiaries, in one or more
non-Wholly Owned Subsidiaries of PGI, so long as the aggregate amount of
such Investments made after the date hereof (i.e. excluding those permitted
under clause (a) above) outstanding at any one time shall not exceed U.S.
$50,000,000; and
(l) additional Investments (which may include transfers of cash or
other Property, determined in each case at the fair market value thereof)
by PGI or any Restricted Subsidiary in any other Person (including any such
Investment in any Affiliate) constituting a Restricted Payment permitted
under Section 9.09 hereof.
The aggregate amount of an Investment at any one time outstanding for purposes
of clause (k) above, shall be deemed to be equal to (A) the aggregate amount of
cash, together with the aggregate fair market value of Property, loaned,
advanced, contributed, transferred or otherwise invested that gives rise to such
Investment minus (B) the aggregate amount of dividends, distributions or other
payments received in cash in respect of such Investment; the amount of an
Investment shall not in any event be reduced by reason of any write-off of such
Investment.
9.09 Restricted Payments. No Obligor will, nor will it permit any of
its Restricted Subsidiaries to, make any Restricted Payments at any time during
any fiscal year, provided that PGI may make Restricted Payments in cash so long
as:
(i) no Default shall have occurred and be continuing, and after
giving effect to such Restricted Payment no Default shall have occurred and
be continuing; and
(ii) the aggregate amount of such Restricted Payments made by PGI
during the period (the "Determination Period") from and including December
31, 1996 to and including the date of such Restricted Payment shall not
exceed an amount equal to the sum of (x) U.S. $25,000,000 plus 50% of
Consolidated Net Income (to the extent positive) for each full fiscal year
included in the Determination Period minus (y) 100% of Consolidated Net
Income (to the extent negative) for each full fiscal year included in the
Determination Period.
Notwithstanding the foregoing, (x) PGI may make cash payments to officers and
employees in respect of shares of stock (or options therefor) granted to such
officers and employees upon the termination of employment of such officer or
employee (so long as the aggregate amount
Credit Agreement
----------------
<PAGE>
-103-
thereof paid in any single fiscal year shall not exceed U.S. $750,000) (and such
cash payments shall not be included in determining the amount of Restricted
Payments permitted above) and (y) so long as at the time thereof and after
giving effect thereto no Event of Default shall have occurred or be continuing,
Restricted Subsidiaries of the Obligors may make Dividend Payments in respect of
their shares of stock to the Obligors and other Restricted Subsidiaries of the
Obligors (and such payments shall not be included in determining the amount of
Restricted Payments permitted above).
9.10 Certain Financial Covenants.
(a) Leverage Ratio. PGI will not permit the Leverage Ratio to exceed
the following respective ratios at any time during the following respective
periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Effective
Date through but excluding the
last day of fiscal year 1998 5.50 to 1
From the last day of fiscal year
1998 through but excluding the
last day of fiscal year 1999 5.25 to 1
From the last day of fiscal year
1999 through but excluding the
last day of fiscal year 2000 5.00 to 1
From the last day of fiscal year
2000 through but excluding the
last day of fiscal year 2001 4.75 to 1
From the last day of fiscal year
2001 through but excluding the
last day of fiscal year 2002 4.50 to 1
From the last day of fiscal year
2002 and at all times thereafter 4.25 to 1
</TABLE>
(b) Senior Leverage Ratio. PGI will not, immediately after giving
effect to any Acquisition permitted under Section 9.05(d)(iv) hereof, permit the
Senior Leverage Ratio to exceed the respective ratio set forth below opposite
the period in which such Acquisition shall occur:
Credit Agreement
----------------
<PAGE>
-104-
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C> <C>
From the Effective
Date through but excluding the
last day of fiscal year 1998 3.50 to 1
From the last day of fiscal year
1998 through but excluding the
last day of fiscal year 2000 3.25 to 1
From the last day of fiscal year
2000 and at all times thereafter 3.00 to 1
</TABLE>
(c) Fixed Charges Ratio. PGI will not permit the Fixed Charges Ratio
to be less than the following respective ratios at the end of any fiscal quarter
which falls within the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Effective
Date through but excluding the
last day of fiscal year 1998 1.15 to 1
From the last day of fiscal year
1998 through but excluding the
last day of fiscal year 1999 1.30 to 1
From the last day of fiscal year
1999 and at all times thereafter 1.40 to 1
</TABLE>
(d) Net Worth. PGI will not permit Net Worth to be less than the
following respective amounts at any time during the following respective
periods:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From the Effective Date
through but excluding the
last day of fiscal year 1997 U.S. $156,000,000
</TABLE>
Credit Agreement
----------------
<PAGE>
-105-
<TABLE>
<CAPTION>
<S> <C>
From the last day of fiscal year
1997 through but excluding the
last day of fiscal year 1998 U.S. $170,500,000
From the last day of fiscal year
1998 through but excluding the
last day of fiscal year 1999 U.S. $186,500,000
From the last day of fiscal year
1999 through but excluding the
last day of fiscal year 2000 U.S. $203,500,000
From the last day of fiscal year
2000 through but excluding the
last day of fiscal year 2001 U.S. $222,500,000
From the last day of fiscal year
2001 through but excluding the
last day of the first fiscal
quarter in 2002 U.S. $243,000,000
From the last day of the first
fiscal quarter in 2002 and at all
times thereafter U.S. $251,000,000
</TABLE>
Notwithstanding the foregoing, in the event that PGI shall take any write-off in
connection with any one or more Acquisitions, the amounts set forth above shall
be adjusted downward by the cumulative amount of such charge-offs, provided,
that in no event shall the aggregate amount of such downward adjustments after
the Effective Date exceed U.S. $50,000,000.
9.11 Lines of Business. No Obligor will, nor will it permit any of
its Subsidiaries to, engage to any substantial extent in any line or lines of
business activity other than the business of manufacturing and marketing of
woven and nonwoven materials, polymers and polyolefins, and related businesses
and activities.
9.12 Transactions with Affiliates. Except as expressly permitted by
this Agreement, no Obligor will, nor will it permit any of its Restricted
Subsidiaries to, directly or indirectly: (a) transfer, sell, lease, assign or
otherwise dispose of any Property to an Affiliate; (b) merge into or consolidate
with or purchase or acquire Property from an Affiliate; or (c) enter into any
other transaction directly or indirectly with or for the benefit of an Affiliate
(including, without limitation, guarantees and assumptions of obligations of an
Affiliate); provided that
Credit Agreement
----------------
<PAGE>
-106-
(x) any Affiliate who is an individual may serve as a director,
officer or employee of any Obligor or any of its Restricted Subsidiaries
and receive reasonable compensation for his or her services in such
capacity,
(y) an Obligor and its Restricted Subsidiaries may enter into
transactions (other than extensions of credit by such Obligor or any of its
Restricted Subsidiaries to an Affiliate) providing for the leasing of
Property, the rendering or receipt of services or the purchase or sale of
inventory and other Property in the ordinary course of business if the
monetary or business consideration arising therefrom would be substantially
as advantageous to such Obligor or its Restricted Subsidiaries as the
monetary or business consideration which it would obtain in a comparable
transaction with a Person not an Affiliate and
(z) nothing herein shall be deemed to prohibit an Investment by PGI
or any of its Restricted Subsidiaries in any entity pursuant to a
transaction permitted under Section 9.05(d)(iv) hereof, or Section 9.08(k)
or 9.08(l) hereof, even though an Affiliate may hold, or concurrently be
making, an Investment in such entity.
9.13 Use of Proceeds. The Borrowers will use the proceeds of the
Loans hereunder: (i) to provide financing for permitted acquisitions, (ii) to
finance ongoing working capital requirements (including loans and letters of
credit of PGI and its Subsidiaries), (iii) to pay fees and expenses in
connection with the Refinancing and (iv) to provide funds for general corporate
purposes; provided that (x) any borrowing of Facility A Revolving Credit Loans
hereunder that would constitute a utilization of any Facility A Reserved
Commitment Amount shall be applied solely to investments in replacement assets,
or to redemptions or repurchases of Existing Senior Notes, in accordance with
the provisions of the second paragraph of Section 2.01(a) hereof, (y) any
borrowing of Facility B Revolving Credit Loans hereunder that would constitute a
utilization of any Facility B Reserved Commitment Amount shall be applied solely
to investments in replacement assets in accordance with the provisions of the
second paragraph of Section 2.01(b) hereof and (z) neither the Administrative
Agent nor any Lender shall have any responsibility as to the use of any of the
proceeds of any Loans hereunder.
9.14 Modifications of Certain Documents. The Obligors will not, and
will not permit their Subsidiaries to, consent to any modification, supplement
or waiver of any of the provisions of any of the Basic Documents (excluding the
License Agreement and the Technology Agreement), the charter documents of any of
the Obligors or their Restricted Subsidiaries, the Future Refinancing Debt
Documents or the Subordinated Acquisition Debt Documents, without in each case
the prior consent of the Administrative Agent (with the approval of the Majority
Lenders), provided that no such consent shall be necessary
Credit Agreement
----------------
<PAGE>
-107-
(i) to modify the charter of Dutch Operating, in the manner
contemplated by the penultimate paragraph of Section 3 of the Security
Agreement, to provide for it to have two classes of common stock in a
manner similar to the capital structure of Dutch Holding,
(ii) to modify the charter documents of any Obligor (other than
Dutch Operating, Bonlam or Fabrene) in a manner that, in the judgment of
the Administrative Agent, shall not be materially adverse to the interests
of the Lenders hereunder, or
(iii) for any modification, supplement or waiver under the Supply
Agreement unless the same would either (x) affect adversely the
"Contribution Margin" (as defined therein) or otherwise materially
adversely affect the economic value of the Supply Agreement to the
Borrowers or (y) alter Section 26 thereof (or otherwise modify the Supply
Agreement so as to adversely affect the ability of the Administrative Agent
or the Lenders to exercise, or result in a breach of the Supply Agreement
if the Administrative Agent or the Lenders were to exercise, any of their
rights or remedies under any of the Security Documents).
9.15 Governmental Approvals. Each Foreign Borrower agrees that it
will promptly obtain from time to time at its own expense all such governmental
licenses, authorizations, consents, permits and approvals as may be required for
such Borrower to comply with its obligations under this Agreement, the Notes,
the Security Documents and each other instrument or agreement referred to herein
or therein.
9.16 Certain Obligations Respecting Subsidiaries.
(a) Ownership of Subsidiaries. PGI will take such action from time
to time as shall be necessary to ensure that, except as otherwise contemplated
by Section 9.08(k) hereof, each Restricted Subsidiary of PGI is a Wholly Owned
Subsidiary. In the event that, as contemplated by Section 9.05(d)(iv)(t)
hereof, PGI or any of its Restricted Subsidiaries shall acquire a Subsidiary
that is not a Wholly Owned Subsidiary of PGI, then (as provided in said Section
9.05(d)(iv)(t)) PGI shall cause such Subsidiary to become a Wholly Owned
Subsidiary of PGI and to become a Guarantor hereunder within nine months
following the date upon which the respective Acquisition of such Subsidiary
shall have occurred.
(b) Domestic Non-Borrower Guarantors. In the event that PGI or any
of its Restricted Subsidiaries shall form or acquire after the Effective Date
any new Restricted Subsidiary that is (x) the Mexican Finco, (y) organized under
the laws of a State of the United States of America or (z) that the Majority
Lenders reasonably determine (in consultation with PGI) may Guarantee the
obligations hereunder without adverse tax consequences under Section 956 of the
Code (any such Restricted Subsidiary described in the foregoing clauses (x)
through (z) being herein called a "Domestic Subsidiary"), PGI shall
Credit Agreement
----------------
<PAGE>
-108-
cause such new Restricted Subsidiary to execute and deliver to the
Administrative Agent a Domestic Non-Borrower Guaranty Agreement, substantially
in the form attached as Exhibit E hereto, and to thereby become a "Domestic Non-
Borrower Guarantor" hereunder and a "Securing Party" under the Security
Agreement and to deliver such proof of corporate action, incumbency of officers,
opinions of counsel and other documents as is consistent with those delivered by
each Obligor pursuant to Section 7.01 hereof upon the Effective Date or as the
Administrative Agent shall have reasonably requested, provided that, if such
Domestic Subsidiary is the Mexican Finco, PGI shall cause the Mexican Finco to
execute and deliver such other documents as the Administrative Agent shall deem
appropriate in order to create and perfect a Lien on all of the Property of the
Mexican Finco under the laws of the Republic of Mexico.
(c) Foreign Non-Borrower Guarantors. In the event that PGI or any of
its Restricted Subsidiaries shall form or acquire after the Effective Date any
new Restricted Subsidiary (other than a Domestic Subsidiary as defined in
paragraph (b) above), PGI shall cause such new Restricted Subsidiary to execute
and deliver to the Administrative Agent on the Effective Date a Foreign Non-
Borrower Guaranty Agreement, either (x) if such new Restricted Subsidiary is a
Subsidiary of Fabrene or Dutch Operating, substantially in the form of Exhibit F
hereto or (y) if such new Restricted Subsidiary is not a Subsidiary of Fabrene
or Dutch Operating, in such other form (and Guaranteeing such other Obligations)
as the Majority Lenders reasonably determine (in consultation with PGI) will not
result in adverse tax consequences under Section 956 of the Code or any
violation of law, and any such Subsidiary shall deliver such proof of corporate
action, incumbency of officers, opinions of counsel and other documents as is
consistent with those delivered by each Obligor pursuant to Section 7.01 hereof
upon the Effective Date or as the Administrative Agent shall have reasonably
requested.
(d) Bonlam Subsidiaries. PGI will take such action from time to time
as shall be necessary to ensure that all Subsidiaries of Bonlam Guarantee the
obligations of Bonlam under the Bonlam Intercompany Notes Agreement and Bonlam
Intercompany Notes. In that connection, in the event that Bonlam shall form or
acquire any such new Subsidiary, PGI will cause such new Subsidiary to Guarantee
the obligations of Bonlam under the Bonlam Intercompany Notes Agreement pursuant
to a written instrument in form and substance satisfactory to the Administrative
Agent and to deliver such proof of corporate action, incumbency of officers,
opinions of counsel and other documents as is consistent with those delivered by
Bonlam pursuant to Section 7.01 hereof upon the Effective Date or as the
Administrative Agent shall have reasonably requested.
(e) Certain Restrictions. PGI will not permit any of its Restricted
Subsidiaries to enter into, after the date of this Agreement, any indenture,
agreement, instrument or other arrangement that, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes materially adverse conditions upon, the incurrence or payment of
Credit Agreement
----------------
<PAGE>
-109-
Indebtedness, the granting of Liens, the declaration or payment of dividends,
the making of loans, advances or Investments or the sale, assignment, transfer
or other disposition of Property, other than any such prohibition or restraint
arising pursuant to an indenture, agreement, instrument or other arrangement
providing for Liens permitted by Section 9.06(i) hereof, so long as such
prohibition or restraint shall only cover the Property that is subject to such
Lien and no other Property.
9.17 Gainesville Georgia Property. Although it is contemplated that
the leasehold interest of Chicopee in Gainesville, Georgia will not be subjected
to the Lien of a Mortgage on the Effective Date, in the event that the Majority
Lenders shall at any time so request, Chicopee agrees to enter into an
arrangement whereby such leasehold interest is assigned to the Administrative
Agent and then subleased by the Administrative Agent to Chicopee, with such
sublease being terminable upon the occurrence of an Event of Default. Any such
assignment and sublease shall be effected pursuant to documentation in form and
substance satisfactory to the Majority Lenders and the Administrative Agent.
9.18 Subordinated Indebtedness. PGI will not, nor will it permit any
of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value,
or set apart any money for a sinking, defeasance or other analogous fund for the
purchase, redemption, retirement or other acquisition of, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any of the Subordinated Indebtedness, except (i) for
regularly scheduled payments or prepayments of principal and interest in respect
thereof required pursuant to the Senior Subordinated Debt Documents, Future
Refinancing Debt Documents or the Subordinated Acquisition Debt Documents, (ii)
to the extent permitted by Section 9.09 hereof and (iii) from the proceeds of a
"Public Equity Offering" under and as defined in the Senior Subordinated Notes
Indenture to the extent permitted by Paragraph 6 of the form of the Senior
Subordinated Notes attached to the Senior Subordinated Notes Indenture.
Section 10. Events of Default. If one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) Any Borrower shall default in the payment when due (whether at
stated maturity or upon mandatory or optional prepayment) of any principal
of or interest on any Loan or any Reimbursement Obligation, any fee or any
other amount payable by it hereunder or under any other Basic Document; or
(b) The Obligors or any of their Restricted Subsidiaries shall
default in the payment when due of any principal of or interest on any of
its other Indebtedness aggregating U.S. $5,000,000 (or its equivalent in
any other currency) or more (excluding, however, Indebtedness under the
Intercompany Notes), or in the payment
Credit Agreement
----------------
<PAGE>
-110-
when due of any amount under any Hedging Transaction; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness or any event specified in any Hedging
Transaction shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the holder
or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause, such Indebtedness to become due, or to be
prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity or, in the case of any Hedging
Transaction, to permit the payments owing under such Hedging Transaction to
be liquidated; or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Basic Document (or in any modification or supplement
hereto or thereto) by any Group Member, or any certificate furnished to any
Lender or either Agent pursuant to the provisions hereof or thereof, shall
prove to have been false or misleading as of the time made, deemed made or
furnished in any material respect; or
(d) Any Obligor shall default in the performance of any of its
obligations under any of Sections 9.01(g), 9.05, 9.06, 9.07, 9.08, 9.09,
9.10, 9.14, 9.16 or 9.18 hereof; any Obligor which is a Securing Party
under the Security Agreement shall default in the performance of any of its
obligations under Sections 4.02, 5.02 or 5.04(d) of the Security Agreement;
or any Obligor shall default in the performance of any of its other
obligations in this Agreement or any other Basic Document and such default
shall continue unremedied for a period of thirty days after the earlier of
(x) the date notice thereof shall be given to such Obligor by the
Administrative Agent or any Lender (through the Administrative Agent) or
(y) such default shall first become known to any officer of PGI; or
(e) Any Group Member shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) Any Group Member shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial part
of its Property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code, (vi) take any corporate action for the purpose of
effecting any of the foregoing or (vii) do the equivalent of any of the
foregoing under the laws of the Netherlands or any other non-U.S.
jurisdiction
Credit Agreement
----------------
<PAGE>
-111-
(including, in the case of Canada, the Bankruptcy and Insolvency Act
(Canada), the Companies Creditors Arrangement Act (Canada) or the Winding
Up Act (Canada)); or
(g) A proceeding or case shall be commenced, without the application
or consent of the affected Group Member, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of such Group Member or of all or any substantial
part of its Property, (iii) similar relief in respect of such Group Member
under any law relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against any
Group Member shall be entered in an involuntary case under the Bankruptcy
Code or (iv) the equivalent of any of the foregoing under the laws of the
Netherlands or any other non-U.S. jurisdiction (including, in the case of
Canada, the Bankruptcy and Insolvency Act (Canada), the Companies Creditors
Arrangement Act (Canada) or the Winding Up Act (Canada)); or
(h) A final judgment or judgments for the payment of money in excess
of U.S. $2,000,000 in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in respect of
such judgment) or in excess of U.S. $10,000,000 in the aggregate
(regardless of insurance coverage) shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction against any
Group Member and the same shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and such Group
Member shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 9.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, PGI or any ERISA Affiliate shall incur or in the opinion of the
Majority Lenders shall be reasonably likely to incur a liability to a Plan,
a Multiemployer Plan or the PBGC (or any combination of the foregoing)
which would constitute, in the determination of the Majority Lenders, a
Material Adverse Effect; or
(j) A reasonable basis shall exist for the assertion against any
Group Member (or there shall have been asserted against any Group Member)
claims or liabilities, whether accrued, absolute or contingent, based on or
arising from the generation,
Credit Agreement
----------------
<PAGE>
-112-
storage, transport, handling or disposal of Hazardous Materials by any
Group Member or any of their Affiliates, or any predecessor in interest of
any Group Member or any of their Affiliates, or relating to any site or
facility owned, operated or leased by any Group Member or any of its
Affiliates, which claims or liabilities (insofar as they are payable by the
Group Member but after deducting any portion thereof which is reasonably
expected to be paid by other creditworthy Persons jointly and severally
liable therefor), in the judgment of the Majority Lenders are reasonably
likely to be determined adversely to the affected Group Members, and the
amount thereof is, singly or in the aggregate, reasonably likely to have a
Material Adverse Effect; or
(k) Any license, consent, authorization, registration or approval at
any time necessary to enable the Foreign Borrowers to comply with any of
their obligations under this Agreement shall be revoked, withdrawn or
withheld or shall be modified or amended in a manner that, in the opinion
of the Majority Lenders, is reasonably likely to result in a Material
Adverse Effect; or the Government of the Netherlands or Canada, or any
agency or political subdivision thereof, shall promulgate or declare
effective any law, rule or regulation that, in the opinion of the Majority
Lenders, could have a Material Adverse Effect; or
(l) Any governmental authority shall take any action to condemn,
seize, nationalize or appropriate any substantial portion of the Property
of any Group Member (either with or without payment of compensation) or
shall take any action that, in the opinion of the Majority Lenders, is
reasonably likely to result in a Material Adverse Effect; or the Group
Members shall be prevented from exercising normal control over all or a
substantial part of their Property (and the same shall continue for 30 or
more days); or
(m) Any one or more of the following events shall occur and be
continuing:
(i) Any Person (other than the Initial Stockholders) shall
own, collectively, on a fully-diluted basis (in other words, giving
effect to the exercise of any warrants, options and conversion and
other rights), capital stock representing more than 25% of the
aggregate fair market value (or, if greater, the aggregate liquidation
value) of the capital stock of all classes of PGI, or more than 25% of
the aggregate shares of voting capital stock of PGI (representing at
least 25% of the votes that may be cast in an election of directors of
PGI); and
(ii) during any period of 12 consecutive calendar months, a
majority of the Board of Directors of PGI shall no longer be composed
of individuals (x) who were members of said Board on the first day of
such period, (y) whose election or nomination to said Board was
approved by
Credit Agreement
----------------
<PAGE>
-113-
individuals referred to in clause (x) above constituting at the time
of such election or nomination at least a majority of said Board or
(z) whose election or nomination to said Board was approved by
individuals referred to in clauses (x) and (y) above constituting at
the time of such election or nomination at least a majority of said
Board; or
(n) Except for expiration pursuant to its terms, any of the Security
Documents shall be terminated or shall cease to be in full force and
effect, for whatever reason; or
(o) Any of the Ancillary Agreements (except for the Shared Facilities
Agreement) shall for any reason be terminated or cease to be in full force
and effect; or J&J or any of its Subsidiaries shall send a notice to
Chicopee pursuant to Section 13(d) of the Supply Agreement and the breach
or other default described in such notice shall not have been cured within
30 days thereof,
THEREUPON:
(1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10 with respect to any Obligor, the
Administrative Agent shall upon request of the Majority Lenders, by notice
to the Borrowers, terminate the Commitments and/or declare the principal
amount then outstanding of, and the accrued interest on, the Loans, the
Reimbursement Obligations and all other amounts payable by the Borrowers
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 or 5.06 hereof) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which
are hereby expressly waived by the Borrowers; and
(2) in the case of the occurrence of an Event of Default referred to
in clause (f) or (g) of this Section 10 with respect to any Obligor, the
Commitments shall automatically be terminated and the principal amount then
outstanding of, and the accrued interest on, the Loans, the Reimbursement
Obligations and all other amounts payable by the Borrowers hereunder and
under the Notes (including, without limitation, any amounts payable under
Section 5.05 or 5.06 hereof) shall automatically become immediately due and
payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrowers.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Administrative Agent has declared the principal amount
then outstanding of, and accrued interest on, the Loans and all other amounts
payable by the Borrowers hereunder and under the Notes to be due and payable),
PGI agrees that it shall, if requested by the Administrative Agent or the
Majority Facility A Revolving Credit Lenders through the Administrative Agent
(and, in the case of any Event of Default referred to in clause (f) or (g)
Credit Agreement
----------------
<PAGE>
-114-
of this Section 10 with respect to any Obligor, forthwith, without any demand or
the taking of any other action by the Administrative Agent or such Lenders)
provide cover for the Letter of Credit Liabilities by paying to the
Administrative Agent immediately available funds in an amount equal to the then
aggregate undrawn face amount of all Letters of Credit, which funds shall be
held by the Administrative Agent in the Collateral Account as collateral
security in the first instance for the Letter of Credit Liabilities, and be
subject to withdrawal only as therein provided.
Section 11. The Administrative Agent and the Co-Agents.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Security Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Basic Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 11.05 and the first sentence of Section 11.06 hereof
shall include references to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Basic Documents, and shall not
by reason of this Agreement or any other Basic Document be a trustee for
any Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in
any other Basic Document, or in any certificate or other document referred
to or provided for in, or received by any of them under, this Agreement or
any other Basic Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Note or
any other Basic Document or any other document referred to or provided for
herein or therein or for any failure by any Obligor or any other Person to
perform any of its obligations hereunder or thereunder;
(c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Basic Document (except
for the exercise of remedies under the Security Documents, as expressly
provided therein); and
(d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other Basic Document or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or
willful misconduct.
Credit Agreement
----------------
<PAGE>
-115-
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or attorneys-
in-fact selected by it in good faith. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until a notice of the assignment or transfer thereof shall have been filed
with the Administrative Agent, together with the consent of the Borrowers to
such assignment or transfer (to the extent provided in Section 12.06(b) hereof).
11.02 Reliance by the Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Basic Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders or, if provided herein, in accordance with the instructions given by the
Majority Facility A Revolving Credit Lenders or the Majority Facility B
Revolving Credit Lenders or all of the Lenders as is required in such
circumstance and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received notice from a Lender or the Borrowers specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders or, if
provided herein, the Majority Facility A Revolving Credit Lenders or the
Majority Facility B Revolving Credit Lenders, provided that, unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Lenders, the Majority Facility
A Revolving Credit Lenders or the Majority Facility B Revolving Credit Lenders
or all of the Lenders.
11.04 Rights as a Lender. With respect to its Commitments and the
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative
Credit Agreement
----------------
<PAGE>
-116-
Agent in its individual capacity. Chase (and any successor acting as
Administrative Agent) and its affiliates may (without having to account therefor
to any Lender) accept deposits from, lend money to, make investments in and
generally engage in any kind of banking, trust or other business with the Group
Members (and any of their Affiliates) as if it were not acting as the
Administrative Agent, and Chase (or any successor) and its affiliates may accept
fees and other consideration from the Obligors for services in connection with
this Agreement or otherwise without having to account for the same to the
Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Borrowers under said Section 12.03,
and including in any event any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in Section
4.02 of the Security Agreement to which remittances in respect of Accounts, as
defined therein, are to be made) ratably in accordance with the aggregate
principal amount of the Loans and Reimbursement Obligations held by the Lenders
(or, if no Loans or Reimbursement Obligations are at the time outstanding,
ratably in accordance with their respective Commitments), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Administrative Agent (including
by any Lender), arising out of or by reason of any investigation in or in any
way relating to or arising out of this Agreement or any other Basic Document or
any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses that the Borrowers are obligated to pay under Section 12.03
hereof, and including also any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in Section
4.02 of the Security Agreement to which remittances in respect of Accounts, as
defined therein, are to be made, but excluding, unless a Default has occurred
and is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
11.06 Non-Reliance by Lenders. Each Lender agrees that it has,
independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Group Members and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Administrative Agent shall not be required to keep itself informed as to the
performance or observance by any Group Member of this Agreement or any of the
other Basic Documents or any other document referred to or provided for herein
or therein or to inspect the Properties or books of the Group Members. Except
for notices, reports and other documents and
Credit Agreement
----------------
<PAGE>
-117-
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or under any of the Basic Documents, the
Administrative Agent shall have no duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of the Group Members (or any of their Affiliates) that may come into
the possession of the Administrative Agent or any of its affiliates.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Borrowers, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall, after consultation with the
Borrowers, have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent, then the retiring Agent
may, on behalf of the Lenders after consultation with the Borrowers, appoint a
successor Administrative Agent, that shall be a bank which has an office in New
York, New York with a combined capital and surplus of at least U.S.
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder and under the Security Documents by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and under the other Basic Documents
and each of the Borrowers will, and will cause each of their Subsidiaries to,
take such action and execute and deliver such instruments, as shall be requested
by the successor Administrative Agent to confirm in favor of such successor
Administrative Agent the Liens created pursuant to the Security Documents in
favor of such retiring Administrative Agent. After any retiring Administrative
Agent's resignation or removal hereunder or under any of the Basic Documents,
the provisions of this Section 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Administrative Agent.
11.09 Consents under Basic Documents. Except as otherwise provided
in Section 12.04 hereof with respect to this Agreement, the Administrative Agent
may, with the prior consent of the Majority Lenders (but not otherwise), consent
to any modification, supplement or waiver under any of the Basic Documents,
provided that, without the prior
Credit Agreement
----------------
<PAGE>
-118-
consent of each Lender, the Administrative Agent shall not (except as provided
herein or in the Security Documents) release any collateral or otherwise
terminate any Lien under any Basic Document providing for collateral security,
agree to additional obligations being secured by such collateral security
(unless the Lien for such additional obligations shall be junior to the Lien in
favor of the other obligations secured by such Basic Document in which event the
Administrative Agent may consent to such junior Lien provided that it obtains
the consent of the Majority Lenders thereto), release any "Subsidiary Guarantor"
under the Intercompany Notes Agreements from its obligations under Section 6
thereof, alter the relative priorities of the obligations entitled to the
benefits of the Liens created under the Security Documents or release any
Domestic or Foreign Non-Borrower Guarantor, except that no such consent shall be
required, and the Administrative Agent is hereby authorized, to release any Lien
covering Property (and to release any such Domestic or Foreign Non-Borrower
Guarantor from such guarantee obligations) which is the subject of either a
disposition of Property permitted hereunder or a disposition to which the
Majority Lenders have consented.
Notwithstanding the foregoing, the Administrative Agent is hereby
authorized to release from the Liens of the Global Assignment Agreement
(constituting one of the German Security Documents) any collateral security
specified by FiberTech to the extent that, pursuant to (S) 9(3) of said
Agreement, the Administrative Agent is required to release such collateral
security.
11.10 Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement, that, in the event it shall hold any Permitted Investments
referred to therein, such Permitted Investments shall be held in the name and
under the control of such Lender, and such Lender shall hold such Permitted
Investments as a collateral sub-agent for the Administrative Agent thereunder.
Each Borrower by its execution and delivery of this Agreement hereby consents to
the foregoing.
11.11 Co-Agents. None of the Co-Agents shall have any rights or
obligations under this Agreement except in its capacity as a "Lender" hereunder.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Credit Agreement
----------------
<PAGE>
-119-
12.02 Notices. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement)
shall be given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof; or, as to any party, at such other
address as shall be designated by such party in a notice to each other party,
provided that notwithstanding the foregoing, all notices to any Obligor by the
Administrative Agent or any Lender may be given to PGI, and the Administrative
Agent and each Lender is authorized to rely on any notice (including notices of
borrowing) given by PGI with respect to matters relating to any Obligor (and
shall not be required to receive a notice from the respective Obligor to which
such matter relates). Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a notice sent by mail or
courier, upon receipt, in each case given or addressed as aforesaid.
12.03 Expenses, Etc. The Obligors (excluding Fabrene and Dutch
Operating) jointly and severally agree to pay or reimburse each of the Lenders
and the Administrative Agent for paying: (a) all reasonable out-of-pocket costs
and expenses of the Administrative Agent (including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New
York counsel to Chase and of special Dutch, Canadian, Mexican or German counsel
to Chase), in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Basic Documents and the extension of
credit hereunder (but subject in any event to such separate arrangements as have
been entered into between Chase and PGI regarding the aggregate amount thereof),
and (ii) any modification, supplement or waiver of any of the terms of this
Agreement or any of the other Basic Documents; (b) all reasonable costs and
expenses of the Lenders and the Administrative Agent (including, without
limitation, reasonable counsels' fees) in connection with (i) any Default and
any enforcement or collection proceedings resulting therefrom or in connection
with the negotiation of any restructuring or "work-out" (whether or not
consummated) of the obligations of the Borrowers hereunder and (ii) the
enforcement of this Section 12.03; (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any of the other Basic Documents or
any other document referred to herein or therein and all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Basic Document or any other document referred to therein (including, without
limitation, all such costs, expenses, taxes, assessments and other charges
relating to the Dutch or Canadian Security Documents (as applicable), it being
understood that neither Dutch Operating nor Fabrene shall be obligated to pay
for any such items); and (d) all costs, expenses and other charges in respect of
title insurance procured with respect to the Liens created pursuant to the
Mortgages.
The Obligors (excluding Fabrene and Dutch Operating) hereby jointly
and severally agree to indemnify the Administrative Agent and each Lender and
their respective
Credit Agreement
----------------
<PAGE>
-120-
affiliates, directors, officers, employees, attorneys and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses incurred by any of them (including, without limitation, any and all
losses, liabilities, claims, damages or expenses incurred by the Administrative
Agent to any Lender, whether or not the Administrative Agent or any Lender is a
party thereto) arising out of or by reason of any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Group Members of the proceeds of any of the extensions of
credit hereunder, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified). Without limiting the
generality of the foregoing, the Obligors (excluding Fabrene and Dutch
Operating) will (x) indemnify the Administrative Agent for any payments that the
Administrative Agent is required to make under any indemnity issued to any bank
referred to in Section 4.02 of the Security Agreement to which remittances in
respect to Accounts, as defined therein, are to be made and (y) indemnify the
Administrative Agent and each Lender from, and hold the Administrative Agent and
each Lender harmless against, any losses, liabilities, claims, damages or
expenses described in the preceding sentence (but excluding, as provided in the
preceding sentence, any loss, liability, claim, damage or expense incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) arising under any Environmental Law as a result of the past,
present or future operations of the Group Members (or any predecessor in
interest to the Group Members), or the past, present or future condition of any
site or facility owned, operated or leased by the Group Members (or any such
predecessor in interest), or any Release or threatened Release of any Hazardous
Materials from any such site or facility, including any such Release or
threatened Release which shall occur during any period when the Administrative
Agent or any Lender shall be in possession of any such site or facility
following the exercise by the Administrative Agent or any Lender of any of its
rights and remedies hereunder or under any of the Security Documents.
Each of Dutch Operating and Fabrene hereby agrees to make all of the
payments, reimbursements and indemnifications referred to in the preceding two
paragraphs of this Section 12.03 to the extent resulting from occurrences that
are attributable to itself.
12.04 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by each Obligor, the Administrative
Agent and the Majority Lenders, or by each Obligor and the Administrative Agent
acting with the consent of the Majority Lenders, and any provision of this
Agreement may be waived by the Majority Lenders or by the Administrative Agent
acting with the consent of the Majority Lenders; provided that: (a) no
modification, supplement or waiver shall, unless by an instrument signed by all
of the Lenders or by the Administrative Agent acting with the consent of all of
the Lenders: (i) increase, or extend the term of any of the Commitments, or
extend the time
Credit Agreement
----------------
<PAGE>
-121-
or waive any requirement for the reduction or termination of any of the
Commitments, (ii) extend any date fixed for the payment of principal of or
interest on any Loan, the Reimbursement Obligations or any fee hereunder, (iii)
reduce the amount of any such payment of principal, (iv) reduce the rate at
which interest is payable thereon or any fee is payable hereunder, (v) alter the
manner of application to the Loans hereunder of any prepayment, (vi) alter the
terms of this Section 12.04, (vii) modify the definition of the term "Majority
Lenders", "Majority Facility A Revolving Credit Lenders" or "Majority Facility B
Revolving Credit Lenders" or modify in any other manner the number or percentage
of the Lenders required to make any determinations or waive any rights hereunder
or to modify any provision hereof, (viii) waive any of the conditions precedent
set forth in Section 7.01 or 7.02 hereof or (ix) release any of the Guarantors
from any of their guarantee obligations under Section 6 hereof; and (b) any
modification or supplement of Section 11 hereof, or any of the rights or duties
of the Administrative Agent hereunder, shall require the consent of the
Administrative Agent.
Anything in this Agreement to the contrary notwithstanding, (A) no
waiver or modification of any provision of this Agreement that has the effect
(either immediately or at some later time) of enabling PGI to satisfy a
condition precedent to the making of a Facility A Revolving Credit Loan or the
issuance of a Letter of Credit shall be effective against the Facility A
Revolving Credit Lenders for the purposes of the Facility A Revolving Credit
Commitments unless the Majority Facility A Revolving Credit Lenders shall have
concurred with such waiver or modification and (B) no waiver or modification of
any provision of this Agreement that has the effect (either immediately or at
some later time) of enabling Fabrene to satisfy a condition precedent to the
making of a Facility B Revolving Credit Loan shall be effective against the
Facility B Revolving Credit Lenders for the purposes of the Facility B Revolving
Credit Commitments unless the Majority Facility B Revolving Credit Lenders shall
have concurred with such waiver or modification.
12.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns but no Person other than the parties hereto and, subject
to the terms and provisions hereof, their successors and permitted assigns shall
have any rights hereunder or shall be entitled to enforce any of the terms
hereof, whether as a third party beneficiary or otherwise.
12.06 Assignments and Participations.
(a) None of the Obligors may assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Administrative Agent.
(b) Each Lender may assign any of its Loans, its Notes, its
Commitments, and, if such Lender is a Facility A Revolving Credit Lender, its
Letter of Credit Interest, but only with the consent of, in the case of its
outstanding Commitments, PGI and the Administrative
Credit Agreement
----------------
<PAGE>
-122-
Agent (neither of which consents shall be unreasonably withheld) and, in the
case of a Facility A Revolving Credit Commitment and Letter of Credit Interest,
the Issuing Lender; provided that
(i) no such consent by the Administrative Agent or PGI shall be
required in the case of any assignment to another Lender, and no such
consent by PGI shall be required if an Event of Default under Section
10((f) or 10(g) hereof shall have occurred and be continuing;
(ii) except to the extent the Administrative Agent shall
otherwise consent, any partial assignment (other than to another Lender)
shall be in an amount at least equal to U.S. $5,000,000;
(iii) each such assignment by a Lender of its Loans, Note or
Commitment of any Class, or Letter of Credit Interest (in the case of the
Facility A Revolving Credit Lenders) shall be made in such manner so that
the same portion of its Loans, Note, and Commitment of such Class (and, if
applicable) Letter of Credit Interest and Currency is assigned to the
respective assignee;
(iv) each such assignment by a Lender of the Loans of any Class
having more than one Borrower, shall be made in such manner so that the
same portion of the Loans made to each such Borrower is assigned to the
respective assignee; and
(v) each such assignment shall be effected pursuant to an
Assignment and Acceptance in substantially the form of Exhibit J hereto and
the assignor and assignee shall deliver to PGI, the Administrative Agent
and (if the assignment is of Facility A Revolving Credit Commitments and
Letter of Credit Interest) the Issuing Lender a fully executed copy
thereof.
Upon execution and delivery by the assignor and the assignee to PGI, the
Administrative Agent and (if applicable) the Issuing Lender of such Assignment
and Acceptance, and upon consent thereto by the Administrative Agent, the
Issuing Lender and PGI to the extent required above, the assignee shall have, to
the extent of such assignment (unless otherwise consented to by the
Administrative Agent and the Issuing Lender), the obligations, rights and
benefits of a Lender hereunder holding the Commitment(s), Loans and, if
applicable, Letter of Credit Interest (or portions thereof) assigned to it and
specified in such Assignment and Acceptance (in addition to the Commitment(s),
Loans and Letter of Credit Interest, if any, theretofore held by such assignee)
and the assigning Lender shall, to the extent of such assignment, be released
from the Commitment(s) (or portion(s) thereof) so assigned. Upon each such
assignment the assigning Lender shall pay (or cause to be paid to) the
Administrative Agent an assignment fee of U.S. $3,000.
Credit Agreement
----------------
<PAGE>
-123-
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part of any Loans or Letter of Credit Interest held
by it, or in its Commitments, in which event each purchaser of a participation
(a "Participant") shall not, except as otherwise provided in Section 4.07(c)
hereof, have any rights or benefits under this Agreement or any Note or any
other Basic Document (the Participant's rights against such Lender in respect of
such participation to be those set forth in the agreements executed by such
Lender in favor of the Participant). All amounts payable by a Borrower to any
Lender under Section 5 hereof in respect of Loans, Letter of Credit Interest
held by it, and its Commitments, shall be determined as if such Lender had not
sold or agreed to sell any participations in such Loans, Letter of Credit
Interest and Commitments, and as if such Lender were funding each of such Loan,
Letter of Credit Interest and Commitments in the same way that it is funding the
portion of such Loan, Letter of Credit Interest and Commitments in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Basic Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) extend the term, or extend the time or waive any
requirement for the reduction or termination, of such Lender's related
Commitment, (ii) extend any date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement Obligations or any portion
of any fee hereunder payable to the Participant, (iii) reduce the amount of any
such payment of principal, (iv) reduce the rate at which interest is payable
thereon, or any fee hereunder payable to the Participant, to a level below the
rate at which the Participant is entitled to receive such interest or fee or (v)
consent to any modification, supplement or waiver hereof or of any of the other
Basic Documents to the extent that the same, under Section 11.09 or 12.04
hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Lender may (without notice
to the Borrowers, the Administrative Agent or any other Lender and without
payment of any fee) (i) assign and pledge all or any portion of its Loans and
its Notes to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank and
(ii) assign all or any portion of its rights under this Agreement and its Loans
and its Notes to an affiliate. No such assignment shall release the assigning
Lender from its obligations hereunder (except that such assignment shall release
the assigning Lender to the extent the same is effected in accordance with the
provisions of paragraph (b) above).
(e) A Lender may furnish any information concerning any Group Member
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject, however, to the
provisions of Section 12.16(b) hereof.
(f) Anything in this Section 12.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan or Reimbursement
Obligation held by it
Credit Agreement
----------------
<PAGE>
-124-
hereunder to any Group Member or any of their Affiliates or Subsidiaries without
the prior written consent of each Lender.
12.07 Survival. The obligations of each Borrower under Sections
5.01, 5.05, 5.06, 5.07, 5.08 and 12.03 hereof, the obligations of the Guarantors
under Section 6.03 hereof, and the obligations of the Lenders under Section
11.05 hereof shall survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Commitments and, in the case of any
Lender that may assign any interest in its Commitments, Loans or Letter of
Credit Interest hereunder, shall survive the making of such assignment,
notwithstanding that such assigning Lender may cease to be a "Lender" hereunder.
In addition, each representation and warranty made, or deemed to be made by a
notice of any extension of credit (whether by means of a Loan or a Letter of
Credit), herein or pursuant hereto shall survive the making of such
representation and warranty, and no Lender shall be deemed to have waived, by
reason of making any extension of credit hereunder (whether by means of a Loan
or a Letter of Credit), any Default which may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or Agent may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such extension of credit was made.
12.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.10 Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the law of the State of New York.
12.11 Jurisdiction, Service of Process and Venue.
(a) Each party hereto hereby agrees that any suit, action or
proceeding with respect to this Agreement, any Note or any judgment entered by
any court in respect thereof may be brought in the United States District Court
for the Southern District of New York, in the Supreme Court of the State of New
York sitting in New York County (including its Appellate Division), or in any
other appellate court in the State of New York, as the party commencing such
suit, action or proceeding may elect in its sole discretion; and each party
hereto hereby irrevocably submits to the non-exclusive jurisdiction of such
court for the purpose of any such suit, action, proceeding or judgment. Each
party hereto further submits, for the purpose of any such suit, action,
proceeding or judgment brought or rendered against it, to the appropriate courts
of the jurisdiction of its domicile.
Credit Agreement
----------------
<PAGE>
-125-
(b) Each of the Foreign Borrowers and Fabrene Holdings hereby agrees
that service of all writs, process and summonses in any such suit, action or
proceeding brought hereunder may be made upon Prentice Hall Legal and Financial
Services, Inc., presently located at 15 Columbus Circle, New York, New York
10023, U.S.A. (the "Process Agent"), and each of the Foreign Borrowers and
Fabrene Holdings hereby confirms and agrees that the Process Agent has been duly
and irrevocably appointed as its agent and true and lawful attorney-in-fact in
its name, place and stead to accept such service of any and all such writs,
process and summonses, and agrees that the failure of the Process Agent to give
any notice of any such service of process to such Borrower shall not impair or
affect the validity of such service or of any judgment based thereon. Each of
the Foreign Borrowers and Fabrene Holdings hereby further irrevocably consents
to the service of process in any suit, action or proceeding in said courts by
the mailing thereof by the Administrative Agent or any Lender by registered or
certified mail, postage prepaid, at its address set forth beneath its signature
hereto.
(c) Nothing herein shall in any way be deemed to limit the ability of
the Administrative Agent or any Lender to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over the Borrowers in such other jurisdictions, and in such manner,
as may be permitted by applicable law.
(d) Each Obligor hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes brought in
the Supreme Court of the State of New York, County of New York, in the United
States District Court for the Southern District of New York and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
such court has been brought in an inconvenient forum.
12.12 Waiver of Jury Trial. EACH OF THE OBLIGORS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
12.13 No Immunity. To the extent that any Foreign Borrower may be or
become entitled, in any jurisdiction in which judicial proceedings may at any
time be commenced with respect to this Agreement or the Notes, to claim for
itself or its Properties or revenues any immunity from suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from any other legal process or remedy relating to
its obligations under this Agreement, the Notes or any of the other Basic
Documents, and to the extent that in any such jurisdiction there may be
attributed such an immunity (whether or not claimed), such Borrower hereby
irrevocably agrees not to claim and
Credit Agreement
----------------
<PAGE>
-126-
hereby irrevocably waives such immunity to the fullest extent permitted by the
laws of such jurisdiction.
12.14 Judgment Currency. This is an international loan transaction
in which the specification of U.S. Dollars, Canadian Dollars and Dutch Guilders,
as the case may be (herein, the "Relevant Currency") and payment in New York
City, Toronto or Amsterdam, as the case may be (herein, the "Relevant City") is
of the essence, and the obligations of each Obligor under this Agreement to make
payment to (or for the account of) a Lender in U.S. Dollars shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency or in another place except to
the extent that such tender or recovery results in the effective receipt by such
Lender in the Relevant City of the full amount of the Relevant Currency payable
to such Lender under this Agreement. If for the purpose of obtaining judgment
in any court it is necessary to convert a sum due hereunder in a Relevant
Currency into another currency (in this Section 12.14 called the "judgment
currency"), the rate of exchange that shall be applied shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase such Relevant Currency at the Principal Office with the judgment
currency on the Business Day next preceding the day on which such judgment is
rendered. The obligation of each Obligor in respect of any such sum due from it
to the Administrative Agent or any Lender hereunder (in this Section 12.14
called an "Entitled Person") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only to the extent
that on the Business Day following receipt by such Entitled Person of any sum
adjudged to be due hereunder in the judgment currency such Entitled Person may
in accordance with normal banking procedures purchase and transfer the Relevant
Currency to the Relevant City with the amount of the judgment currency so
adjudged to be due; and each Obligor hereby, as a joint and several obligation
and notwithstanding any such judgment, agrees to indemnify such Entitled Person
against, and to pay such Entitled Person on demand, in the Relevant Currency,
the amount (if any) by which the sum originally due to such Entitled Person in
the Relevant Currency hereunder exceeds the amount of the Relevant Currency so
purchased and transferred.
12.15 Use of English Language. This Agreement has been negotiated
and executed in the English language. All certificates, reports, notices and
other documents and communications given or delivered pursuant to this Agreement
(including, without limitation, any modifications or supplements hereto) shall
be in the English language, or accompanied by a certified English translation
thereof. Except in the case of laws or official communications of the
Netherlands, in the case of any document originally issued in a language other
than English, the English language version of any such document shall for
purposes of this Agreement, and absent manifest error, control the meaning of
the matters set forth therein.
Credit Agreement
----------------
<PAGE>
-127-
12.16 Treatment of Certain Information; Confidentiality.
(a) The Obligors acknowledge that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Group Members (in connection with this Agreement or otherwise) by any Lender
or by one or more subsidiaries or affiliates of such Lender and the Obligors
hereby authorize each Lender to share any information delivered to such Lender
by the Obligors and their Subsidiaries pursuant to this Agreement, or in
connection with the decision of such Lender to enter into this Agreement, to any
such subsidiary or affiliate, it being understood that any such subsidiary or
affiliate receiving such information shall be bound by the provisions of
paragraph (b) below as if it were a Lender hereunder.
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of this nature and (with respect to those Lenders which are banks) in accordance
with safe and sound banking practices, any non-public information supplied to it
by the Obligors pursuant to this Agreement which is identified by such Person as
being confidential at the time the same is delivered to the Lenders or the
Administrative Agent, provided that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Administrative
Agent, (iii) to bank examiners, auditors, accountants, the National Association
of Insurance Commissioners or any regulatory authority, (iv) to the
Administrative Agent or any other Lender, (v) in connection with any litigation
to which any one or more of the Lenders or the Administrative Agent is a party,
(vi) to a subsidiary or affiliate of such Lender as provided in paragraph (a)
above or (vii) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) first executes and delivers to the respective Lender a
Confidentiality Agreement substantially in the form of Exhibit K hereto
provided, further, that in no event shall any Lender or the Administrative Agent
be obligated or required to return any materials furnished by the Obligors. The
obligations of each Lender under this Section 12.16 shall supersede and replace
the obligations of such Lender under any confidentiality letter in respect of
this financing signed and delivered by such Lender to any Group Member.
12.17 Replacement of Lenders. In the event that any Lender shall
decline to consent to an acquisition that requires the consent of each Lender
under Section 9.05(y) hereof (any such Lender being herein called a "Declining
Lender"), PGI, upon three Business Days notice, may require that such Declining
Lender transfer all of its right, title and interest under this Agreement and
such Declining Lender's Notes to any bank or other financial institution (a
"Proposed Lender") identified by PGI that is satisfactory to the Administrative
Agent and the Issuing Lender if such Proposed Lender agrees to assume all of the
obligations of such Declining Lender hereunder, and to purchase all of such
Declining Lender's Loans
Credit Agreement
----------------
<PAGE>
-128-
hereunder for consideration equal to the aggregate outstanding principal amount
of such Declining Lender's Loans, together with accrued and unpaid interest
thereon to the date of such purchase, and satisfactory arrangements are made for
payment to such Declining Lender of all other amounts payable hereunder to such
Declining Lender on or prior to the date of such transfer (including any fees
accrued hereunder and any amounts that would be payable under Section 5.04
hereof as if all of such Declining Lender's Loans were being prepaid in full on
such date). Subject to the provisions of Section 12.06(b) hereof, such Proposed
Lender shall be a "Lender" for all purposes hereunder.
Without prejudice to the survival of any other agreement of PGI
hereunder the agreements of PGI contained in Sections 5.01, 5.05, 5.06 and 12.03
hereof (without duplication of any payments made to such Declining Lender by PGI
or the Proposed Lender) shall survive for the benefit of such Declining Lender
under this Section 12.17 with respect to the time prior to such replacement.
12.18 Margin Regulations.
(a) Any Loans made hereunder the proceeds of which have been applied
to the buying or carrying (within the meaning of Regulations G or U) of any
Margin Stock (any such Loans being herein called "Purpose Loans") shall be
treated for purposes of Regulations G, U and X as two separate extensions of
credit (the "A Credit" and the "B Credit"), as follows:
(i) The amount of the A Credit shall be equal to the Maximum
Loan Value of the Margin Stock Collateral (as so defined) determined at the
time of the making of Purpose Loans hereunder. Notwithstanding the
foregoing, the Maximum Loan Value of the Margin Stock Collateral in pledge
at any time under the Security Agreement shall be redetermined at the time
of each withdrawal or substitution (as such terms are used in Regulations G
and U).
(ii) The amount of the B Credit shall be equal to the excess of
the aggregate principal amount of Purpose Loans over the amount of the A
Credit.
For purposes hereof, any payments or prepayments of principal of Purpose Loans
(other than any such payments or prepayments derived from the proceeds of the
sale or other disposition of Margin Stock Collateral) shall be deemed to be
applied first to the B Credit and second to the A Credit.
(b) The benefits of the pledge of the Margin Stock Collateral
provided for by the Security Documents shall be allocated first to secure the
obligations of the Obligors in respect of the A Credit (the "A Credit
Obligations") and second to secure the obligations of the Obligors in respect of
the B Credit (the "B Credit Obligations") and all other obligations of the
Obligors to the Lenders hereunder. The benefits of the pledge of the Non-Margin
Credit Agreement
----------------
<PAGE>
-129-
Stock Collateral provided for by the Security Documents shall be allocated first
to secure the obligations of the Obligors in respect of the B Credit Obligations
(and all other obligations of the Obligors hereunder other than the A Credit
Obligations) and second to secure the A Credit Obligations and all other
obligations of the Obligors to the Lenders hereunder.
(c) Except as otherwise specifically provided in this Agreement (but
in any event subject to the requirements of Regulations G and U), (i) all
payments and prepayments by the Obligors (or by the application of proceeds of
Collateral pursuant to the Security Documents) of the Purpose Loans derived from
the proceeds of the sale or other disposition of Margin Stock Collateral (or
made by the application of cash included in the Margin Stock Collateral) shall
be applied first to the payment or prepayment of the A Credit Obligations and
second, after the payment or prepayment in full of the A Credit Obligations, to
the payment or prepayment of the B Credit Obligations (and all other obligations
of the Obligors hereunder) and (ii) all payments and prepayments by the Obligors
(or by the application of proceeds of Collateral pursuant to the Security
Documents) of the Purpose Loans derived from the proceeds of the sale or other
disposition of Non-Margin Stock Collateral (or made by the application of cash
other than cash included in the Margin Stock Collateral) shall be applied first
to the payment or prepayment of the B Credit Obligations (and all other
obligations of the Obligors hereunder other than the A Credit Obligations) and
second, after payment in full of the B Credit Obligations (and such other
obligations), to the payment or prepayment of the A Credit Obligations.
(d) Each Lender represents for itself that, as of the date hereof,
and based upon its current assessment of the value of the Non-Margin Stock
Collateral, it (i) has required or, with respect to any unrelated extensions of
credit made by it to the Obligors, will require as much direct and indirect
security (within the meaning of Regulations G and U) for its B Credit and such
unrelated extensions of credit as such Lender would have required in good faith
and in the exercise of sound judgment in the absence of the pledge of the Margin
Stock Collateral provided for by the Security Documents and (ii) is not relying
(within the meaning of Regulations G and U) on any of the Margin Stock
Collateral securing its A Credit in extending its B Credit.
(e) Anything in this Agreement or the Security Documents to the
contrary notwithstanding, no withdrawal or substitution (as such terms are used
in Regulations G and U) of Margin Stock Collateral or cash pledged under the
Security Documents may be effected if such withdrawal or substitution would be
in violation of Regulation G or U.
(f) Each Lender will maintain records separately identifying its A
Credit and its B Credit and, solely for the purposes of complying with
Regulations G and U, the A and B Credits shall be treated as separate extensions
of credit.
(g) The Obligors will furnish to the Lenders at the time of each
making of any Purpose Loan, each sale or other disposition or any withdrawal or
substitution of Margin
Credit Agreement
----------------
<PAGE>
-130-
Stock Collateral or cash pledged under the Security Documents (whether or not
such withdrawal or substitution involves a sale or other disposition) by any of
the Obligors of either Margin Stock Collateral or Non-Margin Stock Collateral
and of each payment or prepayment of the Purpose Loans hereunder such
information and documents as the Lenders may require to determine the respective
amounts of the A Credit and the B Credit after giving effect to such disposition
or payment or prepayment, and at any time or from time to time such other
information and documents as the Lenders may require to determine compliance
with Regulations G and U.
Credit Agreement
----------------
<PAGE>
-131-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
THE BORROWERS
-------------
POLYMER GROUP, INC.
By /s/ Jerry Zucker
-----------------------------------
Title: Chairman, President and CEO
Address for Notices:
4838 Jenkins Avenue
North Charleston,
South Carolina 29406
Attention: Jerry Zucker/
James G. Boyd
Telecopier No.: (803) 747-4092
Telephone No.: (803) 744-5174
CHICOPEE HOLDINGS B.V. PGI NONWOVENS B.V.
(incorporated in the
State of Delaware under By /s/ James G. Boyd
the name Chicopee --------------------------------------
Holdings (Netherlands) Title: Executive VP, Treasurer and CFO
B.V. Corporation)
By /s/ James G. Boyd
--------------------------------------
Title: Executive VP, Treasurer and CFO
FABRENE INC.
By /s/ James G. Boyd
--------------------------------------
Title: Executive VP, Treasurer and CFO
Credit Agreement
----------------
<PAGE>
-132-
DOMESTIC NON-BORROWER GUARANTORS
--------------------------------
FIBERTECH GROUP, INC. CHICOPEE, INC.
By /s/ James G. Boyd By /s/ James G. Boyd
------------------------------ --------------------------------
Title: Ex. VP, Treasurer & CFO Title: Ex. VP, Treasurer & CFO
PGI POLYMER, INC. CHICOPEE HOLDINGS, INC.
By /s/ James G. Boyd By /s/ James G. Boyd
------------------------------ --------------------------------
Title: Ex. VP, Treasurer & CFO Title: Ex. VP, Treasurer & CFO
TECHNETICS GROUP, INC. FABRENE GROUP, L.L.C.
By /s/ James G. Boyd By /s/ James G. Boyd
------------------------------ --------------------------------
Title: Ex. VP, Treasurer & CFO Title: Ex. VP, Treasurer & CFO
FABRENE CORP. FIBERGOL CORPORATION
By /s/ James G. Boyd By /s/ James G. Boyd
------------------------------ --------------------------------
Title: Ex. VP, Treasurer & CFO Title: Ex. VP, Treasurer & CFO
FABRENE GROUP, INC.
By /s/ James G. Boyd
------------------------------
Title: Ex. VP, Treasurer & CFO
PNA CORP. FNA POLYMER CORP.
By /s/ James G. Boyd By /s/ James G. Boyd
------------------------------ --------------------------------
Title: Ex. VP, Treasurer & CFO Title: Ex. VP, Treasurer & CFO
Credit Agreement
----------------
<PAGE>
-133-
LENDERS
-------
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $14,500,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $14,500,000
THE CHASE MANHATTAN BANK
By /s/ Robert T. Sacks
-------------------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Lending Office for all Loans
Denominated in Dutch Guilders:
Chase Manhattan Investment Bank,
Limited
9 Thomas Moore Street
London, England
E1 9YT
Address for Notices:
Chase Manhattan Investment Bank,
Limited
9 Thomas Moore Street
London, England
E1 9YT
Attention: Annabel Pincus
Telecopier No.: 011-44-171-777-2360
Telephone No.: 011-44-171-777-2024
Credit Agreement
----------------
<PAGE>
-134-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $0
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $7,500,000
Total Commitment
- ----------------
U.S. $7,500,000
THE CHASE MANHATTAN BANK OF CANADA
By /s/ Arun K. Bery
-----------------------------
Title: Vice President
Lending Office for all Loans
Denominated in Canadian Dollars:
The Chase Manhattan Bank of Canada
1 First Canadian Place
100 King Street West
Suite 6900, P.O. Box 106
Toronto, Ontario M5X 1A4
Address for Notices:
The Chase Manhattan Bank of Canada
1 First Canadian Place
100 King Street West
Suite 6900, P.O. Box 106
Toronto, Ontario M5X 1A4
Attention: Arun Bery
Telecopier No.: 416-216-4161
Telephone No.: 416-216-4134
Credit Agreement
----------------
<PAGE>
-135-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,250,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,250,000
THE BANK OF NOVA SCOTIA
By /s/ W. J. Brown
--------------------------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Lending Office for all Loans
Denominated in Dutch Guilders:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Address for Notices:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: William Zarrett
Telecopier No.: 404-888-8998
Telephone No.: 404-877-1504
Credit Agreement
----------------
<PAGE>
-136-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $0
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $7,500,000
Total Commitment
- ----------------
U.S. $7,500,000
THE BANK OF NOVA SCOTIA, AS CANADIAN DOLLAR LENDER
By /s/ Sharon McIntyre
---------------------------------
Title: Relationship Manager
Lending Office for all Loans
Denominated in Canadian Dollars:
The Bank of Nova Scotia
44 King Street West
Toronto, Ontario M5H 1H1
Address for Notices:
The Bank of Nova Scotia
44 King Street West
Toronto, Ontario M5H 1H1
Attention: Sharron McIntyre
Telecopier No.: 416-933-7399
Telephone No.: 416-866-3632
Credit Agreement
----------------
<PAGE>
-137-
Facility A Revolving Credit Commitment
- ----------------------------------------
U.S. $20,750,000
Facility B Revolving Credit Commitment
- ----------------------------------------
U.S. $0
Total Commitment
- ----------------------------------------
U.S. $20,750,000
BHF-BANK AKTIENGESELLSCHAFT
By /s/ Thomas J. Scifo
-------------------------------------
Title: Assistant Vice President
By /s/ Linda Pace
-------------------------------------
Title: Vice President
Lending Office for all Base Rate
Loans Denominated in U.S.
Dollars:
BHF-Bank AG, New York Branch
590 Madison Avenue
New York, New York 10022
Lending Office for all Eurodollar
Loans Denominated in U.S.
Dollars:
BHF-Bank, Grand Cayman Branch
c/o New York Branch
590 Madison Avenue
New York, New York 10022
Lending Office for all Loans
Denominated in Dutch Guilders:
BHF-Bank, Grand Cayman Branch
c/o New York Branch
590 Madison Avenue
New York, New York 10022
Address for Notices:
BHF-Bank
590 Madison Avenue
New York, New York 10022
Attention: Paul Travers
Telecopier No.: 212-756-5536
Telephone No.: 212-756-5570
Credit Agreement
----------------
<PAGE>
-138-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $20,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $20,750,000
CORESTATES BANK, N.A.
By /s/ Karen R. Leaf
-----------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Corestates Bank, N.A.
1345 Chestnut Street
Philadelphia, PA 19107
Lending Office for all Loans
Denominated in Dutch Guilders:
Corestates Bank, N.A.
24 Monument Street
London, England EC3 R8AJ
Address for Notices:
Corestates Bank, N.A.
1345 Chestnut Street
Philadelphia, PA 19107
Attention: Karen Leaf
Telecopier No.: 215-973-6745
Telephone No.: 215-973-6540
Credit Agreement
----------------
<PAGE>
-139-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $20,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $20,750,000
FIRST UNION NATIONAL BANK
(formerly FIRST UNION NATIONAL
BANK OF NORTH CAROLINA)
By /s/ Frederick W. Price
-------------------------------------
Title: Managing Director
Lending Office for all Loans
Denominated in U.S. Dollars:
First Union National Bank (formerly
First Union National Bank of
North Carolina)
301 S. College Street - DC-5
Charlotte, North Carolina 28288-
0737
Lending Office for all Loans
Denominated in Dutch Guilders:
First Union National Bank (formerly
First Union National Bank of
North Carolina)
301 S. College Street - DC-5
Charlotte, North Carolina 28288-
0737
Address for Notices:
First Union National Bank (formerly
First Union National Bank of
North Carolina)
301 S. College Street - DC-5
Charlotte, North Carolina 28288-0737
Attention: Tom Molitor
Telecopier No.: 704-374-3300
Telephone No.: 704-383-0018
Credit Agreement
----------------
<PAGE>
-140-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,750,000
CIBC INC.
By /s/ Roger Colden
---------------------------------------------
Title: Director, CIBC Wood Gundy Securities
Corp. as Agent
Lending Office for all Loans
Denominated in U.S. Dollars:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Atlanta, Georgia 30339
Lending Office for all Loans
Denominated in Dutch Guilders:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Atlanta, Georgia 30339
Address for Notices:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road
Atlanta, Georgia 30339
Attention: Chris Hiott
Telecopier No.: 770-319-4950
Telephone No.: 770-319-4831
Credit Agreement
----------------
<PAGE>
-141-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $0
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $ 5,000,000
Total Commitment
- ----------------
U.S. $ 5,000,000
CANADIAN IMPERIAL BANK OF COMMERCE
By /s/ Mauro Spagnolo
------------------------------------
Title: Director
Lending Office for all Loans
Denominated in Canadian Dollars:
Canadian Imperial Bank of Commerce
Commerce Court West
7th Floor
Toronto, Ontario M5L 1A2
Address for Notices:
Canadian Imperial Bank of Commerce
Commerce Court West
50th Floor
Toronto, Ontario M5L 1A2
Attention: Mary-Anne Tate
Telecopier No.: 416-980-5855
Telephone No.: 416-214-8417
Credit Agreement
----------------
<PAGE>
-142-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $18,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $18,750,000
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Brian O'Leary
--------------------------
Title: Vice President
By /s/ Sean Mounier
------------------------
Title: First Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, New York 10022
Lending Office for all Loans
Denominated in Dutch Guilders:
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, New York 10022
Address for Notices:
Compagnie Financiere de CIC et de
l'Union Europeenne
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Brian O'Leary
Telecopier No.: 212-715-4535
Telephone No.: 212-715-4422
Credit Agreement
----------------
<PAGE>
-143-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,750,000
CREDIT LYONNAIS ATLANTA AGENCY
By /s/ David M. Cawrse
------------------------------------------------
Title: First Vice President and Manager
Lending Office for all Loans
Denominated in U.S. Dollars:
Credit Lyonnais Atlanta Agency
303 Peachtree NE, Suite 4400
Atlanta, Georgia 30308
Lending Office for all Loans
Denominated in Dutch Guilders:
Credit Lyonnais Atlanta Agency
303 Peachtree NE, Suite 4400
Atlanta, Georgia 30308
Address for Notices:
Credit Lyonnais Atlanta Agency
303 Peachtree NE, Suite 4400
Atlanta, Georgia 30308
Attention: Christina Ernshaw
Telecopier No.: 404-584-5249
Telephone No.: 404-524-3700
Credit Agreement
----------------
<PAGE>
-144-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $0
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $ 5,000,000
Total Commitment
- ----------------
U.S. $ 5,000,000
CREDIT LYONNAIS CANADA
By /s/ Helen A. Thomas
-------------------------------------
Title: Vice President, Corporate Banking
By /s/ David J. Farmer
------------------------------------------------
Title: First Vice President and Manager, Central
Region
Lending Office for all Loans
Denominated in Canadian Dollars:
Credit Lyonnais Canada
1 Adelaide Street East, Suite 2505
Toronto, Ontario M5C 2V9
Address for Notices:
Credit Lyonnais Canada
1 Adelaide Street East
Toronto, Ontario M5C 2V9
Attention: Helen Thomas
Vice President
Telecopier No.: 416-202-6525
Telephone No.: 416-947-9355
Credit Agreement
----------------
<PAGE>
-145-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,750,000
MELLON BANK, N.A.
By /s/ John K. Walsh
----------------------------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Mellon Bank, N.A.
Room 2304
Three Mellon Bank Center
Pittsburgh, Pennsylvania 15259
Lending Office for all Loans
Denominated in Dutch Guilders:
Mellon Bank, Grand Cayman
Room 2304
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Address for Notices:
Mellon Bank, N.A.
Room 2304
Three Mellon Bank Center
Pittsburgh, Pennsylvania 15259
Attention: Patricia L. Martin
Telecopier No.: 412-234-5049
Telephone No.: 412-234-4710
Credit Agreement
----------------
<PAGE>
-146-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $0
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $ 5,000,000
Total Commitment
- ----------------
U.S. $ 5,000,000
MELLON BANK CANADA
By /s/ J. L. Cavanaugh
------------------------------------------------
Title: Vice President
Lending Office for all Loans
Denominated in Canadian Dollars:
Mellon Bank Canada
77 King Street West, Suite 3200
Royal Trust Tower
Toronto, Ontario M5K 1K2
Address for Notices:
Mellon Bank Canada
77 King Street West, Suite 3200
Royal Trust Tower
Toronto, Ontario M5K 1K2
Attention: John Rehob/
Judy Ellis
Telecopier No.: 416-860-2439
Telephone No.: 416-860-2430/
2436
Credit Agreement
----------------
<PAGE>
-147-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $18,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $18,750,000
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By /s/ Johannes F. Breukhoven
-------------------------------------
Title: Vice President
By /s/ W. Pieter C. Kodde
-------------------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars and Dutch Guilders
and Address for Notices:
Rabobank Nederland
245 Park Avenue
New York, New York 10167
Attention: Corp. Services Dept.
Telecopier No.: 212-818-0233
Telephone No.: 212-916-7800
with a copy to:
Rabobank Nederland
One Atlantic Center
1201 West Peachtree Street
Suite 3450
Atlanta, Georgia 30309-3400
Attention: Thomas Dawe
Telecopier No.: 404-877-9150
Telephone No.: 404-877-9100
Credit Agreement
----------------
<PAGE>
-148-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $18,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $18,750,000
THE ROYAL BANK OF SCOTLAND PLC
By /s/ Grant F. Stoddart
--------------------------------------------------
Title: Senior Vice President & Manager
Lending Office for all Loans
Denominated in U.S. Dollars:
The Royal Bank of Scotland PLC
Wall Street Plaza
88 Pine Street
26th Floor
New York, New York 10005
Lending Office for all Loans
Denominated in Dutch Guilders:
The Royal Bank of Scotland PLC
Wall Street Plaza
88 Pine Street
26th Floor
New York, New York 10005
Address for Notices:
The Royal Bank of Scotland PLC
Wall Street Plaza
88 Pine Street
26th Floor
New York, New York 10005
Attention: Russell M. Gibson
Telecopier No.: 212-480-0791
Telephone No.: 212-269-1706
Credit Agreement
----------------
<PAGE>
-149-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $18,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $18,750,000
WACHOVIA BANK, N.A.
By /s/ Gina Wurthmann Lesslie
------------------------------------------------- -
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Wachovia Bank, N.A.
1401 Main Street
Columbia, SC 29226
Lending Office for all Loans
Denominated in Dutch Guilders:
Wachovia Bank, N.A.
1401 Main Street
Columbia, SC 29226
Address for Notices:
Wachovia Bank, N.A.
1401 Main Street
Columbia, SC 29226
Attention: Gina Wurthmann Lesslie
Vice President
Telecopier No.: (803) 765-3232
Telephone No.: (803) 765-3130
Credit Agreement
----------------
<PAGE>
-150-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,750,000
BANK OF SCOTLAND
By /s/ Annie Chin Tat
-----------------------------
Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Lending Office for all Loans
Denominated in Dutch Guilders:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Address for Notices:
Bank of Scotland
565 Fifth Avenue
New York, New York 10017
Attention: Janet Taffe
Telecopier No.: 212-557-9460
Telephone No.: 212-450-0872
Credit Agreement
----------------
<PAGE>
-151-
Facility A Revolving Credit Commitment
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0
Total Commitment
- ----------------
U.S. $13,750,000
CREDITANSTALT-BANKVEREIN
By /s/ Gregory F. Mathis
------------------------------------
Title: Vice President
By /s/ Fiona McKone
-------------------------------------
Title: Senior Associate
Lending Office for all Loans
Denominated in U.S. Dollars:
Creditanstalt-Bankverein
2 Greenwich Plaza
Greenwich, Connecticut 06830
Lending Office for all Loans
Denominated in Dutch Guilders:
Creditanstalt-Bankverein
2 Greenwich Plaza
Greenwich, Connecticut 06830
Address for Notices:
Creditanstalt-Bankverein
2 Greenwich Plaza
Greenwich, Connecticut 06830
Attention: Jennifer Poccia/
Kim Newsome
Telecopier No.: 203-861-6594
Telephone No.: 203-861-6423
Credit Agreement
----------------
<PAGE>
-152-
<TABLE>
<CAPTION>
<S> <C>
Facility A Revolving Credit Commitment DG BANK, NEW YORK BRANCH
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment By /s/ Norah McCann
- -------------------------------------- -----------------------------------
U.S. $0 Title: Senior Vice President
Total Commitment By /s/ Sabine Wendt
- ---------------- -----------------------------------
U.S. $13,750,000 Title: Assistant Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
DG Bank, New York Branch
609 Fifth Avenue
New York, New York 10017
Lending Office for all Loans
Denominated in Dutch Guilders:
DG Bank, Cayman Islands Branch
609 Fifth Avenue
New York, New York 10017
Address for Notices:
DG Bank, New York Branch
609 Fifth Avenue
New York, New York 10017
Attention: Ed Thome
Telecopier No.: 212-745-1422
Telephone No.: 212-745-1464
</TABLE>
Credit Agreement
----------------
<PAGE>
-153-
<TABLE>
<CAPTION>
<S> <C>
Facility A Revolving Credit Commitment MERITA BANK LTD, NEW YORK BRANCH
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment By /s/ Frank Maffei
- -------------------------------------- ------------------------------------
U.S. $0 Title: Vice President
Total Commitment By /s/ Clifford Abramsky
- ---------------- ------------------------------------
U.S. $13,750,000 Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
Merita Bank LTD
437 Madison Avenue
21st Floor
New York, New York 10022
Lending Office for all Loans
Denominated in Dutch Guilders:
Merita Bank LTD, Grand Cayman
Branch
437 Madison Avenue
21st Floor
New York, New York 10022
Address for Notices:
Merita Bank LTD
437 Madison Avenue
21st Floor
New York, New York 10022
Attention: Frank Maffei
Telecopier No.: 212-318-9318
Telephone No.: 212-318-9561
</TABLE>
Credit Agreement
----------------
<PAGE>
-154-
<TABLE>
<CAPTION>
<S> <C>
Facility A Revolving Credit Commitment NATIONAL CITY BANK
- --------------------------------------
U.S. $13,750,000
Facility B Revolving Credit Commitment By /s/ Joseph D. Robison
- -------------------------------------- ------------------------------------
U.S. $0 Title: Vice President
Total Commitment
- ---------------- Lending Office for all Loans
U.S. $13,750,000 Denominated in U.S. Dollars:
National City Bank
1900 E. Ninth Street
Cleveland, Ohio 44114
Lending Office for all Loans
Denominated in Dutch Guilders:
National City Bank
1900 E. Ninth Street
Cleveland, Ohio 44114
Address for Notices:
National City Bank
1900 E. Ninth Street
Cleveland, Ohio 44114
Attention: Lisa B. Lisi
Telecopier No.: 216-222-0003
Telephone No.: 216-575-9166
</TABLE>
Credit Agreement
----------------
<PAGE>
-155-
<TABLE>
<CAPTION>
<S> <C>
Facility A Revolving Credit Commitment GIROCREDIT BANK AKTIENGESELLSCHAFT
- -------------------------------------- DER SPARKASSEN, GRAND CAYMAN
U.S. $10,000,000 ISLAND BRANCH
Facility B Revolving Credit Commitment By /s/ Anca Trifan
- -------------------------------------- ---------------------------------
U.S. $0 Title: Vice President
Total Commitment By /s/ John Redding
- ---------------- ---------------------------------
U.S. $10,000,000 Title: Vice President
Lending Office for all Loans
Denominated in U.S. Dollars:
GiroCredit Bank AG der Sparkassen
280 Park Avenue
32nd Floor
New York, New York 10017
Lending Office for all Loans
Denominated in Dutch Guilders:
GiroCredit Bank AG der Sparkassen
280 Park Avenue
32nd Floor
New York, New York 10017
Address for Notices:
GiroCredit Bank AG der Sparkassen
280 Park Avenue
32nd Floor
New York, New York 10017
Attention: Anca Trifan
Telecopier No.: 212-984-5627
Telephone No.: 212-984-5631
</TABLE>
Credit Agreement
----------------
<PAGE>
-156-
<TABLE>
<CAPTION>
<S> <C>
Facility A Revolving Credit Commitment THE DAI-ICHI KANGYO BANK, LIMITED,
- -------------------------------------- ATLANTA AGENCY
U.S. $10,000,000
Facility B Revolving Credit Commitment
- --------------------------------------
U.S. $0 By /s/ Tatsuji Noguchi
---------------------------------
Total Commitment Title: Joint General Manager
- ----------------
U.S. $10,000,000
Lending Office for all Loans
Denominated in U.S. Dollars:
The Dai-Ichi Kangyo Bank, Limited,
Atlanta Agency
Marquis Two Tower, Suite 2400
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Lending Office for all Loans
Denominated in Dutch Guilders:
The Dai-Ichi Kangyo Bank, Limited,
London Branch
DKB House
24 King William Street
London EC4R 9DB
Address for Notices:
The Dai-Ichi Kangyo Bank, Limited,
Atlanta Agency
Marquis Two Tower, Suite 2400
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attention: Percy Lee/
Mary Kay Manion
Telecopier No.: 404-222-9556
Telephone No.: 404-581-0200
</TABLE>
Credit Agreement
----------------
<PAGE>
-157-
THE CHASE MANHATTAN BANK,
as Administrative Agent
By /s/ Robert T. Sacks
--------------------------------
Title: Vice President
Address for Notices to
Chase as Administrative Agent:
The Chase Manhattan Bank
1 Chase Manhattan Plaza, 8th Floor
New York, New York 10081
Attention: Daniel N. Fischer
Telecopier No.: 212-552-5777
Telephone No.: 212-552-7906
Credit Agreement
----------------
<PAGE>
ANNEX I
Certain Provisions Relating to Bankers' Acceptances
---------------------------------------------------
This Annex I sets forth certain terms and conditions relating to the
obligation of the Facility B Revolving Credit Lenders to make loans to Fabrene
pursuant to Section 2.01(a) of the Credit Agreement by way of Banker's
Acceptances. Capitalized terms used herein shall have the meanings assigned to
such terms in the Credit Agreement.
(a) Availability. All notices of borrowings, Conversions or
Continuations for Bankers' Acceptances shall be in a minimum aggregate face
amount of Cdn $3,000,000 or a multiple of Cdn. $100,000 in excess thereof, and a
Facility B Revolving Credit Lender shall not be obliged to accept any bill of
exchange which:
(i) is drawn on or which matures on a day which is not a
Business Day;
(ii) matures on a day subsequent to the Revolving Credit
Termination Date;
(iii) has a term other than approximately 30, 60, 90 or 180
days;
(iv) is denominated in any currency other than Canadian Dollars;
(v) is not in a form satisfactory to such Canadian Lender or
the Administrative Agent;
(vi) has a face amount of less than Cdn. $100,000; or
(vii) in respect of which Fabrene has not then paid the
applicable Acceptance Fee.
(b) Grace. Fabrene hereby renounces, and shall not claim or request
or require any Facility B Revolving Credit Lender to claim, any days of grace
for the payment of any Bankers' Acceptance.
(c) Bankers' Acceptances in Blank. To facilitate the acceptance by
the Facility B Revolving Credit Lenders of bills of exchange as contemplated by
the Credit Agreement and this Annex I, Fabrene shall, on the Effective Date and
from time to time as required, supply the Administrative Agent with such numbers
of bills as it may request, each executed and endorsed in blank by Fabrene. The
Administrative Agent and each Facility B Revolving Credit Lender shall exercise
such care in the custody and safekeeping of such bills as they give to similar
property owned by them. Each Facility B Revolving Credit Lender is hereby
authorized to issue such Bankers' Acceptances endorsed in blank in such face
amounts as may be determined by such Facility B Revolving Credit Lender,
provided that the aggregate amount thereof is equal to the aggregate amount of
Bankers' Acceptances required to be accepted by such Facility B Revolving Credit
Lender. No Facility B Revolving Credit Lender shall be responsible or liable for
its failure to accept a Bankers' Acceptance if the cause of
Annex I to the Credit Agreement
-------------------------------
<PAGE>
-2-
such failure is, in whole or in part, due to the failure of Fabrene to provide
duly executed and endorsed drafts to the Administrative Agent on a timely basis,
nor shall any Facility B Revolving Credit Lender be liable for any damage, loss
or other claim arising by reason of any loss or improper use of any such
instrument except loss or improper use arising by reason of the negligence or
wilful misconduct of such Facility B Revolving Credit Lender, its officers,
employees, agents or representatives. Each Facility B Revolving Credit Lender
shall maintain a record with respect to Bankers' Acceptances (i) received by it
from the Administrative Agent in blank hereunder, (ii) voided by it for any
reason, (iii) accepted by it hereunder, (iv) purchased by it hereunder, and (v)
canceled at their respective maturity dates. Each Facility B Revolving Credit
Lender further agrees to retain such records in the manner and for the statutory
period provided in the various Canadian provincial or federal statutes and
regulations which apply to such Facility B Revolving Credit Lender.
(d) Execution of Bankers' Acceptances. Drafts of Fabrene to be
accepted as Bankers' Acceptances hereunder shall be duly executed on behalf of
Fabrene. Notwithstanding that any one or more of the individuals whose manual
or facsimile signature appears on any bill as a signatory on behalf of Fabrene
may no longer hold office at the date of such bill or at the date of its
acceptance by any Facility B Revolving Credit Lender hereunder, or at any time
thereafter, any Bankers' Acceptance signed as aforesaid on behalf of Fabrene
shall be valid and binding upon Fabrene.
(e) Issuance of Bankers' Acceptances. Promptly following receipt of a
notice of borrowing, Conversion or Continuation by way of Bankers' Acceptances,
the Administrative Agent shall so advise the Facility B Revolving Credit Lenders
and shall advise each Facility B Revolving Credit Lender of the face amount of
each Bankers' Acceptance to be accepted by it and the term thereof. The
aggregate face amount of Bankers' Acceptances to be accepted by a Facility B
Revolving Credit Lender shall be determined by the Administrative Agent by
reference to the respective Facility B Revolving Credit Commitment Percentages
of the Facility B Revolving Credit Lenders, except that, if the face amount of
the Bankers' Acceptance, that would otherwise be accepted by a Facility B
Revolving Credit Lender, would not be Cdn. $100,000 or a multiple thereof, such
face amount shall be increased or reduced by the Administrative Agent in its
sole discretion to the nearest multiple of Cdn. $100,000.
Notwithstanding the foregoing, if by reason of any increase or
reduction described in the immediately preceding sentence, any Facility B
Revolving Credit Lender shall have aggregate Bankers' Acceptances and Loans in
excess of its respective Facility B Revolving Credit Commitment Percentage (any
such Lender being herein called an "Over-Allotted Lender"), then at any time
following the occurrence and during the continuance of an Event of Default, each
other Facility B Revolving Credit Lender agrees, upon request of the Over-
Allotted Lender, to promptly purchase from such Over-Allotted Lender
participations in (or, if and to the extent specified by any such purchasing
Lender, direct interests in) the Bankers' Acceptances and Loans owing to the
Over-Allotted Lender (and in interest due
Annex I to the Credit Agreement
-------------------------------
<PAGE>
-3-
thereon, as the case may be) in such amounts, and to make such other adjustments
from time to time as shall be equitable, to the end that all the Facility B
Revolving Credit Lenders shall hold the Bankers' Acceptances and Loans ratably
according to their respective Facility B Revolving Credit Commitment
Percentages.
(f) Purchase of Bankers' Acceptances; Continuations as and
Conversions into Bankers' Acceptance Loans. Subject to subsection (k) below,
upon the acceptance of a Bankers' Acceptance by a Facility B Revolving Credit
Lender, such Facility B Revolving Credit Lender shall purchase, or arrange the
purchase of, each Bankers' Acceptance from Fabrene at a price determined by the
BA Discount Rate of such Bankers' Acceptance and provide to the Administrative
Agent the BA Discount Proceeds for the account of Fabrene. The BA Discount
Proceeds so received by the Administrative Agent from the Facility B Revolving
Credit Lenders shall be retained by the Administrative Agent and applied as
follows: (i) remitted to Fabrene (in the case of the making of a Loan), (ii) to
the prepayment of Canadian Base Rate Loans (which shall constitute a Conversion
of the Loans of such Class from Canadian Base Rate Loans to Bankers' Acceptance
Loans) or (iii) to the payment of Bankers' Acceptances maturing on such date
(which shall constitute a Continuation of Bankers' Acceptance Loans to new
Bankers' Acceptance Loans of such Class), provided that in the case of any such
Conversion or Continuation of Loans, Fabrene shall pay to the Administrative
Agent for account of the respective Facility B Revolving Credit Lenders such
additional amounts, if any, as shall be necessary to effect the prepayment in
full of the respective Canadian Base Rate Loans being prepaid, or the Bankers'
Acceptances maturing, on such date.
On any date on which a Conversion or Continuation described in the
preceding paragraph shall occur, the Administrative Agent shall be entitled to
net all amounts payable on such date by the Administrative Agent to a Facility B
Revolving Credit Lender against all amounts payable on such date by such
Facility B Revolving Credit Lender to the Administrative Agent. Similarly, on
any such date, Fabrene hereby authorizes each Facility B Revolving Credit Lender
to net all amounts payable on such date by such Facility B Revolving Credit
Lender to the Administrative Agent for the account of Fabrene, against all
amounts payable on such date by Fabrene to such Facility B Revolving Credit
Lender in accordance with the Administrative Agent's calculations.
(g) Acceptance Fees. Fabrene shall pay to the Administrative Agent,
in advance, on behalf of each Facility B Revolving Credit Lender which accepts a
Bankers' Acceptance, an Acceptance Fee in respect of the face amount of such
Bankers' Acceptance, which shall be payable on or before the date of acceptance
of such Bankers' Acceptance.
(h) Prepayments. Subject to paragraph (j) of this Annex I, no
prepayment of any Bankers' Acceptances shall be made by Fabrene prior to the
maturity date of such Bankers' Acceptance.
Annex I to the Credit Agreement
-------------------------------
<PAGE>
-4-
(i) Conversion to Canadian Base Rate Loans upon Maturity. Unless a
Bankers' Acceptance is paid in full at the maturity thereof, or Continued as
another Loan by way of Bankers' Acceptances, the obligation of Fabrene to any
Facility B Revolving Credit Lender in respect of a maturing Bankers' Acceptance
accepted by such Lender shall be deemed to be Converted automatically into a
Canadian Base Rate Loan in an amount equal to the full face amount of the
maturing Bankers' Acceptance. Such Canadian Base Rate Loan shall be subject to
all of the provisions of the Credit Agreement applicable to a Canadian Base Rate
Loan made as a Facility B Revolving Credit Loan, including in particular the
obligation to pay interest, from and after the maturity date of such Bankers'
Acceptance.
(j) Default. Upon the acceleration of the Loans to be due and
payable pursuant to Section 10 of the Credit Agreement (whether by action of the
Administrative Agent or the Majority Lenders, or automatically by reason of the
occurrence of an Event of Default referred to in clause (f) or (g) of said
Section 10), Fabrene shall pay to the Administrative Agent, as cover in respect
of the obligations of Fabrene to the Facility B Revolving Credit Lenders in
respect of then-outstanding Bankers' Acceptances, an amount equivalent to the
amount or amounts that will be sufficient to pay:
(i) all outstanding Bankers' Acceptances on the maturity thereof; and
(ii) all unpaid Acceptance Fees, if any,
and, except for any amount payable in respect of unpaid Acceptance Fees, such
amount shall be held by the Administrative Agent from the date of payment to the
Administrative Agent until the maturity of such Bankers' Acceptances, as
additional security for payment of the face amount of such outstanding Bankers'
Acceptances upon maturity.
(k) Circumstances Making Bankers' Acceptances Unavailable. If the
Administrative Agent shall have reasonably determined (which determination shall
be conclusive and binding upon all parties hereto) and notified Fabrene and each
of the Facility B Revolving Credit Lenders that, by reason of circumstances
arising after the Effective Date and affecting the Canadian money market (i)
there is no market for Bankers' Acceptances or (ii) the demand for Bankers'
Acceptances is insufficient to allow the sale or trading of the Bankers'
Acceptances created and purchased hereunder, then the right of Fabrene to
request that any Facility B Revolving Credit Lender accept a Bankers' Acceptance
shall be suspended until the Administrative Agent determines that the
circumstances giving rise to such suspension no longer exist and the
Administrative Agent so notifies Fabrene.
(l) Indemnification in Respect of Bankers' Acceptances. In addition
to any liability of Fabrene to any Lender or the Administrative Agent under any
other provision hereof, Fabrene shall indemnify each Lender and the
Administrative Agent and hold each of them harmless against any reasonable loss
or expense incurred by such Lender or the Administrative Agent as a result of
(x) any failure by Fabrene to fulfill any of its obligations
Annex I to the Credit Agreement
-------------------------------
<PAGE>
-5-
hereunder including, without limitation, any cost or expense incurred by reason
of the liquidation or re-employment in whole or in part of deposits or other
funds required by any Lender to fund any Bankers' Acceptance as a result of the
failure of Fabrene to make any payment, repayment or prepayment on the date
required hereunder or specified by it in any notice given hereunder; (y)
Fabrene's failure to provide for the payment to the Administrative Agent, for
the account of each of the Lenders, or the full principal amount of each
Bankers' Acceptance on its maturity date; or (z) the provision of funds for any
outstanding Bankers' Acceptance, before the maturity date of such Bankers'
Acceptance.
Annex I to the Credit Agreement
-------------------------------
<PAGE>
SCHEDULE I
Certain Litigation
------------------
[Section 8.03]
Schedule I to Credit Agreement
------------------------------
<PAGE>
SCHEDULE II
Material Agreements and Liens
-----------------------------
[Sections 8.12, 9.06 and 9.07]
Schedule II to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE III
Hazardous Materials
-------------------
[Section 8.13]
Schedule III to Credit Agreement
--------------------------------
<PAGE>
SCHEDULE IV
Capital Structure
-----------------
[Section 8.14(a)]
Schedule IV to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE V
Existing Equity Rights
----------------------
[Section 8.14(b)]
Schedule V to Credit Agreement
------------------------------
<PAGE>
SCHEDULE VI
Subsidiaries and Investments
----------------------------
[Sections 8.15 and 9.08]
Schedule VI to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE VII
Real Property
-------------
[Section 8.21]
Schedule VII to Credit Agreement
--------------------------------
<PAGE>
SCHEDULE II
Material Agreements and Liens
-----------------------------
[Sections 8.12, 9.06 and 9.07]
Part A - Material Agreements
-------------------
Part B - Liens
-----
Schedule II to Credit Agreement
-------------------------------
<PAGE>
SCHEDULE VIII
Insurance Deductibles
---------------------
[Section 9.04(1)]
Schedule VIII to Credit Agreement
---------------------------------
<PAGE>
Exhibit 10.31
RECAPITALIZATION AGREEMENT
--------------------------
THIS AGREEMENT is made as of May 6, 1996 between Polymer Group, Inc.,
a Delaware corporation (the "Company"), The InterTech Group, Inc., a South
Carolina corporation ("InterTech"), Golder, Thoma, Cressey Fund III Limited
Partnership, an Illinois limited partnership ("GTC Fund III"), Jerry Zucker
("Zucker"), James G. Boyd ("Boyd"), FTG, Inc., a South Carolina corporation
("FTG"), Chase Manhattan Investment Holdings, Inc., a Delaware corporation
("CMIHI"), Leeway & Co. ("Leeway") and California Public Employees' Retirement
System ("CalPERS"). InterTech, GTC Fund III, Zucker, Boyd, FTG, CMIHI, Leeway
and CalPERS are referred to herein as the "Stockholders." Except as otherwise
indicated herein, capitalized terms used herein are defined in Section 6 hereof.
GTC Fund III owns 190,277 shares of the Company's Class A-1 Common
Stock, par value $.01 per share ("Class A-1 Common"), 115,000 shares of the
Company's Class A-3 Common Stock, par value $.01 per share ("Class A-3 Common")
and 185,902 shares of the Company's Class B Common Stock, par value $.01 per
share ("Class B Common"). CMIHI owns 25,832 shares of Class A-1 Common, 35,000
shares of the Company's Class A-2 Common Stock, par value $.01 per share ("Class
A-2 Common") and 14,136 shares of Class B Common. InterTech owns 210,415 shares
of Class B Common. Zucker owns 83,611 shares of Class B Common. Boyd owns
27,870 shares of Class B Common. FTG owns 15,295 shares of Class B Common.
Leeway and CalPERS each own 26,150 shares of Class A-1 Common and warrants to
purchase 35,500 shares of the Company's Class C Common Stock, par value $.01 per
share ("Class C Common"), which warrants will be exercised concurrently with the
Initial Public Offering (as defined herein). All such shares of Class A-1
Common, Class A-2 Common, Class A-3 Common, Class B Common and Class C Common
are referred to herein as the "Exchange Shares."
The Company has filed a Registration Statement on Form S-1 (File No.
333-2424) with the Securities and Exchange Commission relating to an initial
public offering (the "Initial Public Offering") of the Company's common stock,
par value $.01 per share (the "Common Stock"), under the Securities Act. In
connection with the Initial Public Offering, the Stockholders desire to (i)
cause the Company to amend and restate its certificate of incorporation and (ii)
exchange their Exchange Shares for shares of Common Stock. Following such
exchange, the Exchange Shares shall be canceled.
The parties hereto agree as follows:
Section 1. Authorization and Exchange.
1A. Restated Certificate of Incorporation. The Company has previously
authorized the amendment and restatement of the Company's Restated Certificate
of Incorporation in the form attached hereto as Exhibit A (the "Restated
Certificate"), to be filed and to be effective as of the date of the
consummation of the Initial Public Offering (the "Closing Date"). The
Stockholders have
<PAGE>
previously approved such amendment and restatement pursuant to Section 242 of
the General Corporation Law of the State of Delaware.
1B. Authorization of the Common Stock. The Company hereby authorizes
the issuance of an aggregate of 20,500,000 shares of Common Stock to the
Stockholders in exchange for the Exchange Shares.
1C. Calculation of the Exchange Shares. The number of shares of
Common Stock to be issued to each Stockholder (net of any fractional shares)
shall be equal to (i) the aggregate amount such Stockholder would receive under
the Company's currently effective certificate of incorporation attached hereto
as Exhibit B (the "Current Certificate") upon a Distribution (as defined in the
Current Certificate) by the Company of an amount equal to the Pre-IPO Company
Value divided by (ii) an amount equal to (A) the initial price to the public per
share of Common Stock in the Initial Public Offering multiplied by (B) 19.96809
(the "Pre-Split IPO Price"). "Pre-IPO Company Value" means an amount equal to
(i) the Pre-Split IPO Price multiplied by (ii) 1,026,638.00093. Immediately
following the exchange, the Company will execute a 19.96809-for-one split of its
Common Stock (the "Split"). An example of the calculations set forth herein is
attached hereto as Annex A.
1D. Notice. Prior to the Closing, the Company shall calculate the
number of shares of Common Stock to be issued to each Stockholder as set forth
above, and shall deliver notice to each Stockholder of the results of such
calculation in accordance with Section 7M hereof at least two days before the
Closing. The Company's calculations shall be conclusive and binding upon each
Stockholder unless such Stockholder objects to such calculation in writing prior
to the Closing.
1E. Exchange of the Exchange Shares. At the Closing, the Company
shall, upon the effectiveness of the Restated Certificate and subject to the
terms and conditions set forth herein, issue to each Stockholder a number of
shares of Common Stock calculated as set forth below, in exchange for the
Exchange Shares held by such Stockholder which shares shall be canceled
immediately thereafter. The Company will pay each Stockholder for any
fractional shares resulting from such calculation by check and such fractional
shares will not be issued.
1F. The Closing. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Kirkland & Ellis, 153 East
53rd Street, New York, New York at 10:00 a.m. on the Closing Date, or at such
other place as may be mutually agreeable to the Company and the Stockholders.
At the Closing, the Company shall deliver, or cause the Company's transfer agent
to deliver, to each Stockholder stock certificates evidencing the shares of
Common Stock to be issued by the Company to each such Stockholder, registered in
each such Stockholder's name or its nominee's name, upon presentment and
delivery by each such Stockholder to the Company of the certificates
representing the Exchange Shares duly endorsed for transfer to the Company. At
the option of any Stockholder who is subject to Regulation Y of the Board of
Governors of the Federal Reserve System, the Company shall deliver shares of the
Company's non-voting common stock, par value $.01 per share, to such Stockholder
in lieu of Common Stock.
-2-
<PAGE>
Section 2. Conditions of Each Stockholder's Obligation at the
Closing. The obligation of each Stockholder to exchange its Exchange Shares for
the Common Stock at the Closing is subject to the satisfaction as of the Closing
of the following conditions:
2A. Representations and Warranties. The representations and
warranties contained in Section 4 hereof shall be true and correct in all
material respects at and as of the Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein.
2B. Initial Public Offering. The Company shall consummate the
Initial Public Offering concurrently with the transactions contemplated hereby.
2C. Amendment of Certificate of Incorporation. The Restated
Certificate shall be in full force and effect as of the Closing under the laws
of Delaware and shall not have been further amended or modified.
2D. Securities Law Compliance. The Company shall have made all
filings under all applicable federal and state securities laws necessary to
consummate the issuance of the Common Stock pursuant to this Agreement in
compliance with such laws.
2E. Voting Agreement. The Company and the Stockholders (other than
CalPERS) shall have entered into a voting agreement (the "Voting Agreement")
substantially in the form attached hereto as Exhibit C, and the Voting Agreement
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
2F. Credit Agreement. The Company and its subsidiaries and The Chase
Manhattan Bank (National Association) and certain other lenders shall have
entered into a credit agreement (the "Credit Agreement"), and related documents,
providing for term loans and revolving loans of up to an aggregate of $200
million and $125 million, respectively, and the Credit Agreement shall be in
full force and effect as of the Closing and shall not have been amended or
modified.
2G. Closing Documents. The Company shall have delivered to each
Stockholder such documents relating to the transactions contemplated by this
Agreement as any Stockholder or its special counsel may reasonably request.
2H. Proceedings. All corporate and other proceedings taken or
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Stockholder and its special counsel.
2I. Waiver. Any condition specified in this Section 2 may be waived
if consented to by each Stockholder; provided that no such waiver shall be
effective against any Stockholder unless it is set forth in a writing executed
by such Stockholder.
-3-
<PAGE>
Section 3. Transfer of Restricted Securities.
3A. General Provisions. Restricted Securities are transferable only
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 or Rule 144A under the Securities Act (or any similar rule or rules then in
force) if such rule is available and (iii) subject to the conditions specified
in paragraph 3B below, any other legally available means of transfer.
3B. Opinion Delivery. In connection with the transfer of any
Restricted Securities (other than a transfer described in paragraph 3A(i) or
(ii) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of Kirkland & Ellis or other counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to the Company an
opinion of Kirkland & Ellis or such other counsel that no subsequent transfer of
such Restricted Securities shall require registration under the Securities Act,
the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
legend set forth in paragraph 7E. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7E.
3C. Rule 144A. Upon the request of any Stockholder, the Company
shall promptly supply to such Stockholder or its prospective transferees all
information regarding the Company required to be delivered in connection with a
transfer pursuant to Rule 144A under the Securities Act.
3D. Legend Removal. If any Restricted Securities become eligible for
sale pursuant to Rule 144(k) under the Securities Act, the Company shall, upon
the request of the holder of such Restricted Securities, remove the legend set
forth in paragraph 7E(i) from the certificates for such Restricted Securities.
Section 4. Representations and Warranties of the Company. As a
material inducement to the Stockholders to enter into this Agreement and to
exchange their Exchange Shares for Common Stock hereunder, the Company hereby
represents and warrants that:
4A. Organization and Corporate Power. The Company is a corporation
duly organized, validly and in good standing under the laws of Delaware and is
qualified to do business in every jurisdiction in which the failure to so
qualify has had or would reasonably be expected to have a material adverse
effect on the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole.
4B. Authorization; No Breach. The execution, delivery and
performance of this Agreement, the Stock Purchase Agreement, the Voting
Agreement, the Credit Agreement and all
-4-
<PAGE>
other agreements contemplated hereby and thereby to which the Company is a
party, the amendment of the Certificate of Incorporation have been duly
authorized by the Company. This Agreement, the Voting Agreement, the Credit
Agreement, the Restated Certificate and all other agreements contemplated hereby
and thereby to which the Company is a party each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution and delivery by the Company of this Agreement, the Voting Agreement,
the Credit Agreement and all other agreements contemplated hereby and thereby to
which the Company is a party, the issuance of the Common Stock hereunder, the
amendment of the Restated Certificate and the fulfillment of and compliance with
the respective terms hereof and thereof by the Company, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) except pursuant to the Credit Agreements,
result in the creation of any lien, security interest, charge or encumbrance
upon the Company's or any Subsidiary's capital stock or assets pursuant to, (iv)
give any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to,
the Current Certificate or the certificate of incorporation of any Subsidiary,
or any law, statute, rule or regulation to which the Company or any Subsidiary
is subject, or any agreement, instrument, order, judgment or decree to which the
Company or any Subsidiary is a party or by which their respective property is
bound, other than as expressly contemplated in such agreements described above
and other than those made and obtained.
4C. Capital Stock and Related Matters. As of the Closing and
immediately thereafter, the authorized capital stock of the Company shall
consist of 100,000,000 shares of Common Stock, of which 32,000,000 shares will
be issued and outstanding, 3,000,000 shares of Non-Voting Common Stock, par
value $.01 per share (none of which shall be issued and outstanding), and
10,000,000 shares of preferred stock, par value $.01 per share (none of which
shall be issued and outstanding). As of the Closing, all of the outstanding
shares of the Company's capital stock shall be validly issued, fully paid and
nonassessable. There are no statutory or contractual stockholders preemptive
rights or rights of refusal with respect to the issuance of Common Stock
hereunder which have not been waived or terminated. The Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock, and the offer, sale and
issuance of the Common Stock hereunder does not require registration under the
Securities Act or any applicable state securities laws.
Section 5. Representations and Warranties of the Stockholders. The
Stockholders hereby represent and warrant to the Company that:
5A. Authorization; Enforceability. The execution, delivery and
performance of this Agreement and the Voting Agreement, all other agreements
contemplated hereby and thereby to which any Stockholder is a party each
constitutes a valid and binding obligation of such Stockholder, enforceable in
accordance with its terms.
5B. No Violation. Neither the execution and the delivery of this
Agreement and the other documents contemplated hereby to which each Stockholder
is a party, nor the
-5-
<PAGE>
consummation of the transactions contemplated hereby and thereby, will (a)
conflict with, result in a breach of any of the provisions of, (b) constitute a
default under, (c) result in the violation of, (d) give any third party the
right to terminate or to accelerate any obligation under, or (e) require any
authorization, consent, approval, execution or other action by or notice to or
filing with any court or administrative or governmental body under, the
provisions of the certificate of incorporation or bylaws of the Stockholder
(where the Stockholder is an incorporated entity) or any statute, regulation,
rule, judgment, order, decree or other restriction of any government,
governmental agency or court to which the Stockholder is subject.
5C. Ownership. Each Stockholder owns the Exchange Shares being
exchanged by such Stockholder pursuant to this Agreement free and clear of any
restrictions on transfer, claims, taxes, liens, charges, encumbrances, pledges,
security interests, options, warrants, rights, contracts, calls, commitments,
equities and demands, except for applicable restrictions on transfer under
securities laws.
Section 6. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Restricted Securities" means (i) the Common Stock issued hereunder
and (ii) any securities issued with respect to the securities referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in paragraph 7E have been delivered by the
Company in accordance with paragraph 3B. Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in paragraph 7E.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or
-6-
<PAGE>
other business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
Section 7. Miscellaneous.
7A. Termination. This Agreement shall terminate upon the earlier of
(i) June 30, 1996 and (ii) the sending of notice by the Company to each
Stockholder that the Initial Public Offering will not be consummated.
7B. Termination of Stockholders Agreement. Contingent upon the
consummation of the Initial Public Offering, the Company and each of the
Stockholders hereby agree to terminate that certain Amended and Restated
Stockholders Agreement, dated as of March 15, 1995, by and among the Company and
the Stockholders.
7C. Expenses. The Company shall pay, and hold each Stockholder and
all holders of Common Stock harmless against liability for the payment of, the
fees and expenses of their special counsel arising in connection with the
negotiation and execution of this Agreement and the agreements contemplated
hereby and the consummation of the transactions contemplated hereby.
7D. Remedies. Any Person having any rights under any provision of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
7E. Legend. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued
on_______ __, 199__ and have not been registered under the Securities Act
of 1933, as amended. The transfer of the securities represented by this
certificate is subject to the conditions specified in the Recapitalization
Agreement, dated as of May 6, 1996 and as amended and modified from time to
time, between the issuer (the "Company") and certain investors, and the
Company reserves the right to refuse the transfer of such securities until
such conditions have been fulfilled with respect to such transfer. A copy
of such conditions shall be furnished by the Company to the holder hereof
upon written request and without charge."
7F. Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein
-7-
<PAGE>
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the holders of at least
two-thirds of the Common Stock held by the parties subject to this Agreement
(voting together as a single class).
7G. Survival of Representations and Warranties. All representations
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Stockholder or on its behalf.
7H. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Stockholder's benefit as a
Stockholder or holder of Common Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Common Stock.
7I. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7J. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
7K. Descriptive Headings; Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
7L. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by the
internal law, and not the law of conflicts, of New York.
7M. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or telecopied to the recipient. Such notices, demands and
other communications shall be sent to each Stockholder at the address indicated
next to such party's name on the signature pages hereto or to such other address
or to the attention of such other person as the recipient party has specified by
prior written notice to the sending party.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Recapitalization Agreement on the date first written above.
<TABLE>
<CAPTION>
<S> <C>
Address: POLYMER GROUP, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
Attention: President --------------------------
Telecopier: 803/747-4092
Its: Chairman, President & CEO
--------------------------
Address: THE INTERTECH GROUP, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
Attention: President --------------------------
Telecopier: 803/747-4092
Its: Chairman, President & CEO
--------------------------
Address: GOLDER, THOMA, CRESSEY FUND III
6100 Sears Tower LIMITED PARTNERSHIP
Chicago, IL 60606-6402
Attention: Bruce V. Rauner By: Golder, Thoma, Cressey & Rauner, L.P.
David A. Donnini Its: General Partner
Telecopier: 312/382-2201
By: /s/ Bruce V. Rauner
--------------------------
Its: General Partner
--------------------------
Address:
c/o The InterTech Group, Inc. /s/ Jerry Zucker
4838 Jenkins Avenue -------------------------------
North Charleston, SC 29406 Jerry Zucker
Telecopier: 803/747-4092
Address:
c/o The InterTech Group, Inc. /s/ James G. Boyd
4838 Jenkins Avenue -------------------------------
North Charleston, SC 29406 James G. Boyd
Telecopier: 803/747-4092
Address: FTG, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
Attention: President --------------------------
Telecopier: 803/747-4092 Its: Chairman, President & CEO
--------------------------
</TABLE>
-9-
<PAGE>
<TABLE>
<S> <C>
Address: CHASE MANHATTAN INVESTMENT
c/o Chase Capital Partners HOLDINGS, INC.
380 Madison Avenue, 12th Floor
New York, NY 10017 By: /s/ Donna L. Carter
Attention: Robert Ruggiero ------------------------------------
Telecopier: 212/622-3101 Its: Senior Vice President & Treasurer
------------------------------------
Address: LEEWAY & CO.
c/o State Street Bank and
Trust Company By: State Street Bank & Trust,
Master Trust Division-Q4W -------------------------------------
P.O. Box 1992 by /s/ John Muir
Boston, MA 02101 ----------------------------------
Telecopier: Its: Assistant Vice President
-------------------------------------
Address: CALIFORNIA PUBLIC EMPLOYEES'
CalPERS RETIREMENT SYSTEM
Investment Office
P.O. Box 2749
Sacramento, CA 95812-2749 By: /s/ David E. Maxwell
Attention: David E. Maxwell, -------------------------------------
Principal Investment Officer Its: Principal Investment Officer
Telecopier: 916/326-3330 -------------------------------------
</TABLE>
<PAGE>
ANNEX A--Example Share Calculation
There are currently 418,409 shares of Class A Common, 537,229 shares
of Class B Common and 71,000 shares of Class C Common outstanding (assuming
exercise of warrants to purchase shares of Class C Common). Assume the
aggregate face value of the Class A Common is $48,000,000 and the accrued yield
on the Class A Common is $6,826,308 as of April 30, 1996 and $7,094,044 as of
May 15, 1996. Further assume the Pre-Split IPO Price is $329.47349 per share
($16.50 post-Split) and therefore the Pre-IPO Company Value is $338,250,000.
Under the Current Certificate (i) first, the holders of Class A Common
are entitled to receive the face value of the Class A Common plus accrued but
unpaid yield thereon, (ii) second, the holders of Class A Common and Class B
Common are entitled to receive an amount equal to $85,000,000 less the amount
distributed to holders of Class A Common pursuant to clause (i) above (allocated
pro rata according to the number of shares owned) and (iii) third, holders of
Class A Common, Class B Common and Class C Common are entitled to receive the
remainder (allocated pro rata according to the number of shares owned).
Using the April 30, 1996 accrued yield assumptions, the
1,026,638.00093 shares of Common Stock to be outstanding after the exchange
would be distributed as follows: holders of Class A Common would receive an
aggregate of 166,405.82525 shares of Common Stock (3,322,806.49504 shares after
giving effect to the Split) in respect of the face value and accrued yield on
their Class A Common, holders of Class A Common and Class B Common would receive
an aggregate of 91,581.54727 shares of Common Stock (1,828,708.57831 shares
after giving effect to the Split) in respect of the distribution contemplated by
clause (ii) above and the holders of Class A Common, Class B Common and Class C
Common would receive an aggregate of 768,650.6284 shares of Common Stock
(15,348,484.9265 shares after giving effect to the Split) in respect of the
distribution contemplated by clause (iii) above. As a result, Holders of Class
A Common would receive 1.24225 shares of Common Stock per share of Class A
Common, for an aggregate of 519,768.73960 shares of Common Stock
(10,378,788.9715 shares after giving effect to the Split); holders of Class B
Common would receive .84454 shares of Common Stock per share of Class B Common
for an aggregate of 453,711.09397 shares of Common Stock (9,059,743.95834 shares
after giving effect to the Split); and holders of Class C Common would receive
.74871 shares of Common Stock per share of Class C Common, for an aggregate of
53,158.167735 shares of Common Stock (1,061,467 shares after giving effect to
the Split). Using the May 15, 1996 accrued yield assumption would, of course,
yield slightly different results.
The following chart shows the results of such calculations for each
Stockholder after giving effect to the Split as of April 30, 1996 and as of
May 15, 1996:
<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3 Class B Class C Common Stock Common Stock
Common Common Common Common Common As of April 30 As of May 15
------- ------ ------- ------- ------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Golder, Thoma, 190,277 115,000 185,902 10,707,531 10,711,029
Cressey Fund III
Chase Manhattan 25,832 35,000 14,136 1,747,348 1,748,434
Investment Holdings
The InterTech Group 210,765 3,554,307 3,550,728
Jerry Zucker 83,349 1,405,584 1,404,169
James G. Boyd 27,782 468,511 468,039
FTG 15,295 257,932 257,673
Leeway & Co. 26,150 35,500 1,179,394 1,179,964
CalPERS 26,150 35,500 1,179,394 1,179,964
------- ------ ------- ------- ------ -------------- ------------
Total 268,409 35,000 115,000 537,229 71,000 20,500,001 20,500,000
</TABLE>
-11-
<PAGE>
Exhibit 10.32
VOTING AGREEMENT
----------------
THIS AGREEMENT is made as of May 15, 1996, by and among Polymer Group,
Inc., a Delaware corporation (the "Company"), The InterTech Group, Inc., a South
Carolina corporation ("InterTech"), Golder, Thoma, Cressey Fund III Limited
Partnership, an Illinois limited partnership ("GTC"), Jerry Zucker ("Zucker"),
James G. Boyd ("Boyd"), FTG, Inc., a South Carolina corporation ("FTG"), Chase
Manhattan Investment Holdings, Inc., a Delaware corporation ("Chase") and Leeway
& Co. ("Leeway"). InterTech, GTC, Zucker, Boyd, FTG, Chase and Leeway are
sometimes collectively referred to herein as the "Stockholders" and individually
as a "Stockholder." Certain capitalized terms used herein are defined in
paragraph 4 hereof.
The Company and the Stockholders desire to enter into this Agreement
for the purpose of establishing the composition of the Company's board of
directors (the "Board").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors.
(a) From and after the date hereof and until the provisions of this
paragraph 1 cease to be effective, each Stockholder shall vote all of his or its
Stockholder Shares and any other voting securities of the Company over which
such Stockholder has voting control and shall take all other necessary or
desirable actions within his or its control (whether in the capacity as a
stockholder, director, member of a board committee or officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary and desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall be
established at seven directors;
(ii) the following persons shall be elected to the Board:
(A) the Chief Executive Officer of the Company;
(B) the Executive Vice President of the Company;
(C) two representatives designated by GTC (the "GTC
Directors"); and
<PAGE>
(D) two representatives jointly selected by GTC and the ZB
Group (based upon a vote of the holders of a majority of the Company's
voting stock held by the ZB Group (the "Independent Directors")),
provided that no Independent Director shall be (x) a member of the
Company's management or an employee or officer of the Company or any
of its Subsidiaries or (y) an officer, stockholder, general partner or
employee of GTC, any member of the ZB Group or any of their
Affiliates.
(iii) any committees of the Board are to be created only upon
the approval of a majority of the members of the Board;
(iv) the removal from the Board (with or without cause) of any
representative designated hereunder pursuant to (ii)(C) and (ii)(D) above
shall be at the written request of GTC and of GTC and the holders of a
majority of the Stockholder Shares held by the ZB Group, respectively, but
only upon such written request and under no other circumstances; and
(v) in the event that any representative designated pursuant to
(ii)(C) and (ii)(D) above for any reason ceases to serve as a member of the
Board during his term of office, the resulting vacancy on the Board shall
be filled by a representative designated by GTC and by GTC and the holders
of a majority of the Stockholder Shares held by the ZB Group, respectively,
as provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the Board
and any committee thereof. In addition, the Company shall pay to each GTC
Director and each Independent Director an annual fee of $5,000, and $500 for any
committee meeting attended on a day other than a day of a Board meeting; which
amounts shall be subject to periodic review and increase by the Board. So long
as any GTC Director or Independent Director serves on the Board and for five
years thereafter, the Company shall maintain directors and officers indemnity
insurance coverage satisfactory to GTC, and the Company's certificate of
incorporation and bylaws shall provide for indemnification and exculpation of
directors to the fullest extent permitted under applicable law.
(c) The rights of GTC and the ZB Group, respectively, under this
paragraph 1 shall terminate at such time as any such Person (together with its
Permitted Transferees) holds in the aggregate less than 10% of the Common Stock
on a fully diluted basis (assuming the exercise of all outstanding options,
warrants and other securities convertible into or exchangeable for Common
Stock).
(d) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this paragraph 1, the election of a person
to such directorship shall be accomplished in accordance with the Company's or
any Subsidiary's by-laws and applicable law, as appropriate.
2. Legend. Each certificate evidencing voting capital stock of the
Company owned by a party hereto and each certificate issued in exchange for or
upon the transfer of any such
-2-
<PAGE>
securities (if such shares remain subject hereto after such transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to a Voting
Agreement dated as of May 15, 1996, among the issuer of such securities
(the "Company") and certain of the Company's stockholders. A copy of such
Voting Agreement will be furnished without charge by the Company to the
holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall
be removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with the terms hereof.
3. Transfer. Prior to transferring any Stockholder Shares (other than
in a Public Sale or upon the Sale of the Company to any Person), the
transferring Stockholder shall cause the prospective transferee to execute and
deliver to the Company and the other Stockholders a counterpart of this
Agreement.
4. Definitions.
"Affiliate" means any Person which controls, is controlled by or is
under common control with another Person, any partner of any Person which is a
partnership and Persons which have received distributions of securities from a
partnership holding such securities.
"Certificate of Incorporation" means the Company's amended and
restated certificate of incorporation of the Company as filed with the Delaware
Secretary of State on May 15, 1996.
"Common Stock" means the Company's Common Stock, par value $.01 per
share.
"Family Group" means an Executive's spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of the Executive and/or
the Executive's spouse and/or descendants.
"Permitted Transferees" means (i) in the case of a Stockholder who is
a natural person, such person's spouse, descendants (whether natural or adopted)
and any trust solely for the benefit of such person and/or such person's spouse
and/or descendants, and (ii) in the case of any other Stockholder, any Affiliate
of such Stockholder.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
-3-
<PAGE>
"Recapitalization Agreement" means the Recapitalization Agreement of
even date herewith among the Company and the Stockholders.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Stockholder Shares" means (i) any Common Stock owned by any
Stockholder, whether acquired pursuant to the Recapitalization Agreement or
otherwise, and (ii) any equity securities issued or issuable directly or
indirectly with respect to the Securities referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Stockholder Shares, such shares will cease to be
Stockholder Shares when they have been disposed of in a Public Sale.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, association or other business
entity.
"ZB Group" means Zucker, Boyd, InterTech, and FTG.
5. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, GTC and the ZB Group
(determined by a vote of the holders of a majority of the Stockholder Shares
held by the ZB Group). The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
6. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
-4-
<PAGE>
7. Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral.
8. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind the Stockholders and the respective successors and assigns
of each of them.
9. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
10. Remedies. The Company and the Stockholders shall be entitled to
enforce their rights under this Agreement specifically to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in their favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of the Agreement and that the Company and the Stockholders in its
sole discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief (without posting a bond or
other security) in order to enforce or prevent any violation of the provisions
of this Agreement.
11. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the signature page hereto and to any
subsequent holder of Stockholder Shares subject to this Agreement at such
address as indicated by the Company's records, or at such address or to the
attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service. The
Company's address is:
Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, South Carolina 29406
Attention: President
12. Governing Law. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement shall be governed by the internal law, and not the law of conflicts,
of New York.
13. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stockholder
Agreement on the day and year first above written.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
---------------------------
Its: Chairman, President & CEO
---------------------------
Address: THE INTERTECH GROUP, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
---------------------------
Its: Chairman, President & CEO
---------------------------
Address: By: /s/ Bruce V. Rauner
6100 Sears Tower ---------------------------
Chicago, IL 60606-6402 Its: General Partner
---------------------------
Address: /s/ Jerry Zucker
c/o The InterTech Group, Inc. --------------------------------
4838 Jenkins Avenue Jerry Zucker
North Charleston, SC 29406
/s/ James G. Boyd
Address: --------------------------------
c/o The InterTech Group, Inc. James G. Boyd
4838 Jenkins Avenue
North Charleston, SC 29406
-6-
<PAGE>
Address: FTG, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
----------------------------------
Its: Chairman, President & CEO
----------------------------------
Address: CHASE MANHATTAN INVESTMENT
c/o Chase Capital Partners HOLDINGS, INC.
380 Madison Avenue, 12th Floor
New York, NY 10017 By: /s/ Donna L. Carter
Attention: Robert Ruggiero -----------------------------------
Its: Senior Vice President & Treasurer
----------------------------------
LEEWAY & CO.
By: State Street Bank & Trust Company,
Address: Partner
c/o State Street Bank and
Trust Company By: /s/ John Muir
Master Trust Division-Q4W ----------------------------------
P.O. Box 1992
Boston, MA 02101 Its: Assistant Vice President
---------------------------------
-7-
<PAGE>
Exhibit 10.33
AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
THIS AMENDMENT, dated as of May 15, 1996, is by and between Polymer Group,
Inc. (the "Company"), Chicopee, Inc., a Delaware corporation ("Chicopee") and
Jerry Zucker (the "Executive").
WHEREAS, the parties hereto are parties to a Management Agreement dated as
of March 15, 1995 (the "Management Agreement");
WHEREAS, the Company is contemporaneously with the execution hereof
consummating an initial public offering of its common stock; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Management Agreement as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Vesting. Notwithstanding anything to the contrary contained in the
Management Agreement, all Executive Stock shall be Vested Stock as of the date
hereof.
2. Amendments.
(i) The following definition set forth in Section 1 of the Management
Agreement is hereby amended in its entirety to read as follows:
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of May 15, 1996 among Polymer Group, Inc. and its subsidiaries and
the Chase Manhattan Bank, N.A. and certain other lenders, as the same may
be amended, modified or amended and restated from time to time.
(ii) The definitions of "Vested Stock" and "Unvested Stock" set forth in
Section 1 of the Management Agreement are hereby deleted in their entirety.
(iii) Sections 3, 4 and 6 of the Management Agreement and any definitions
which are not used outstide of such sections are hereby deleted in their
entirety.
3. Counterparts. This Amendment may be executed in counterparts each of
which may contain the signature of only one party but each such counterpart
shall be deemed an original and all such counterparts taken together shall
constitute one and the same Amendment.
4. Effect of Amendment. The Management Agreement, as previously amended
and otherwise as in effect immediately prior to this Amendment, continues in
full force and effect in accordance with the original terms thereof, except and
to the extent amended hereby. All
<PAGE>
references in the Management Agreement shall, from and after the effective date
of this Amendment, refer to the Management Agreement as amended hereby.
5. Definitions. All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given to such terms in the
Management Agreement.
6. Governing Law. All questions concerning the construction, validity and
interpretation of this Amendment will be governed by the internal law, and not
the law of conflicts, of the State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Management Agreement as of the date first above written.
POLYMER GROUP, INC.
By: /s/ James G. Boyd
Its: Executive Vice President, Treasurer and
Secretary
---------------------------------------
CHICOPEE, INC.
By: /s/ James G. Boyd
---------------------------------------
Its: Executive Vice President, Treasurer and
Secretary
---------------------------------------
/s/ Jerry Zucker
---------------------------------------
JERRY ZUCKER
<PAGE>
Exhibit 10.34
AMENDMENT NO. 3 TO MANAGEMENT AGREEMENT
THIS AMENDMENT, dated as of May 15, 1996, is by and between PGI
Polymer Inc., a Delaware corporation formerly known as Polymer Group, Inc. (the
"Company"), FiberTech Group, Inc., a Delaware corporation ("FiberTech"), Golder,
Thoma, Cressey Fund III Limited Partnership, an Illinois limited partnership, as
successor in interest to ZBG Partners, and Jerry Zucker (the "Executive").
WHEREAS, the parties hereto are parties to a Management Agreement
dated as of October 21, 1992, as subsequently amended as of June 24, 1994 and
March 15, 1995 (the "Management Agreement");
WHEREAS, pursuant to an Exchange Agreement dated as of June 29, 1994
(the "Exchange Agreement"), the Executive exchanged certain shares of capital
stock of the Company for shares of capital stock of Polymer Group, Inc., a
Delaware corporation ("New PGI");
WHEREAS, New PGI is contemporaneously with the execution hereof
consummating an initial public offering of its common stock; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Management Agreement as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Vesting. Notwithstanding anything to the contrary contained in
the Management Agreement, all Executive Stock shall be Vested Stock as of the
date hereof.
2. Amendments.
(i) The following definition set forth in Section 1 of the Management
Agreement is hereby amended in its entirety to read as follows:
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of May 15, 1996 among Polymer Group, Inc. and its subsidiaries and
the Chase Manhattan Bank, N.A. and certain other lenders, as the same may
be amended, modified or amended and restated from time to time.
(ii) The definitions of "Vested Stock" and "Unvested Stock" set forth
in Section 1 of the Management Agreement are hereby deleted in their entirety.
(iii) Paragraphs (e) and (f) of Section 2 and any definitions which
are not used
<PAGE>
outstide of such paragraphs are hereby deleted in their entirety.
(iv) Sections 3, 4 and 6 of the Management Agreement and any
definitions which are not used outstide of such sections are hereby deleted in
their entirety.
3. Counterparts. This Amendment may be executed in counterparts each
of which may contain the signature of only one party but each such counterpart
shall be deemed an original and all such counterparts taken together shall
constitute one and the same Amendment.
4. Effect of Amendment. The Management Agreement, as previously
amended and otherwise as in effect immediately prior to this Amendment,
continues in full force and effect in accordance with the original terms
thereof, except and to the extent amended hereby. All references in the
Management Agreement shall, from and after the effective date of this Amendment,
refer to the Management Agreement as amended hereby.
5. Definitions. All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given to such terms in the
Management Agreement.
6. Governing Law. All questions concerning the construction,
validity and interpretation of this Amendment will be governed by the internal
law, and not the law of conflicts, of the State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 3 to Management Agreement as of the date first above written.
POLYMER GROUP, INC.
By: /s/ James G. Boyd
---------------------------------------
Its: Executive Vice President, Treasurer and
Secretary
---------------------------------------
FIBERTECH GROUP, INC.
By: /s/ James G. Boyd
---------------------------------------
Its: Executive Vice President, Treasurer and
Secretary
---------------------------------------
GOLDER, THOMA, CRESSEY FUND III
LIMITED PARTNERSHIP
By: Golder, Thoma, Cressey &
Rauner, L.P.
Its: General Partner
By: /s/ Bruce V. Rauner
---------------------------------------
Its: General Partner
/s/ Jerry Zucker
--------------------------------------------
JERRY ZUCKER
<PAGE>
Exhibit 10.35
AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
THIS AMENDMENT, dated as of May 15, 1996, is by and between Polymer
Group, Inc. (the "Company"), Chicopee, Inc., a Delaware corporation ("Chicopee")
and James G. Boyd (the "Executive").
WHEREAS, the parties hereto are parties to a Management Agreement
dated as of March 15, 1995 (the "Management Agreement");
WHEREAS, the Company is contemporaneously with the execution hereof
consummating an initial public offering of its common stock; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Management Agreement as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Vesting. Notwithstanding anything to the contrary contained in
the Management Agreement, all Executive Stock shall be Vested Stock as of the
date hereof.
2. Amendments.
(i) The following definition set forth in Section 1 of the Management
Agreement is hereby amended in its entirety to read as follows:
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of May 15, 1996 among Polymer Group, Inc. and its subsidiaries and
the Chase Manhattan Bank, N.A. and certain other lenders, as the same may
be amended, modified or amended and restated from time to time.
(ii) The definitions of "Vested Stock" and "Unvested Stock" set forth
in Section 1 of the Management Agreement are hereby deleted in their entirety.
(iii) Sections 3, 4 and 6 of the Management Agreement and any
definitions which are not used outstide of such sections are hereby deleted in
their entirety.
3. Counterparts. This Amendment may be executed in counterparts each
of which may contain the signature of only one party but each such counterpart
shall be deemed an original and all such counterparts taken together shall
constitute one and the same Amendment.
4. Effect of Amendment. The Management Agreement, as previously
amended and otherwise as in effect immediately prior to this Amendment,
continues in full force and effect in accordance with the original terms
thereof, except and to the extent amended hereby. All references in the
Management Agreement shall, from and after the effective date of this Amendment,
refer to
<PAGE>
the Management Agreement as amended hereby.
5. Definitions. All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given to such terms in the
Management Agreement.
6. Governing Law. All questions concerning the construction,
validity and interpretation of this Amendment will be governed by the internal
law, and not the law of conflicts, of the State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 to Management Agreement as of the date first above written.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
--------------------------
Its: Chairman, President & CEO
--------------------------
CHICOPEE, INC.
By: /s/ Jerry Zucker
--------------------------
Its: Chairman, President & CEO
--------------------------
/s/ James G. Boyd
-------------------------------
JAMES G. BOYD
<PAGE>
Exhibit 10.36
AMENDMENT NO. 3 TO MANAGEMENT AGREEMENT
THIS AMENDMENT, dated as of May 15, 1996, is by and between PGI
Polymer Inc., a Delaware corporation formerly known as Polymer Group, Inc. (the
"Company"), FiberTech Group, Inc., a Delaware corporation ("FiberTech"), Golder,
Thoma, Cressey Fund III Limited Partnership, an Illinois limited partnership, as
successor in interest to ZBG Partners, and James G. Boyd (the "Executive").
WHEREAS, the parties hereto are parties to a Management Agreement
dated as of October 21, 1992, as subsequently amended as of June 24, 1994 and
March 15, 1995 (the "Management Agreement");
WHEREAS, pursuant to an Exchange Agreement dated as of June 29, 1994
(the "Exchange Agreement"), the Executive exchanged certain shares of capital
stock of the Company for shares of capital stock of Polymer Group, Inc., a
Delaware corporation ("New PGI");
WHEREAS, New PGI is contemporaneously with the execution hereof
consummating an initial public offering of its common stock; and
WHEREAS, the parties hereto desire to amend certain provisions of the
Management Agreement as set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Vesting. Notwithstanding anything to the contrary contained in
the Management Agreement, all Executive Stock shall be Vested Stock as of the
date hereof.
2. Amendments.
(i) The following definition set forth in Section 1 of the Management
Agreement is hereby amended in its entirety to read as follows:
"Credit Agreement" means the Amended and Restated Credit Agreement
dated as of May 15, 1996 among Polymer Group, Inc. and its subsidiaries and
the Chase Manhattan Bank, N.A. and certain other lenders, as the same may
be amended, modified or amended and restated from time to time.
(ii) The definitions of "Vested Stock" and "Unvested Stock" set forth
in Section 1 of the Management Agreement are hereby deleted in their entirety.
(iii) Paragraphs (e) and (f) of Section 2 and any definitions which
are no used outstide of such paragraphs are hereby deleted in their entirety.
<PAGE>
(iv) Sections 3, 4 and 6 of the Management Agreement and any
definitions which are not used outstide of such sections are hereby deleted in
their entirety.
3. Counterparts. This Amendment may be executed in counterparts each
of which may contain the signature of only one party but each such counterpart
shall be deemed an original and all such counterparts taken together shall
constitute one and the same Amendment.
4. Effect of Amendment. The Management Agreement, as previously
amended and otherwise as in effect immediately prior to this Amendment,
continues in full force and effect in accordance with the original terms
thereof, except and to the extent amended hereby. All references in the
Management Agreement shall, from and after the effective date of this Amendment,
refer to the Management Agreement as amended hereby.
5. Definitions. All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given to such terms in the
Management Agreement.
6. Governing Law. All questions concerning the construction,
validity and interpretation of this Amendment will be governed by the internal
law, and not the law of conflicts, of the State of Delaware.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 3 to Management Agreement as of the date first above written.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
--------------------------
Its: Chairman, President & CEO
--------------------------
FIBERTECH GROUP, INC.
By: /s/ Jerry Zucker
--------------------------
Its: Chairman, President & CEO
--------------------------
GOLDER, THOMA, CRESSEY FUND III
LIMITED PARTNERSHIP
By: Golder, Thoma, Cressey &
Rauner, L.P.
Its: General Partner
By: /s/ Bruce V. Rauner
--------------------------
Its: General Partner
/s/ James G. Boyd
---------------------------
JAMES G. BOYD
<PAGE>
Exhibit 10.37
AMENDMENT NO. 1 TO
ROLL-IN AGREEMENT
-----------------
This Amendment No. 1 to Roll-In Agreement (this "Amendment") is
entered into as of May 15, 1996 by and among ZB Holdings, Inc., a South Carolina
corporation ("ZBH"), The InterTech Group, Inc., a South Carolina corporation
("InterTech"), Polymer Group, Inc., a Delaware corporation ("PGI"), Polypore,
Inc., a Delaware corporation ("Polypore"), Chase Manhattan Investment Holdings,
Inc., a Delaware corporation ("CMIHI"), Jerry Zucker ("Zucker"), James Boyd
("Boyd"), and Golder, Thoma, Cressey Fund III Limited Partnership, an Illinois
limited partnership ("GTC").
The parties hereto, together with FTG, Inc., a South Carolina
corporation ("FTG"), are parties to a Roll-In Agreement, dated as of November
18, 1994 ("Agreement"). InterTech has acquired all of the PGI capital stock
owned by FTG and, as a result, has succeeded to the rights and obligations of
FTG with respect to such stock under the Agreement. The parties hereto desire
to amend the Agreement in the manner specified herein. Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
such terms in the Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments.
(A) The second paragraph of the Agreement (i.e., the second recital)
is hereby amended by deleting such paragraph and replacing it with the
following:
InterTech, GTC, Chase, Zucker and Boyd each own shares of PGI capital
stock (in their capacity as holders of such capital stock, the "PGI
Stockholders"). ZBH, GTC, Chase, Zucker and Boyd each own shares of
Polypore capital stock (in their capacity as holders of such capital
stock, the "Polypore Stockholders"). PGI and Polypore are
collectively referred to herein as the "Companies." The Polypore
Stockholders desire to grant to the PGI Stockholders the option to
cause the Polypore Stock (as defined below) to be exchanged for shares
of PGI Stock (as defined below) on the terms and subject to the
conditions set forth herein.
(B) A third paragraph (i.e., a third recital) is hereby added to the
Agreement as follows:
The parties hereto acknowledge that all outstanding shares of PGI
capital stock are to be exchanged for shares of PGI's common stock,
par value $.01 per share ("PGI Common Stock"), pursuant to a
Recapitalization Agreement to be entered into by and among PGI and
<PAGE>
its stockholders as of May 15, 1996 (the "Recapitalization
Agreement"). A portion of the PGI Common Stock to be issued pursuant
to the Recapitalization Agreement will be subject to this Agreement as
set forth in paragraph 1(b) hereof.
(C) Paragraph 1 of the Agreement is hereby amended by deleting such
paragraph and replacing it with the following:
1. Option to Require Exchange of Stock.
(a) At any time, the persons who hold, as of May 15, 1996, a
majority of the PGI Stock (as defined below) (the "PGI Majority
Holders") will have one election, exercisable by written notice
delivered to the Polypore Stockholders not less than 30 days prior to
the closing date selected by the PGI Majority Holders, to cause the
exchange (an "Exchange") by the Polypore Stockholders of the Polypore
Stock for the PGI Stock. Each class of the Polypore Stock shall be
allocated among the PGI Stockholders stock pro rata based upon their
ownership of PGI Stock prior to the exchange. The PGI Stock shall be
allocated among the Polypore Stockholders pro rata based upon the
relative values (determined under paragraph 2 below) of the Polypore
Stock given up in the exchange by each Polypore Stockholder.
(b) For purposes hereof, (i) the "PGI Stock" shall mean, for any
PGI Stockholder, a number of shares of PGI Common Stock equal to 21.5%
of the number of shares of PGI Common Stock into which the shares of
PGI capital stock set forth opposite each PGI Stockholder's name on
Schedule A attached hereto are converted pursuant to the
Recapitalization Agreement (as such number is equitably adjusted for
stock splits, stock dividends, combinations of shares,
recapitalizations and similar transactions), or such lesser number of
shares as may be owned by such PGI Stockholder at the time of an
Exchange, it being understood that this Agreement shall apply to a
certain number of shares of PGI Common Stock rather than any
particular shares of PGI Common Stock; and (ii) the "Polypore Stock"
shall mean, for any Polypore Stockholder, the number of shares of each
class of Polypore capital stock set forth opposite each Polypore
Stockholder's name on Schedule A attached hereto (as such numbers are
equitably adjusted for stock splits, stock dividends, combinations of
shares, recapitalizations and similar transactions); provided that
immediately prior to any Exchange, all shares of convertible preferred
stock of Polypore shall be converted to common stock.
-2-
<PAGE>
(c) If any PGI Stockholder owns less than the number of shares of
PGI Stock into which the shares of PGI capital stock set forth
opposite such PGI Stockholder's name on Schedule A attached hereto are
converted pursuant to the Recapitalization Agreement, the amount of
Polypore Stock to be exchanged by the Polypore Stockholders shall be
proportionately reduced, and such Polypore Stock received by the PGI
Stockholders shall be allocated pursuant to (a) above taking into
account such lesser number of shares.
(d) The costs and expenses of any Exchange will be paid 78.5% by
the PGI Stockholders and 21.5% by the Polypore Stockholders.
(D) All references to the defined term "Roll-In" anywhere in the
Agreement shall be amended by deleting such reference and replacing it with
the defined term "Exchange."
(E) Paragraph 2 of the Agreement is hereby amended by deleting the
parenthetical at the end of the last sentence thereof.
(F) Paragraph 3 of the Agreement is hereby amended by deleting the
last three sentences thereof.
(G) Paragraph 4(b) of the Agreement is hereby amended by deleting
such paragraph and replacing it with the following:
(b) Stockholders' Agreements; Regulation Y.
(i) All stockholder agreements relating to the PGI Stock
and/or the Polypore Stock in existence immediately prior to any
Exchange shall remain in full force and effect immediately after such
Exchange, and the PGI Stock or Polypore Stock (as the case may be)
shall continue to be subject to the terms thereof; provided that PGI,
Polypore, the PGI Stockholders and the Polypore Stockholders hereby
waive any restrictions on transfer that may be contained in any such
agreement (whether now in existence or subsequently entered into) with
respect to any Exchange.
(ii) Any holder of stock who is subject to Regulation Y
promulgated by the Board of Governors of the Federal Reserve, or any
successor regulation thereto, will not be required to accept any
securities in an Exchange which it would not be required to accept
under Section 8.2(h) of the Stockholders Agreement, dated as of
November 18, 1994, among Polypore, the Polypore Stockholders and
certain other parties, and the parties will comply with Section 3H of
the Purchase Agreement, dated as of November 18, 1994, among Polypore,
GTC, ZBH and Chase, with respect to any Exchange.
-3-
<PAGE>
(H) Paragraph 5 of the Agreement is hereby amended by deleting all
references therein to "PGI Stock".
(I) Paragraph 6 of the Agreement is hereby amended by deleting the
first sentence thereof and replacing it with the following:
Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement shall be effective against
any party unless such modification, amendment or waiver is approved in
writing by the holders of a majority of the PGI Stock and the holders
of a majority of the Polypore Stock; provided that to the extent any
amendment would materially and adversely affect any party hereto, such
amendment will not be effective without such party's consent.
(J) Paragraph 14 of the Agreement is hereby amended by deleting such
paragraph and replacing it with the following:
This Agreement will terminate on the earlier of (i) the tenth
anniversary of the date hereof and (ii) the occurrence of a Change in
Control. The rights of the PGI Majority Holders hereunder will
terminate on the earlier of (i) the date the Exchange contemplated
hereby is consummated and (ii) the first date on which GTC does not
own any PGI Common Stock. For purposes of this Agreement, "Change in
Control" means the acquisition by an independent third party of a
majority of the voting securities of Polypore or the sale by Polypore
to an independent third party of all or substantially all of its
assets.
2. Conditions to Effectiveness. This Amendment will be effective
only upon (i) the consummation of the initial public offering of PGI's common
stock, and (ii) the execution by Connecticut General Life Insurance Company and
CIGNA Mezzanine Partners III, L.P. of the consent attached hereto as Exhibit I.
3. Miscellaneous. This Amendment may be executed in two or more
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same Amendment. This Amendment shall be governed
by the internal law, and not the law of conflicts, of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 to Roll-In Agreement on the day and year first above written.
THE INTERTECH GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------------
Its: Chairman, President & CEO
-------------------------------------
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------------
Its: Chairman, President & CEO
-------------------------------------
POLYPORE, INC.
By: /s/ Jerry Zucker
-------------------------------------
Its: Chairman, President & CEO
-------------------------------------
CHASE MANHATTAN INVESTMENT HOLDINGS, INC.
By: /s/ Donna L. Carter
-------------------------------------
Its: Senior Vice President & Treasurer
/s/ Jerry Zucker
------------------------------------------
JERRY ZUCKER
/s/ James G. Boyd
------------------------------------------
JAMES BOYD
<PAGE>
CONTINUATION OF SIGNATURE PAGES TO
AMENDMENT NO. 1 TO ROLL-IN AGREEMENT
GOLDER, THOMA, CRESSEY FUND III LIMITED
PARTNERSHIP
By: Golder, Thoma, Cressey, Rauner, L.P.
Its: General Partner
By: /s/ Bruce V. Rauner
-------------------------------------
Its: General Partner
-------------------------------------
ZB HOLDINGS, INC.
By: /s/ Jerry Zucker
-------------------------------------
Its: Chairman, President & CEO
-------------------------------------
<PAGE>
SCHEDULE A
----------
PGI Stockholders
----------------
<TABLE>
<CAPTION>
Name PGI Stock/1/
- ---- ------------
Class Class Class Class
A-1 A-2 A-3 B
Common Common Common Common
------ ------ ------ ------
<S> <C> <C> <C> <C>
GTC 111,825 115,000 185,902
InterTech 118,476
Zucker 21,802
Boyd 7,267
CMIHI 17,248 14,136
</TABLE>
Polypore Stockholders
---------------------
<TABLE>
<CAPTION>
Name Polypore Stock/2/
- ---- -----------------
Class A Class B-1 Class B-2
Preferred Preferred/3/ Preferred/3/ Common Stock
--------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
GTC 2,565 18,314
ZBH 5,861 41,872
Zucker 27,876
Boyd 9,289
CMIHI 2,565 18,314
</TABLE>
- ---------------------
/1/ Amounts represent PGI capital stock outstanding as of the time of the
Polypore acquisition/formation, as adjusted for the recapitalization which
occurred on March 15, 1995 in connection with the Chicopee acquisition. All
such shares will be converted into PGI Common Stock pursuant to the
Recapitalization Agreement.
/2/ Amounts are equal to 78.5% of each class of capital stock held by the
indicated stockholder.
/3/ All convertible preferred stock will be converted into common stock prior
to the Exchange.
<PAGE>
Exhibit I
---------
Consent to Amendment
The undersigned hereby consent to Amendment No. 1 to Roll-In Agreement
in the form attached hereto as Annex 1.
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc. (as Agent)
By:
--------------------------------------
Its:
--------------------------------------
CIGNA MEZZANINE PARTNERS III, L.P.
By: CIGNA Investments, Inc. (as Agent)
By:
--------------------------------------
Its:
--------------------------------------
<PAGE>
Exhibit 10.38
INDEMNIFICATION AGREEMENT
-------------------------
THIS AGREEMENT is made as of April 1, 1996 among Polymer Group, Inc.,
a Delaware corporation (together with each of its subsidiaries, the "Company"),
The InterTech Group, Inc., a South Carolina corporation ("InterTech"), Golder,
Thoma, Cressey Fund III Limited Partnership, an Illinois limited partnership
("GTC Fund III"), Golder, Thoma, Cressey, Rauner, Inc., a Delaware corporation
("GTCR"), ConX, Inc., a South Carolina corporation ("ConX"), ConX II, Inc., a
Delaware corporation ("ConX II"), Jerry Zucker ("Zucker") and James G. Boyd
("Boyd"). InterTech, GTC Fund III, GTCR, ConX, ConX II, Zucker, Boyd and, as
applicable, each of their respective directors, officers, partners and agents,
are referred to herein as the "Indemnified Parties." Except as otherwise
indicated herein, capitalized terms used herein are defined in Section 6 hereof.
Pursuant to a Letter Agreement (the "Danaklon Letter Agreement"),
dated as of September 28, 1995, by and among ConX, ConX II, Danaklon a/s and
Danaklon Americas, Inc., ConX II has guaranteed the performance by ConX and The
FiberTech Group, Inc. ("FiberTech") of certain obligations under a Supply and
Cooperation Agreement (the "Supply and Cooperation Agreement") between Danaklon
Americas, Inc. and FiberTech. ConX and FiberTech are wholly owned subsidiaries
of the Company and the guarantee of their obligations allowed the Company to
obtain certain benefits under the Supply and Cooperation Agreement.
Pursuant to (i) a Loan and Security Agreement (the "First Union Credit
Agreement"), dated as of June 9, 1995, by and among First Union National Bank of
South Carolina ("First Union") as lender, ConX II as borrower and Zucker and
Boyd as guarantors, (ii) an Unconditional Guaranty, dated as of June 9 1995, by
and between First Union and Zucker, relating to the First Union Credit Agreement
and (iii) an Unconditional Guaranty, dated as of June 9 1995, by and between
First Union and Boyd, relating to the First Union Credit Agreement, Zucker and
Boyd have guaranteed the performance by ConX II of certain of its obligations
under the First Union Credit Agreement (collectively, the "First Union
Guarantees"). The loans to ConX II under the First Union Credit Agreement have
enabled ConX II to perform its obligations under its Services/Production
Agreement and its Fiber Supply agreement with FiberTech.
Pursuant to a Letter Agreement (the "GTC Letter Agreement"), dated as
of June 9, 1995, by and among GTC Fund III, Zucker and Boyd, relating to First
Union Credit Agreement, GTC Fund III have indemnified Zucker and Boyd for a
portion of any amounts for which they may become liable in connection with their
guarantees under the First Union Credit Agreement.
Pursuant to a Purchase Agreement (the "J&J Purchase Agreement"), dated
as of January 27, 1995, by and among Johnson & Johnson Advanced Materials
Company, Johnson & Johnson, InterTech and Chicopee, Inc. ("Chicopee"), and a
Supply Agreement (the "J&J Supply Agreement"), dated as of March 15, 1995, by
and among Johnson & Johnson and Chicopee, InterTech has guaranteed performance
by Chicopee of certain of its obligations under the J&J Purchase Agreement and
the J&J Supply Agreement. Chicopee is a wholly owned subsidiary of the Company
which was formed to acquire the nonwoven fabrics business of Johnson & Johnson
-1-
<PAGE>
pursuant to the J&J Purchase Agreement. Johnson & Johnson purchases a
substantial amount of product from Chicopee pursuant to the J&J Supply
Agreement.
Pursuant to a Guaranty as an Inducement to Make Loan, dated as of
September 1, 1993, by and among Zucker and Enterprise Zone Development
Corporation of Vineland and Millville (the "Development Corporation") and a
Guaranty as an Inducement to Make Loan, dated as of September 1, 1993, by and
among InterTech and the Development Corporation, Zucker and InterTech have
guaranteed the performance by ConX of certain of its obligations under a loan
agreement between ConX and the Development Corporation (collectively, the
"Development Corporation Guarantees"). ConX, a wholly owned subsidiary of the
Company, used the proceeds of such loan agreement to make substantial
improvements to its Vineland facility.
Pursuant to certain other agreements, the Indemnified Parties have
from time to time, individually or collectively, guaranteed the performance of
certain obligations of affiliates of the Company (collectively, "Other
Guaranteed Obligations"). The Indemnified Parties' obligations under the
Danaklon Letter Agreement, the First Union Guarantees, the GTC Letter Agreement,
the J&J Purchase Agreement, the J&J Supply Agreement, the Development
Corporation Guarantees and the Other Guaranteed Obligations are collectively
referred to herein as the "Indemnified Obligations."
The Indemnified Parties have entered into the Indemnified Obligations
at the request of the Company and at substantial personal risk to themselves.
Each of the Indemnified Obligations represents a significant benefit to the
Company or to one of its affiliates. The Company desires to defend, hold
harmless and indemnify the Indemnifies Parties from and against any losses they
may incur from time to time in respect of the Indemnified Obligations.
The parties hereto agree as follows:
Section 1. Indemnification.
1A. Indemnification Obligation. If any Indemnified Party suffers any
Adverse Consequences in respect of any of the Indemnified Obligations, the
Company shall defend, hold harmless and indemnify such Indemnified Party from
and against the entirety of such Adverse Consequences the Indemnified Party may
suffer through and after the date of the claim for indemnification in respect of
such Indemnified Obligations. "Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and attorneys' fees and
expenses.
1B. Notice; Payment. If any Indemnified Party suffers any Adverse
Consequences which may give rise to a claim for indemnification hereunder, then
such Indemnified Party shall promptly notify the Company thereof in writing,
providing written evidence of the incurrence of such Adverse Consequences;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Company shall relieve the Company from any obligation hereunder.
The Company shall promptly, but in any event within ten days after receipt of
such
-2-
<PAGE>
notice, pay such Indemnified Party such amounts as are due with respect to such
Indemnified Obligation. If such Indemnified Party suffers additional Adverse
Consequences with respect to such Indemnified Obligation, the Company shall pay
such Indemnified Party such additional amounts in accordance with the terms of
this Section 1B.
1C. Right of Setoff. Any Indemnified Party shall have the option of
recouping all or any part of any Adverse Consequences it may suffer (in lieu of
seeking any indemnification to which it is entitled under this Agreement) by
notifying the Company that such Indemnified Party is reducing the amount
outstanding under any amounts otherwise payable by such Indemnified Party,
irrespective of whether the terms of such amounts payable to such Indemnified
Party expressly allow a right of setoff against such amounts.
1D. Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Indemnified Party may have against the
Company.
Section 2. Miscellaneous.
2A. Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Indemnified Party to which such amendment relates. No other course of dealing
between the Company and any Indemnified Party or any delay in exercising any
rights hereunder shall operate as a waiver of any rights of any such holder.
2B. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
2C. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
2D. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
2E. Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by the internal law, and not the law of conflicts, of
New York.
2F. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be
-3-
<PAGE>
deemed to have been given when delivered personally to the recipient, sent to
the recipient by reputable overnight courier service (charges prepaid) or mailed
to the recipient by certified or registered mail, return receipt requested and
postage prepaid. Such notices, demands and other communications shall be sent
to each Stockholder at the address indicated next to such party's name on the
signature pages hereto or to such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party.
* * * * * * * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement on the date first written above.
<TABLE>
<S> <C>
Address: POLYMER GROUP, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
Attention: President ---------------------------------------
Its: Chairman, President & CEO
Address: THE INTERTECH GROUP, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ Jerry Zucker
Attention: President ----------------------------------------
Its: Chairman, President & CEO
----------------------------------------
Address: CONX, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ James G. Boyd
Attention: President ----------------------------------------
Its: Executive Vice President and Treasurer
----------------------------------------
Address: CONX II, INC.
4838 Jenkins Avenue
North Charleston, SC 29406 By: /s/ James G. Boyd
Attention: President ----------------------------------------
Its: Executive Vice President and Treasurer
----------------------------------------
GOLDER, THOMA, CRESSEY FUND III
LIMITED PARTNERSHIP
Address:
6100 Sears Tower By: Golder, Thoma, Cressey & Rauner, L.P.
Chicago, IL 60606-6402 ----------------------------------------
Attention: Bruce V. Rauner Its: General Partner
David A. Donnini ----------------------------------------
By: /s/ Bruce V. Rauner
----------------------------------------
Its: General Partner
---------------------------------------
GOLDER, THOMA, CRESSEY, RAUNER, INC.
Address:
6100 Sears Tower By: /s/ Bruce V. Rauner
Chicago, IL 60606-6402 ----------------------------------------
Attention: Bruce V. Rauner Its: Principal
David A. Donnini ----------------------------------------
Address:
c/o The InterTech Group, Inc. /s/ Jerry Zucker
4838 Jenkins Avenue ---------------------------------------------
North Charleston, SC 29406 Jerry Zucker
Address:
c/o The InterTech Group, Inc. /s/ James G. Boyd
4838 Jenkins Avenue ---------------------------------------------
North Charleston, SC 29406 James G. Boyd
</TABLE>
<PAGE>
Exhibit 10.40
FIFTH SUPPLEMENT INDENTURE
FIFTH SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as of
June 19, 1997, between Polymer Group, Inc., a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois banking corporation
(the "Trustee"). All capitalized terms used herein without definition herein
shall have the meaning ascribed thereto in the Indenture (as defined).
W I T N E S S E T H:
WHEREAS, pursuant to the Offer to Purchase and Consent Solicitation
Statement dated June 5, 1997 (the "Statement") and related Consent and Letter of
Transmittal (together with the Statement, the "Offer"), the Corporation has
commenced an offer to purchase (the "Tender Offer") all of the Corporation's
outstanding 12 1/4% Senior Notes due 2002 (the "Notes") and to solicit consents
(the "Consent Solicitation") to the amendment of certain provisions of the
indenture, dated as of June 24, 1994, between the Company and First Union
National Bank of South Carolina ("First Union"), as amended by the First
Supplemental Indenture dated as of March 15, 1995 between the Company and First
Union, the Second Supplemental Indenture dated as of September 14, 1995 among
the Company, First Union and Harris Trust and Savings Bank, as Trustee, the
Third Supplemental Indenture dated as of April 9, 1996 between the Company and
the Trustee, and the Fourth Supplemental Indenture dated as of August 14, 1996
between the Company and the Trustee (as so amended, the "Indenture"), pursuant
to which the Notes were issued;
WHEREAS, Section 902 of the Indenture authorizes the Company and the
Trustee, from time to time, with the consent of the Holders of not less than a
majority in principal amount of Outstanding Notes and when authorized by a Board
Resolution, to amend the Indenture by supplemental indenture for the purpose
therein set forth;
WHEREAS, in accordance with Section 902 of the Indenture, the Trustee, the
Company and the Holders (as defined in the Indenture) of a majority in principal
amount of the Outstanding Securities (as defined in the Indenture) as of the
date hereof have agreed to amend certain terms related to limitations on
Indebtedness (as set forth in Section 1011 of the Indenture), limitations on
Restricted Payments (as set forth in Section 1012 of the Indenture), limitations
on transactions with Affiliates (as set forth in Section 1013 of the Indenture),
limitations on certain Subordinated Indebtedness (as set forth in Section 1014
of the Indenture), limitations on Liens (as set forth in Section 1015 of the
Indenture), limitations on Restricted Subsidiary Capital Stock (as set forth in
Section 1018 of the Indenture), and limitations on Dividends and other payment
restrictions affecting Restricted Subsidiaries (as set forth in Section 1019 of
the Indenture);
<PAGE>
WHEREAS, the Company and the Guarantors, by appropriate corporate action,
have determined to amend the provisions of the Indenture in the manner described
below and have taken all acts and proceedings required by law, by the Indenture,
and by their respective Articles of Incorporation and Bylaws necessary to duly
authorize, execute and deliver this Supplemental Indenture and to constitute
this Supplemental Indenture a legal, valid and binding agreement of the Company
and the Guarantors enforceable against the Company and Guarantors in accordance
with the terms herein;
WHEREAS, the Company desires that the modifications, additions and
amendments contained herein become operative and effective on the date the
Company accepts for purchase and payment Notes validly tendered (and not validly
withdrawn) pursuant to the terms of the Offer.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Amendment to Section 101. The text of Section 101 of the
Indenture is hereby amended as follows:
Insert the following as a new definition immediately prior to the
definition of "Acquired Indebtedness":
"Acceptance Date" means the date the Company accepts for purchase and
payment Notes validly tendered (and not withdrawn) pursuant to the terms of
the Offer to Purchase and Consent Solicitation Statement dated June 5,
1997.
Section 2.1 Amendments of Section 1011. Section 1011 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.2 Amendments of Section 1012. Section 1012 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.3 Amendments of Section 1013. Section 1013 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.4 Amendments of Section 1014. Section 1014 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.5 Amendments of Section 1015. Section 1015 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.6 Amendments of Section 1018. Section 1018 is hereby amended
by deleting the existing subsection in its entirety.
-2-
<PAGE>
Section 2.7 Amendments of Section 1019. Section 1019 is hereby amended
by deleting the existing subsection in its entirety.
Section 2.8 Deletion of Certain Definitions. The Indenture is hereby
amended to delete all definitions and defined terms from the Indenture where all
references to such definitions or defined terms would be eliminated as a result
of the amendments set forth herein.
Section 3. Operative Effect of Amendments. Sections 2.1 through 2.8
shall not become operative unless and until the Company accepts for purchase and
payment Notes validly tendered (and not withdrawn) on the Acceptance Date
pursuant to the Offer, at which time such Sections shall become operative and
shall be in full force and effect. In the event the Acceptance Dates does not
occur on or prior to October 1, 1997, such Sections shall be null and void and
of no further effect.
Section 4. Governing Law. This Supplemental Indenture shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts to be performed entirely in that State.
Section 5. Counterparts. This Supplemental Indenture may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Section 6. Severability. In case any provision in this Supplemental
Indenture 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 7. Ratification. Except as expressly amended hereby, each
provision of the Indenture shall remain in full force and effect and, as amended
hereby, the Indenture is in all respects agreed to, ratified and confirmed by
each of the Company, the Guarantors and the Trustee.
* * *
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
PGI POLYMER, INC.,
as Guarantor
By: /s/ Jerry Zucker
-------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
FIBERTECH GROUP, INC.,
as Guarantor
By: /s/ Jerry Zucker
---------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
TECHNETICS GROUP, INC.,
as Guarantor
By: /s/ Jerry Zucker
---------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
-4-
<PAGE>
[Signatures Continued]
FIBERGOL CORPORATION,
as Guarantor
By: /s/ Jerry Zucker
---------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
CHICOPEE HOLDINGS, INC.,
as Guarantor
By: /s/ Jerry Zucker
---------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
CHICOPEE, INC.,
as Guarantor
By: /s/ Jerry Zucker
---------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
-5-
<PAGE>
[Signatures Continued]
PNA CORP.
By: /s/ Jerry Zucker
----------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
FNA POLYMER CORP.
By: /s/ Jerry Zucker
----------------------------------------
Title: Chairman, President & CEO
Attest: /s/ James G. Boyd
--------------------------------
Title: Executive Vice President
& Treasurer
HARRIS TRUST AND SAVINGS BANK
By: /s/ Judy Bartolini
----------------------------------------
Title: Vice President
Attest: /s/ D.G. Donovan
-------------------------------
Title: Assistant Secretary
-6-
<PAGE>
EXHIBIT 10.41
POLYMER GROUP, INC.
$400,000,000
9% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
June 30, 1997
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Polymer Group, Inc., a Delaware corporation, proposes to issue and
sell $400,000,000 aggregate principal amount of its 9% Senior Subordinated Notes
due 2007 (the "Notes"). The Notes will be issued pursuant to an Indenture to be
dated as of July 1, 1997 (the "Indenture") between the Company, the Guarantors
(as defined below) and Harris Trust and Savings Bank, as trustee (the
"Trustee"). The Notes will be unconditionally guaranteed on a senior
subordinated basis (the "Guarantees") by each of PGI Polymer, Inc., a Delaware
Corporation, PNA Corp., a North Carolina corporation, FNA Polymer Corp., a North
Carolina corporation, Fabrene Group, Inc., a Canadian corporation, Fabrene
Corp., a Delaware corporation, Fabrene Group, L.L.C., a Delaware limited
liability company, FiberTech Group, Inc., a Delaware corporation, Technetics
Group, Inc., a Delaware corporation, FiberGol Corporation, a Delaware
corporation, Chicopee Holdings, Inc., a Delaware corporation, Chicopee, Inc., a
Delaware corporation, and Chicopee Holdings, B.V., a Delaware corporation
(collectively, the "Guarantors" and, together with the Company, the "Issuers"),
pursuant to the terms of the Indenture. The Notes and the Guarantees are
sometimes referred to herein together as the "Securities." The Issuers hereby
confirm their agreement with Chase Securities Inc. ("CSI" or the "Initial
Purchaser") concerning the purchase of the Securities by the Initial Purchaser.
The Securities will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom. The Company has
prepared a preliminary offering memorandum dated June 17, 1997 (the "Preliminary
Offering Memorandum") and an offering
<PAGE>
-2-
memorandum dated the date hereof (the "Final Offering Memorandum") setting forth
information concerning the Issuers and the Securities. Copies of the Preliminary
Offering Memorandum have been, and copies of the Final Offering Memorandum will
be, delivered by the Company to the Initial Purchaser pursuant to the terms of
this Agreement. Any references herein to the Preliminary Offering Memorandum and
the Final Offering Memorandum shall be deemed to include all amendments and
supplements thereto, unless otherwise noted. Each of the Issuers hereby confirms
that it has authorized the use of the Preliminary Offering Memorandum and the
Final Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchaser in accordance with Section 2.
Holders of the Securities (including the Initial Purchaser and its
direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Issuers
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Notes") which are identical in
all material respects to the Notes and which are unconditionally guaranteed by
each of the Guarantors (except that the Exchange Securities will not contain
terms with respect to transfer restrictions) and (ii) under certain limited
circumstances, a shelf registration statement with respect to the resale of the
Securities pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
The Securities are being offered in connection with the refinancing of
certain of the Company's outstanding indebtedness, consisting of (i) an offer
(the "Tender Offer") to purchase all, but not less than a majority, of the
Company's outstanding 121/4% Senior Notes due 2002 (the "Existing Notes"), (ii)
a related solicitation of consents (the "Consent Solicitation") to modify
certain terms of the indenture under which the Existing Notes were issued, (iii)
the refinancing (the "Refinancing") of the outstanding indebtedness under the
Company's existing credit facility and (iv) the execution by the Company of the
amended credit facility (the "Amended Credit Facility"). The consummation of the
Tender Offer, Consent Solicitation, the Refinancing and the execution and
delivery of the Amended Credit Facility are referred to herein collectively as
the "Transaction." The net proceeds from the Offering, together with borrowings
under the Amended Credit Facility will be used by the Company to effect the
Transaction and to pay related fees and expenses.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Final Offering Memorandum.
<PAGE>
-3-
1. Representations, Warranties and Agreements of the Issuers. Each of
the Issuers represents and warrants to, and agrees with, the Initial Purchaser
on and as of the date hereof and the Closing Date (as defined in Section 3)
that:
(a) The Final Offering Memorandum, as of its date, did not, and on the
Closing Date will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Issuers make no representation or
warranty as to information contained in or omitted from the Final Offering
Memorandum in reliance upon and in conformity with written information
relating to the Initial Purchaser furnished to the Company by or on behalf
of the Initial Purchaser expressly for use therein (the "Initial
Purchaser's Information").
(b) The Final Offering Memorandum, as of its respective date, contains
all of the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective purchaser
pursuant to Rule 144A(d)(4) under the Securities Act; and the Securities
satisfy the eligibility requirements of Rule 144A(d)(3) under the
Securities Act.
(c) Assuming the accuracy of the representations and warranties of the
Initial Purchaser contained in Section 2 and its compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Securities to the Initial Purchaser and the offer,
resale and delivery of the Securities by the Initial Purchaser in the
manner contemplated by this Agreement and the Final Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The Company and each of the Subsidiaries (as defined in paragraph
(e) below) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in which
their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the failure
to so qualify or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the financial condition,
results of operations or business prospects of the Company and the
Subsidiaries, taken as a whole (a "Material Adverse Effect").
<PAGE>
-4-
(e) As of the dates set forth therein, the Company had the authorized,
issued and outstanding capitalization as set forth in the Final Offering
Memorandum under the heading "Capitalization"; all of the outstanding
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable. The entities
listed on Schedule I hereto are the only active subsidiaries, direct and
indirect, of the Company (collectively, the "Subsidiaries"). All of the
outstanding shares of capital stock of each Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable and are
owned directly or indirectly by the Company, free and clear of any lien,
charge, encumbrance, security interest, restriction upon voting or transfer
or any other claim of any third party except for any such lien, charges,
encumbrances, security interests and restrictions existing under or in
connection with the Amended Credit Facility; and except as set forth in the
Final Offering Memorandum or incorporated therein by reference, there were
no material (i) options, warrants or other rights to purchase, (ii)
agreements or other obligations of the Company to issue or (iii) other
rights to convert any obligation into, or exchange any securities for,
shares of capital stock of or ownership interests in the Company or any of
the Subsidiaries outstanding.
(f) Each of the Issuers has all requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement, the Notes (in the case of the Company) and
the Guarantees endorsed on the Notes (in the case of the Guarantors) and
the Amended Credit Facility (collectively, the "Transaction Documents") and
to perform its obligations hereunder and thereunder; and all corporate
action required to be taken by each of the Issuers for the due and proper
authorization, execution and delivery of each of the Transaction Documents
to which it is a party and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered by
each of the Issuers and constitutes a valid and legally binding agreement
of each of the Issuers.
(h) The Registration Rights Agreement has been duly authorized by each
of the Issuers and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms, except to the extent that (i) such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and (ii) the
enforce-
<PAGE>
-5-
ability of rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or regulations or the public
policy underlying such laws or regulations.
(i) The Indenture has been duly authorized by each of the Issuers and,
when duly executed and delivered in accordance with its terms by each of
the parties thereto, will constitute a valid and legally binding agreement
of each of the Issuers, enforceable against each of the Issuers in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered in
a proceeding in equity or at law.
(j) The Notes have been duly authorized by the Company and, when duly
executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(k) The Guarantees to be endorsed on the Notes have been duly
authorized by each of the Guarantors and, when duly executed by each of the
Guarantors and when the Notes are duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein,
will constitute valid and legally binding obligations of each of the
Guarantors entitled to the benefits of the Indenture, enforceable against
each of the Guarantors in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(l) The Exchange Notes have been duly authorized by the Company and,
when executed, authenticated, issued and delivered as provided in the
Indenture and the Registration Rights Agreement in exchange for the Notes,
will be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Company entitled to the benefits of
the Indenture, enforceable against the Company in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, re-
<PAGE>
-6-
organization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(m) The Guarantees to be endorsed on the Exchange Notes have been duly
authorized by each of the Guarantors and, when duly executed by each of the
Guarantors and when the Exchange Notes are duly executed, authenticated,
issued and delivered as provided in the Indenture and the Registration
Rights Agreement in exchange for the Notes, will constitute valid and
legally binding obligations of each of the Guarantors entitled to the
benefits of the Indenture, enforceable against each of the Guarantors in
accordance with their terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered in
a proceeding in equity or at law).
(n) Each Transaction Document conforms in all material respects to the
description thereof contained in the Final Offering Memorandum.
(o) The execution, delivery and performance by each of the Issuers of
each of the Transaction Documents to which it is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by each
of the Issuers with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents and the Transaction
will not (i) conflict with or result in a breach or violation of any of the
terms or the provisions of, or constitute a default under, or, with notice
or lapse of time or both, constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of any of the Issuers pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which
any of the Issuers is a party or by which any of the Issuers is bound or to
which any of the property or assets of any of the Issuers is subject or
(ii) result in any violation of the provisions of (a) the charter or by-
laws of any of the Issuers or (b) any statute or any judgment, order,
decree, rule or regulation of any court or arbitrator or governmental
agency or body having jurisdiction over any of the Issuers or any of their
properties or assets, except, in the case of clause (i) above, for any such
events which would not, singularly or in the aggregate, have a Material
Adverse Effect or a material adverse effect on the ability of the Issuers
to enter into each of the Transaction Documents and consummate each of the
transactions contemplated thereby; and no consent, approval, authorization
or order of, or filing or registration with, any such court or arbitrator
or governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery
<PAGE>
-7-
and performance by each of the Issuers of each of the Transaction Documents
to which it is a party, the issuance, authentication, sale and delivery of
the Securities and compliance by each of the Issuers with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents and the Transaction, except for such consents, approvals,
authorizations, filings, registrations or qualifications (a) which shall
have been obtained or made prior to the Closing Date, (b) as may be
required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement and
(c) which would not, singularly or in the aggregate, have a Material
Adverse Effect.
(p) Ernst & Young LLP are independent certified public accountants
with respect to the Company and its consolidated subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its interpretations
and rulings thereunder. The historical financial statements (including the
related notes) contained in the Final Offering Memorandum comply in all
material respects with the requirements applicable to a registration
statement on Form S-1 under the Securities Act (except that certain
supporting schedules are omitted); such historical financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and
fairly present the financial position of the entities purported to be
covered thereby at the respective dates indicated and the results of their
operations and their cash flows for the respective periods indicated; and
the financial information contained in the Final Offering Memorandum under
the headings "Summary - Summary Historical and Pro Forma Financial Data for
the Company," "Capitalization," "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is derived from the accounting records of the Company and the
Subsidiaries and fairly presents the information purported to be shown
thereby. The pro forma financial statements contained in the Final Offering
Memorandum have been prepared on a basis consistent with the historical
financial statements contained in the Final Offering Memorandum (except for
the pro forma adjustments specified therein), include all material
adjustments to the historical financial statements required by Rule 11-02
of Regulation S-X under the Securities Act and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), to reflect the transactions
described in the Final Offering Memorandum, are based on assumptions made
on a reasonable basis and fairly present the historical and proposed
transactions described in the Final Offering Memorandum (including the
transactions contemplated by the Transaction Documents and the
Transaction). The other historical financial and statistical information
and data included in the Final Offering Memorandum fairly presents, in all
material respects, the information purported to be shown thereby.
<PAGE>
-8-
(q) There are no legal or governmental proceedings pending to which
the Company or any of the Subsidiaries is a party or of which any property
or assets of the Company or any of the Subsidiaries is the subject which,
singularly or in the aggregate, if determined adversely to the Company or
any of the Subsidiaries, could reasonably be expected to have a Material
Adverse Effect or; which could reasonably be expected to prevent or
adversely affect the issuance of the Securities or challenge the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant to the Transaction and the Transaction Documents;
and to the best knowledge of the Company, no such proceedings are overtly
threatened by governmental authorities or threatened by others.
(r) Neither the Company nor any of the Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default, and no event has
occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject except for any such default which would not, singly or in the
aggregate with all other such defaults, have a Material Adverse Effect or
(iii) in violation in any material respect of any law, ordinance,
governmental rule, regulation, order, judgment or decree to which it or its
property or assets may be subject.
(s) The Company and each of the Subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have made
all declarations and filings with, the appropriate federal, state, local or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in the Final Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and neither the Company nor
any of the Subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit or
has any reason to believe that any such license, certificate, authorization
or permit will not be renewed in the ordinary course.
(t) Neither the Company nor any of the Subsidiaries is an "investment
company" or a company "controlled by" an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations of the Commission thereunder.
<PAGE>
-9-
(u) The Company and each of the Subsidiaries maintain reasonably
adequate insurance covering their respective properties, operations,
personnel and businesses.
(v) The Company and each of the Subsidiaries own or possess or can
acquire on reasonable terms, adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and know-
how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures) materially
necessary for the conduct of their respective businesses; and the Company
and the Subsidiaries have not received any notice of any infringement of or
claim or conflict with, any such rights of others except for any such
infringement, claim or conflict which would not, singly or in the aggregate
with all other such defaults, have a Material Adverse Effect.
(w) The Company and each of the Subsidiaries have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use, all
items of real property described as being owned by them in the Final
Offering Memorandum, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title other than (i)
liens, encumbrances and claims securing the Amended Credit Facility or (ii)
liens, encumbrances, claims and defects and imperfections of title that (a)
are described in the Final Offering Memorandum or (b) do not materially
interfere with the use made of such property or could not reasonably be
expected to have a Material Adverse Effect.
(x) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of the Company or any of the Subsidiaries, or any
entity that together with the Company or any Subsidiary is treated as a
single employer under Section 414 (b), (c), (m) or (e) of the Code, which
could reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each of the
Subsidiaries have not incurred and do not expect to incur material
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan for which the Company or any of the
Subsidiaries would have any liability; and each such pension
<PAGE>
-10-
plan that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to cause
the loss of such qualification.
(y) Except as would not individually or in the aggregate have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and the
Subsidiaries, considered as one enterprise, (A) each of the Company and
each Subsidiary is in material compliance with all applicable Environmental
Laws, (B) each of the Company and each Subsidiary has all permits,
authorizations and approvals required under any applicable Environmental
Laws and are each in compliance with their requirements, (C) there are no
pending or, to the knowledge of the Company, threatened Environmental
Claims against the Company or any Subsidiary, and (D) there are no
conditions with respect to any property or operations of the Company or any
Subsidiary that could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or any Subsidiary.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or
Canadian, Mexican, German or other applicable jurisdiction's) federal,
state, provincial, local or municipal statute, law, rule, regulation,
ordinance, code, policy or rule of common law and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority. "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law.
(z) No part of the proceeds of the sale of the Securities will be used
for any purpose that violates the provisions or any of Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
(aa) The statistical and market-related data included in the Final
Offering Memorandum are based on or derived from sources which the Issuers
believe to be reliable.
(bb) Assuming the accuracy of the representations and warranties of
the Initial Purchaser contained in Section 2 and its compliance with the
agreements set forth therein, none of the Issuers nor any of their
respective affiliates (as defined in
<PAGE>
-11-
Rule 501(b) of Regulation D under the Securities Act ("Regulation D"))
("Affiliates") has, directly or through any authorized agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as such term is defined in the Securities Act),
which is or will be integrated with the sale of the Securities in a manner
that would require registration of the Securities under the Securities Act
or (ii) engaged, in connection with the offering of the Securities, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act or has solicited offers for, or has
offered and sold, the Securities in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act.
(cc) Other than the Common Stock of the Company listed on the New York
Stock Exchange under the symbol "PGH," there are no securities of any
Issuer registered under the Exchange Act, listed on a national securities
exchange or quoted in a U.S. automated inter-dealer quotation system.
(dd) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange Act in
connection with the offering of the Securities.
(ee) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in the
Final Offering Memorandum has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.
(ff) Since the date as of which information is given in the Final
Offering Memorandum, except as otherwise expressly stated therein, (i)
there has been no material adverse change or any development involving a
prospective material adverse change in the financial condition, or in the
results of operations or business prospects of the Company and the
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (ii) neither the Company nor any Subsidiary has entered
into any material transaction other than in the ordinary course of business
and (iii) there has not been any change in the long-term debt of the
Company and the Subsidiaries (other than borrowings under the Amended
Credit Facility).
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Issuers agree to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, the entire principal amount of Notes (including the Guarantees thereof)
at a purchase price equal to 95.891% of the prin-
<PAGE>
-12-
cipal amount thereof. The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchaser has advised the Issuers that it proposes to
offer the Securities for resale upon the terms and subject to the conditions set
forth herein and in the Final Offering Memorandum. The Initial Purchaser
represents and warrants to, and agrees with, the Issuers that (i) it is
purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act or in any manner involving
a public offering within the meaning of Section 4(2) of the Securities Act and
(iii) it has solicited and will solicit offers for the Securities only from, and
has offered or sold and will offer, sell or deliver the Securities, as part of
its initial offering, only to, persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Securities Act (as such rule may be amended from time to
time, "Rule 144A"), or if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and, in each case, in
transactions in accordance with Rule 144A as described in the Final Offering
Memorandum. The Initial Purchaser agrees that, prior to or simultaneously with
the confirmation of sale by such Initial Purchaser to any purchaser of any of
the Securities purchased by such Initial Purchaser from the Issuers pursuant
hereto, such Initial Purchaser shall furnish to that purchaser a copy of the
Final Offering Memorandum (and any amendment or supplement thereto that the
Issuers shall have furnished to such Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Issuers and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Sections 5(d) and (e), counsel
for the Issuers and for the Initial Purchaser, respectively, may rely upon the
accuracy of the representations and warranties of the Initial Purchaser and its
compliance with its agreements contained in this Section 2, and the Initial
Purchaser hereby consents to such reliance.
(c) The Issuers acknowledge and agree that the Initial Purchaser may
sell Securities to any affiliate of the Initial Purchaser and that any such
affiliate may sell Securities purchased by it to the Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Milbank, Tweed,
Hadley & McCloy, New York, New York, or at such other place as shall be agreed
upon by the Initial Purchaser and the Company, at 10:00 A.M., New York City
time, on July 3, 1997, or at such
<PAGE>
-13-
other time or date, not later than seven full business days thereafter, as shall
be agreed upon by the Initial Purchaser and the Company (such date and time of
payment and delivery being referred to herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of same-
day funds to such account or accounts as the Company shall specify prior to the
Closing Date or by such other means as the parties hereto shall agree prior to
the Closing Date against delivery to the Initial Purchaser of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchaser hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as the Initial Purchaser shall have requested in writing not less
than two full business days prior to the Closing Date. The Issuers agree to make
one or more global certificates evidencing the Securities available for
inspection by the Initial Purchaser in New York, New York at least 24 hours
prior to the Closing Date.
4. Further Agreements of the Company. Each of the Issuers agrees with
the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Final Offering Memorandum
untrue and which requires the making of any additions to or changes in the
Final Offering Memorandum (as amended or supplemented from time to time) in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; to advise the Initial Purchaser
promptly upon receipt of any order preventing or suspending the use of the
Preliminary Offering Memorandum or the Final Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its best efforts to prevent the issuance of
any such order preventing or suspending the use of the Preliminary Offering
Memorandum or the Final Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to obtain the lifting
thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and counsel for the
Initial Purchaser, without charge, as many copies of the Preliminary
Offering Memorandum and the Final Offering Memorandum (and any amendments
or supplements thereto) as may be reasonably requested;
<PAGE>
-14-
(c) prior to making any amendment or supplement to the Final Offering
Memorandum, to furnish a copy thereof to the Initial Purchaser and counsel
for the Initial Purchaser and not to effect any such amendment or
supplement to which the Initial Purchaser shall reasonably object by notice
to the Company after a reasonable period to review unless the Company is
advised by counsel that such amendment or supplement is legally required;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur, information
shall become known or condition shall exist as a result of which it is
necessary, in the reasonable opinion of counsel for the Initial Purchaser
or counsel for the Issuers, to amend or supplement the Final Offering
Memorandum in order that the Final Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Final Offering
Memorandum to comply with applicable law, to promptly prepare (subject to
Section 4(c) above) such amendment or supplement as may be necessary to
correct such untrue statement or omission or so that the Final Offering
Memorandum, as so amended or supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
to furnish to holders of the Securities, upon request of such holders, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement being
for the benefit of the holders from time to time of the Securities and
prospective purchasers of the Securities designated by such holders);
(f) for a period of two years following the Closing Date, to furnish
to the Initial Purchaser copies of any annual reports, quarterly reports
and current reports filed by any Issuer with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchaser may reasonably request to qualify the Securities for offering and
sale under the state securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser
<PAGE>
-15-
may designate and to continue such qualifications in effect for so long as
required for the resale of the Securities; provided, however, that the
Issuers shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction or to subject themselves
to the payment of taxes in excess of a nominal amount in any jurisdiction
in which they are not so subject;
(h) to assist the Initial Purchaser in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
("NASD") relating to trading in the PORTAL Market and for the Securities to
be eligible for clearance and settlement through The Depository Trust
Company ("DTC");
(i) not to, and to cause its Affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, not to, and to cause its Affiliates not to, and not to authorize or
knowingly permit any person acting on their behalf to, solicit any offer to
buy or offer to sell the Securities by means of any form of general
solicitation or general advertising within the meaning of Regulation D or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Final Offering Memorandum;
(k) for a period of 60 days from the date of the Final Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by any of the Issuers (other than
the Securities) without the prior written consent of the Initial Purchaser
other than debt incurred under the Amended Credit Facility, the Exchange
Securities, any Private Exchange Securities, if any and debt incurred in
the ordinary course of business;
<PAGE>
-16-
(l) until consummation of the Exchange Offer, without the prior
written consent of the Initial Purchaser, not to, and not permit any of its
Affiliates to, resell any of the Securities that have been reacquired by
them, except for Securities purchased by any of the Issuers or any of their
respective Affiliates and resold in a transaction registered under the
Securities Act;
(m) in connection with the offering of the Securities, until the
Initial Purchaser shall have notified the Company of the completion of the
resale of the Securities, not to, and to cause its affiliated purchasers
(as defined in Regulation M under the Exchange Act) not to, either alone or
with one or more other persons, bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial interest, any
Securities, or attempt to induce any person to purchase any Securities; and
not to, and to cause its affiliated purchasers not to, make bids or
purchase for the purpose of creating actual, or apparent, active trading in
or of raising the price of the Securities;
(n) to do and perform all things required to be done and performed by
it under this Agreement and the Registration Rights Agreement that are
within its control prior to or after the Closing Date, and to use its best
efforts to satisfy all conditions precedent on its part to the delivery of
the Securities;
(o) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to any Issuer, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine
communications in the ordinary course of business and consistent with the
past practices of such Issuer), without the prior written consent of the
Initial Purchaser, unless in the judgment of such Issuer and its counsel,
and after notification to the Initial Purchaser, such press release or
communication is reasonably necessary or advisable; and
(p) to apply the net proceeds from the sale of the Securities as set
forth in the Final Offering Memorandum under the heading "Use of Proceeds."
5. Conditions of Initial Purchaser's Obligations. The respective
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of each of the Issuers contained herein, to the accuracy of the
statements of each of the Issuers and their respective officers made in any
certificates delivered pursuant hereto, to the performance by each of the
Issuers of its respective obligations hereunder and to each of the following
additional terms and conditions:
<PAGE>
-17-
(a) The Final Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial Purchaser
may agree; and no stop order suspending the sale of the Securities in any
jurisdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchaser shall have discovered and disclosed
to the Company on or prior to the Closing Date that the Final Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which, in the written opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in the
written opinion of such counsel, is material or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Final Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby and the
Transaction (including any agreements or documents executed and delivered
in connection therewith), shall be reasonably satisfactory in all material
respects to the Initial Purchaser, and the Issuers shall have furnished to
the Initial Purchaser all documents and information that they or its
counsel may reasonably request to enable them to pass upon such matters.
(d) Kirkland & Ellis shall have furnished to the Initial Purchaser
their written opinion, as counsel to the Issuers, addressed to the Initial
Purchaser and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchaser, substantially to the effect set
forth in Annex B hereto.
(e) The Initial Purchaser shall have received from Cahill Gordon &
Reindel, counsel for the Initial Purchaser, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Initial Purchaser may
reasonably require, and the Issuers shall have furnished to such counsel
such documents and information as they request for the purpose of enabling
them to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchaser a
letter (the "Initial Letter") of Ernst & Young LLP, addressed to the
Initial Purchaser and dated the date hereof, in form and substance
previously approved by the Initial Purchaser and counsel for the Initial
Purchaser.
<PAGE>
-18-
(g) The Company shall have furnished to the Initial Purchaser a
letter (the "Bring-Down Letter") of Ernst & Young LLP, addressed to the
Initial Purchaser and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchaser and counsel for the
Initial Purchaser.
(h) The Company shall have furnished to the Initial Purchaser a
certificate, dated the Closing Date, of its chief executive officer and its
chief financial officer stating that (A) such officers have carefully
examined the Final Offering Memorandum and (B) as of the Closing Date, the
representations and warranties of such Issuer in this Agreement are true
and correct in all material respects, such Issuer has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, and subsequent to the
date of the most recent financial statements contained in the Final
Offering Memorandum, there has been no material adverse change in the
financial position or results of operations of the Company and the
Subsidiaries, taken as a whole, except as expressly set forth in the Final
Offering Memorandum.
(i) The Initial Purchaser shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of each of the Issuers.
(j) The Indenture shall have been duly executed and delivered by each
of Issuers and the Trustee, and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee and the
Guaranty of each Guarantor shall have been duly endorsed thereon.
(k) The Notes shall have been approved by the NASD for trading in the
PORTAL Market.
(l) If any event shall have occurred that requires the Issuers under
Section 4(d) to prepare an amendment or supplement to the Final Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchaser shall have been given a reasonable opportunity to comment
thereon, and copies thereof shall have been delivered to the Initial
Purchaser reasonably in advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the reasonable judgment of the Initial Purchaser would materially
and adversely impair
<PAGE>
-19-
the ability of the Initial Purchaser to purchase, hold or effect resales of
the Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Final Offering
Memorandum (exclusive of any amendment or supplement thereto), other than
as contemplated by the Transaction and expressly described in the Final
Offering Memorandum, there shall not have been any decrease in the capital
stock or increase in the long-term debt (other than borrowings under the
Amended Credit Facility) or any change, or any development involving a
prospective change, in or affecting the financial condition, results of
operations or business prospects of the Company and the Subsidiaries taken
as a whole, the effect of which, in any such case described above, is, in
the reasonable judgment of the Initial Purchaser, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated in
this Agreement and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto).
(o) No action shall have been taken by and no statute, rule,
regulation or order shall have been enacted, adopted or issued by, any
governmental agency or body which would, as of the Closing Date, prevent
the issuance, sale or resale of the Securities in the manner contemplated
by the Final Offering Memorandum; and no injunction, restraining order or
order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance, sale or resale of the Securities in the manner
contemplated by the Final Offering Memorandum.
(p) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Notes or any of
the Company's other debt securities or preferred stock by any "nationally
recognized statistical rating organization", as such term is defined by the
Commission for purposes of Rule 436(g)(2) of the rules and regulations of
the Commission under the Securities Act and (ii) no such organization shall
have publicly announced that it has under surveillance or review (other
than an announcement with positive implications of a possible upgrading),
its rating of the Notes or any of the Company's other debt securities or
preferred stock.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have
<PAGE>
-20-
been established on any such exchange or market by the Commission, by any
such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended or
(ii) any moratorium on commercial banking activities shall have been
declared by federal or New York state authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) the
effect of which, in the case of clauses (iii) and (iv), is, in the
reasonable judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or the
delivery of the Securities on the terms and in the manner contemplated in
this Agreement and in the Final Offering Memorandum (exclusive of any
amendment or supplement thereto).
(r) Each of the components of the Transaction shall have been
consummated on the Closing Date.
(s) The Company shall have entered into the Amended Credit Facility
and the Initial Purchaser shall have received a conformed copy thereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchaser.
6. Termination. The obligations of the Initial Purchaser hereunder
may be terminated by the Initial Purchaser, in its absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(m), (n), (o), (p) or (q) shall have occurred and be continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 (except in the case
of a failure of the Condition specified in Section 5(q)), (b) the Issuers shall
fail to tender the Securities for delivery to the Initial Purchaser for any
reason permitted under this Agreement or (c) the Initial Purchaser shall decline
to purchase the Securities for any reason permitted under this Agreement, the
Issuers, jointly and severally, shall reimburse the Initial Purchaser for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Initial Purchaser in connection
with this Agreement and the proposed purchase and resale of the Securities.
<PAGE>
-21-
8. Indemnification. (a) Each of the Issuers, jointly and severally,
shall indemnify and hold harmless the Initial Purchaser, its respective
affiliates, its respective officers, directors, employees, representatives and
agents, and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as an
"Initial Purchaser"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Securities), to which such Initial Purchaser may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Final
Offering Memorandum or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and shall reimburse the Initial Purchaser
promptly upon demand for any legal or other expenses reasonably incurred by the
Initial Purchaser in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Issuers shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of suchdocuments in reliance upon and in conformity
with any Initial Purchaser's Information; provided, further, however, that with
respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of the Initial Purchaser to the extent that the
sale to the person asserting any such loss, claim, damage, liability or action
was an initial resale by the Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to the Initial Purchaser results from the
fact that both (A) to the extent required by applicable law, a copy of the Final
Offering Memorandum was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities to such person and (B) the
untrue statement in or omission from the Preliminary Offering Memorandum was
corrected in the Final Offering Memorandum, unless, in either case, such failure
to deliver the Final Offering Memorandum was a result of non-compliance by the
Issuers with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless each of
the Issuers, their respective affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls any
Issuer within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively referred to
<PAGE>
-22-
for purposes of this Section 9(b) and Section 10 as the "Issuers"), from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Issuers may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Final Offering Memorandum or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with any Initial Purchaser's Information, and shall reimburse the
Issuers promptly upon demand for any legal or other expenses reasonably incurred
by the Issuers in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing such claim or the commencement of such action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the extent
that the indemnifying party was otherwise unaware of such claim or the
commencement of such action and it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; provided,
further, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 8. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that an indemnified party
shall have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indmnifying party,
(2) the indemnified party
<PAGE>
-23-
has reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 8(a) and 8(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim.
No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. Notwithstanding the
immediately preceding sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for the fees,
disbursements and other charges of counsel as contemplated by the third sentence
of this paragraph (c), the indemnifying party agrees that it shall be liable for
any settlement of any action without its written consent if (i) such settlement
is entered into more than 30 days after receipt by such indemnifying party of
the aforesaid request for reimbursement and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement; provided, however, that such indemnifying party
shall not be liable for any settlement effected without its consent pursuant to
this sentence if such indemnifying party is contesting such request for
reimbursement. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party in form and substance
satisfactory to such indemnified party from all liability on claims that are the
subject matter of such proceeding.
<PAGE>
-24-
The obligations of the Issuers and the Initial Purchaser in this
Section 8 and in Section 9 are in addition to any other liability that the
Issuers or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or 8(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Issuers on the one hand and the Initial Purchaser on
the other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law or if the indemnified
party failed to give notice as required in Section 8(c) above, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Issuers on the one
hand and the Initial Purchaser on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to any Issuer or information
supplied by any Issuer on the one hand or to any Initial Purchaser's Information
on the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission, and any other equitable considerations appropriate in the
circumstances.
The Issuers and the Initial Purchaser agree that it would not be just
and equitable if contributions pursuant to this Section 9 were to be determined
by pro rata allocation (even if the Initial Purchaser were treated as one entity
for such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 9
shall be deemed to include, for purposes of this Section 9, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the price at
which the aggregate amount of the Securities sold by the Initial Purchaser
exceeds the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within
<PAGE>
-25-
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.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchaser and each of
the Issuers and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Issuers and
the Initial Purchaser and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in
this Section 10, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
11. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Issuers, jointly
and severally, agree with the Initial Purchaser to pay (a) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Securities
and any taxes payable in that connection; (b) the costs incident to the
preparation, printing and distribution of the Preliminary Offering Memorandum,
the Final Offering Memorandum and any amendments or supplements thereto; (c) the
costs of reproducing and distributing each of the Transaction Documents; (d) the
costs incident to the preparation, printing and delivery of the certificates
evidencing the Securities, including stamp duties and transfer taxes, if any,
payable upon issuance of the Securities; (e) the fees and expenses of the
Issuers' counsel and independent accountants; (f) the fees and expenses of
qualifying the Securities under the securities laws of the several jurisdictions
as provided in Section 4(g) and of preparing, printing and distributing Blue Sky
memoranda; (g) any fees charged by rating agencies for rating the Securities;
(h) the fees and expenses of the Trustee and any paying agent (including related
fees and expenses of any counsel to such parties); (i) all expenses and
application fees incurred in connection with the application for the inclusion
of the Notes on the PORTAL Market and the approval of the Notes for book-entry
transfer by DTC; and (j) all other costs and expenses incident to the
performance of the obligations of the Issuers under this Agreement which are not
otherwise specifically provided for in this Section 11; provided, however, that
fees and expenses set forth in clauses (a) through (d) and (j) above shall be
subject, to the extent set forth therein, to the terms of the letter agreement
by and among The Chase Manhattan Bank, the Initial Purchaser and the Company
dated June 4, 1997, relating to fees and expenses of the Company; provided,
further, however, that except as expressly provided in this Section 11, the
Initial Purchaser shall pay its own costs and expenses (including, without
limitation, fees and expenses of counsel for the Initial Purchaser).
<PAGE>
-26-
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Issuers and the Initial
Purchaser contained in this Agreement or made by or on behalf of the Issuers or
the Initial Purchaser pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Dan Tredwell (telecopier no.: (212) 270-
0994); or
(b) if to the Issuers, shall be delivered or sent by mail or telecopy
transmission to the address of the Company set forth in the Offering
Memorandum, Attention: Jerry Zucker (telecopier no.: (803) 747-4092);
provided, however, that any notice to an Initial Purchaser pursuant to Section
8(c) shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof.
14. Definition of Terms. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) except where otherwise expressly provided, the term
"affiliate" has the meaning set forth in Rule 405 under the Securities Act.
15. Initial Purchaser's Information. The parties hereto acknowledge
and agree that for all purposes of this Agreement (including, but not limited
to, Section 1(a), Section 8 and Section 9) the Initial Purchaser's Information
consists solely of the following information in the Preliminary Offering
Memorandum and the Final Offering Memorandum: (i) the last paragraph on the
front cover page concerning the terms of the offering by the Initial Purchaser;
(ii) the first paragraph on page "i" concerning stabilization activities by the
Initial Purchaser; and (iii) the statements concerning the Initial Purchaser
contained in the third paragraph, the third and fourth sentences in the fourth
paragraph, the seventh and eighth paragraphs and the first sentence of the ninth
paragraph under the heading "Plan of Distribution."
<PAGE>
-27-
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPALS OF
CONFLICTS OF LAW.
17. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature Pages Follow]
<PAGE>
S-1
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between each of the Issuers and the
Initial Purchaser in accordance with its terms.
Very truly yours,
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
PGI POLYMER, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
PNA CORP.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
FNA POLYMER CORP.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
FABRENE GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
<PAGE>
S-2
FABRENE CORP.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
FABRENE GROUP, L.L.C.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
FIBERTECH GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
TECHNETICS GROUP, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
FIBERGOL CORPORATION
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
<PAGE>
S-3
CHICOPEE HOLDINGS, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
CHICOPEE, INC.
By: /s/ Jerry Zucker
-------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
<PAGE>
S-4
Accepted:
CHASE SECURITIES INC.
By /s/ Mark N. Lightcap
---------------------------
Authorized Signatory
<PAGE>
S-5
Address for notices pursuant to Section 8(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
<PAGE>
SCHEDULE I
----------
Subsidiaries
------------
Bonlam, S.A. de C.V.
Chicopee Holdings, B.V.
Chicopee Holdings, Inc.
Chicopee, Inc.
Chicopee, B.V.
Fabrene Corp.
Fabrene Group, Inc.
Fabrene, Inc.
Fabrene Group, L.L.C.
FiberGol Corporation
FiberTech Group, Inc.
FNA Polymer Corp.
PGI Polymer, Inc.
PNA Corp.
Technetics Group, Inc.
<PAGE>
ANNEX A
[Form of Registration Rights Agreement]
<PAGE>
ANNEX B
-------
[Form of Opinion of Counsel for the Company]
Kirkland & Ellis shall have furnished to the Initial Purchaser their
written opinion, as counsel for the Issuers, addressed to the Initial Purchaser
and dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchaser, substantially to the effect set forth below:
(i) The Company and each of the Subsidiaries incorporated or
organized under the laws of the State of Delaware have been duly
incorporated or organized, as the case may be, and are validly existing as
a corporation or limited liability company, as the case may be, in good
standing under the laws of the State of Delaware, are duly qualified to do
business and are in good standing as a foreign corporation in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, and
have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged (except
where the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect).
(ii) As of March 29, 1997, the Company had the authorized
capitalization as set forth in the Final Offering Memorandum under the
heading "Capitalization"; all of the outstanding shares of capital stock of
the Company have been duly and validly authorized and issued and are fully
paid and non-assessable. To our knowledge, there are no material (A)
options, warrants or other obligations of the Company to issue or (B) other
rights to convert any obligation into, or exchange any securities for,
shares of capital stock of or ownership interests in the Company or any of
the Subsidiaries outstanding.
(iii) All of the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly by the Company,
free and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third party
(other than any lien securing the Amended Credit Facility).
(iv) Each of the Company and each Guarantor has the requisite power
(corporate or otherwise) to enter into and perform its obligations under
the Transaction Documents to which it is a party, including without
limitation the corporate power to issue, sell and deliver the Notes and
the Guarantees, respectively, as contemplated by the Purchase Agreement.
<PAGE>
-2-
(v) The Company's Board of Directors or a duly authorized committee
thereof has adopted by requisite vote the resolutions necessary to
authorize the Company's execution, delivery and performance of each of the
Transaction Documents to which it is a party and has approved by requisite
vote the terms thereof. Each Guarantor's Board of Directors has adopted by
requisite vote the resolutions necessary to authorize such Guarantor's
execution, delivery and performance of each of the Transaction Documents to
which it is a party.
(vi) Each of the Company and each Guarantor has duly executed and
delivered the Purchase Agreement, the Indenture, the Registration Rights
Agreement and the Amended Credit Facility.
(vii) Each of the Purchase Agreement, the Indenture, the Registration
Rights Agreement and the Amended Credit Facility is a valid and binding
obligation of each of the Company, each Guarantor and (assuming the due
authorization, execution and delivery thereof by the other parties thereto)
is enforceable against each of the Company and each Guarantor in accordance
with its terms.
(viii) The Notes have been duly executed and delivered by the Company
and, when paid for by the Initial Purchaser in accordance with the terms of
the Purchase Agreement and, (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication and
delivery of the Notes by the Trustee in accordance with the Indenture),
will constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled
to the benefits of the Indenture.
(ix) The Guarantees have been duly executed and delivered by each of
the Guarantors and, when the Notes are duly and validly authorized,
executed, issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms of the Purchase Agreement, will be the valid and binding obligations
of each of the Guarantors, enforceable against each of the Guarantors in
accordance with their terms and entitled to the benefits of the Indenture.
(x) When the Exchange Notes have been duly executed and delivered
by the Company in accordance with the terms of the Registration Rights
Agreement, the Exchange Offer and the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication and delivery of the Exchange Notes by the Trustee in
accordance with the Indenture), the Exchange Notes will constitute the
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of the
Indenture.
<PAGE>
-3-
(xi) Each Transaction Document conforms in all material respects to
the description thereof contained in the Final Offering Memorandum.
(xii) The execution, delivery and performance by each of the Issuers
of each of the Transaction Documents to which it is a party, the issuance,
authentication, sale and delivery of the Securities and compliance each of
the Issuers with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents and the Transaction will not (A)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or, with notice or lapse of
time or both, constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of any of the Issuers pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument to which any of
the Issuers is a party or by which any of the Issuers is bound or to which
any of the property or assets of any of the Issuers is subject or (B)
result in any violation of the provisions of the charter or by-laws of any
of the Issuers or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body having
jurisdiction over any of the Issuers or any of their properties or assets;
and, to the knowledge of such counsel, no consent, approval, authorization
or order of, or filing or registration with, any such court or arbitrator
or governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by each of the Issuers of each of the Transaction Documents to
which it is a party, the issuance, authentication, sale and delivery of the
Securities and compliance by each of the Issuers with the terms thereof and
the consummation of the transactions contemplated by the Transaction
Documents and the Transaction, except for such consents, approvals,
authorizations, filings, registrations or qualifications (1) which have
been obtained or made prior to the Closing Date and (2) as may be required
to be obtained or made under the Securities Act and applicable state
securities laws as provided in the Registration Rights Agreement.
(xiii) To the knowledge of such counsel, there are no pending actions
or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which the Company or any of the Subsidiaries is a party or
of which any property or assets of the Company or any of the Subsidiaries
is the subject which (A) singularly or in the aggregate, if determined
adversely to the Company or any of the Subsidiaries, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity or
enforceability of any of the Transaction Documents or any action taken or
to be taken pursuant thereto; and to the best knowledge of such counsel, no
such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
<PAGE>
-4-
(xiv) Neither the Company nor any of the Subsidiaries is (A) in
violation of its charter or by-laws, (B) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to
which it is a party or by which it is bound or to which any of its property
or assets is subject or (C) in violation in any material respect of any
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject.
(xv) Neither the Company nor any of the Subsidiaries is an
"investment company" or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder.
(xvi) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T, U or X of the Federal Reserve
Board.
(xvii) Assuming the accuracy of the representations, warranties and
agreements of the Issuers and of the Initial Purchasers contained in the
Purchase Agreement, it is not necessary, in connection with the issuance
and sale of the Securities to the Initial Purchasers and the offer, resale
and delivery of the Securities by the Initial Purchasers in the manner
contemplated by the Purchase Agreement and the Final Offering Memorandum,
to register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act.
(xviii) As of the date of such opinion, none of the Securities are of
the same class (within the meaning of Rule 144A under the Securities Act)
as securities of the Issuers that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are quoted
in a United States automated inter-dealer quotation system.
Such counsel shall also state that they have participated in
conferences with representatives of the Issuers, representatives of the
independent public accountants of the Company and the Subsidiaries,
representatives of the Initial Purchaser and counsel for the Initial Purchaser,
at which conferences the contents of the Preliminary Offering Memorandum and the
Final Offering Memorandum and any amendment and supplement thereto and related
matters were discussed and, although such counsel assumes no responsibility for
the accuracy, completeness or fairness of the Preliminary Offering Memorandum
and the Final Offering Memorandum and any amendment or supplement thereto
(except as expressly provided in (xi) above), nothing has come to the attention
of such counsel to cause such coun-
<PAGE>
-5-
sel to believe that the Preliminary Offering Memorandum or the Final Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements and other financial and accounting information contained therein, as
to which such counsel need express no belief) as of its date of issuance and, in
the case of the Final Offering Memorandum and any amendment or supplement
thereto, as of the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Issuers and public officials which are furnished to the Initial
Purchaser and counsel for the Initial Purchaser.
<PAGE>
POLYMER GROUP, INC.
Exhibit 11-Statement of Computation of Per Share Earnings
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Six Months Six Months Six Months
Year Ended Ended Ended Ended
December 28, June 28, June 28, June 29,
1996 1997 1997 1996
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
PRIMARY INCOME (LOSS) PER COMMON
SHARE
Net income (loss) available to common stock (A) $20,373 $ 7,898 $ 10,974 $(14,837)
Common shares:
Weighted average shares outstanding 32,000 32,000 32,000 23,375
Adjustments:
Common share equivalents
Shares - - - -
Warrants to purchase common shares - - - -
------- -------- -------- --------
Weighted average number of shares outstanding (B) 32,000 32,000 32,000 23,375
Primary income (loss) per common share $ 0.64 $ 0.25 $ 0.34 $ (0.64)
======= ======== ======== ========
INCOME (LOSS) PER COMMON SHARE ASSUMING
FULL DILUTION
Net income (loss) available to common stock (A) $20,373 $ 7,898 $ 10,974 $(14,837)
Common shares:
Weighted average shares outstanding 32,000 32,000 32,000 23,375
Adjustments:
Common share equivalents
Shares - - - -
Warrants to purchase common shares - - - -
------- -------- -------- --------
Weighted average number of shares outstanding (B) 32,000 32,000 32,000 23,375
Income (loss) per common share assuming full dilution $ 0.64 $ 0.25 $ 0.34 $ (0.64)
======= ======== ======== =======
Fiscal Year Ended
-------------------------------------------------------------
December 28, December 30, December 31, January 1,
1996 1995 1994 1994
----------- ------------ ----------- ----------
PRIMARY INCOME (LOSS) PER COMMON
SHARE
Net income (loss) available to common stock (A) $(2,130) $(28,446) $(23,919) $ 960
Common shares:
Weighted average shares outstanding 27,688 1,097 938 176
Adjustments:
Common share equivalents
Shares - 17,985 18,144 18,906
Warrants to purchase common shares - 1,418 1,418 1,418
------- -------- -------- --------
Weighted average number of shares outstanding (B) 27,688 20,500 20,500 20,500
Primary income (loss) per common share $ (0.08) $ (1.39) $ (1.17) $ 0.05
======= ======== ======== ========
INCOME (LOSS) PER COMMON SHARE ASSUMING
FULL DILUTION
Net income (loss) available to common stock (A) $(2,130) $(28,446) $(23,919) $ 960
Common shares:
Weighted average shares outstanding 27,688 1,097 938 176
Adjustments:
Common share equivalents
Shares - 17,985 18,144 18,906
Warrants to purchase common shares - 1,418 1,418 1,418
------- -------- -------- --------
Weighted average number of shares outstanding (B) 27,688 20,500 20,500 20,500
Income (loss) per common share assuming full dilution $ (0.08) $ (1.39) $ (1.17) $ 0.05
======= ======== ======== =======
</TABLE>
(A) Adjusted for cumulative dividends on redeemable preferred stock.
(B) The calculation of weighted average shares outstanding gives effect to the
approximate 19.97 to 1 stock split which was approved by the Company's Board of
Directors on March 5, 1996.
<PAGE>
POLYMER GROUP, INC.
Exhibit 12 - Calculation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Six Months Six Months Six Months
Year Ended Ended Ended Ended
December 28, June 28, June 28, June 29,
1996 1997 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
EARNINGS
- --------
Consolidated income (loss) before
income taxes and extraordinary item $30,453 $11,806 $16,401 $ 3,891
Undistributed dividend income from Fabrene - - - -
Share of equity loss from minority interest
in Fabrene (27%) - - - -
Interest 37,787 19,410 15,468 20,961
Interest capitalized during period and other credits (2,669) (1,936) (1,936) (1,356)
Amortization of capitalized debt costs 1,849 1,003 350 575
------- ------- ------- -------
Earnings $67,420 $30,283 $30,283 $24,071
------- ------- ------- -------
FIXED CHARGES
- --------------
Interest $37,787 $19,410 $15,468 $20,961
Amortization of capitalized debt costs 1,849 1,003 350 575
Interest portion of rental expense - - - -
------- ------- ------- -------
Fixed charges $39,636 $20,413 $15,818 $21,536
------- ------- ------- -------
Ratio of earnings to fixed charges (A) 1.7 1.5 1.9 1.1
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------- Ten-Week
December 28, December 30, December 31, January 1, Period Ended
1996 1995 1994 1994 January 2, 1993
------------ ------------ ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
EARNINGS
- --------
Consolidated income (loss) before
income taxes and extraordinary item $25,552 $(18,391) $(14,985) $ 5,410 $ (615)
Undistributed dividend income from Fabrene - - (246) (340) (113)
Share of equity loss from minority interest
in Fabrene (27%) - - 682 753 -
Interest 36,310 39,801 13,699 4,659 915
Interest capitalized during period and other credits (2,669) (1,933) (483) (272) -
Amortization of capitalized debt costs 1,471 1,150 523 514 98
------- -------- -------- ------- ------
Earnings $60,664 $ 20,627 $ (810) $10,724 $ 285
------- -------- -------- ------- ------
FIXED CHARGES
- -------------
Interest $36,310 $ 39,801 $ 13,699 $ 4,659 $ 915
Amortization of capitalized debt costs 1,471 1,150 523 514 98
Interest portion of rental expense - - - - -
------- -------- -------- ------- ------
Fixed charges $37,781 $ 40,951 $ 14,222 $ 5,173 $1,013
------- -------- -------- ------- ------
Ratio of earnings to fixed charges (A) 1.6 - - 2.1 -
====== ======== ======== ======= ======
</TABLE>
(A) Fixed charges exceeded earnings for the ten-week period ended January 2,
1993, the year ended December 31, 1994 and the year ended December 30, 1995 by
approximately $0.7 million, $15.0 million and $20.3 million, respectively.
However, the Company met all required interest payment and debt obligations
during this time period.
<PAGE>
EXHIBIT 21
Polymer Group, Inc.
Subsidiaries of Polymer Group, Inc.
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
PGI Polymer, Inc. Delaware
Chicopee Holdings, Inc. Delaware
Chicopee, Inc. Delaware
Chicopee Holdings B.V. The Netherlands, Delaware*
Chicopee B.V. The Netherlands
FiberTech Group, Inc. Delaware
Technetics Group, Inc. Delaware
FiberGol Corporation Delaware
Bonlam S.A. de C.V. Mexico
Fabrene Group, Inc. Canada
Fabrene Inc. Canada
Fabrene Corp. Delaware
Fabrene Group L.L.C. Delaware
PNA Corp. North Carolina
FNA Polymer Corp. North Carolina
* Pursuant to a certificate of domestication filed with the Secretary of State
of Delaware on September 19, 1996, this subsidiary was incorporated in the
State of Delaware under the name Chicopee Holdings (Netherlands) B.V.
Corporation.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-4) and related
Prospectus of Polymer Group, Inc. for the registration of $400 million in 9%
senior subordinated notes due 2007 and to the inclusion therein and to the
incorporation by reference therein of our report dated January 23, 1997, with
respect to the consolidated financial statements and to the incorporation by
reference therein of our report dated January 23, 1997, with respect to the
financial statement schedule of Polymer Group, Inc. included in its Annual
Report (Form 10-K) for the year ended December 28, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Greenville, South Carolina
September 3, 1997
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Carolyn Potter, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2531 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
POLYMER GROUP, INC.
(Name of Obligor)
Delaware 57-1003983
(State of Incorporation) (I.R.S. Employer Identification No.)
PGI Polymer, Inc. Chicopee, Inc.
FiberTech Group, Inc. PNA Corp.
FiberGol Corporation FNA Polymer Corp.
Technetics Group, Inc. Fabrene Corp.
Chicopee Holdings, Inc. Fabrene Group, L.L.C.
Fabrene Group, Inc.
(Name of Guarantor)
Delaware 57-0962088
Delaware 57-0962089
Delaware 57-0962081
Delaware 57-0982116
Delaware 57-1018373
Delaware 57-1013629
North Carolina 56-1887385
North Carolina 56-1742445
Delaware 51-0319685
Delaware 57-0988766
Prince Edward Island, Canada N/A
(State of Incorporation) (I.R.S. Employer Identification No.)
4838 Jenkins Avenue
North Charleston, SC 29405
(Address of principal executive offices)
9% Senior Subordinated Notes due 2007, Series B
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System,Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each suchaffiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation, File
No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
1
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 27th day of August, 1997.
HARRIS TRUST AND SAVINGS BANK
/s/ C. Potter
By: ______________________________
C. Potter
Assistant Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
/s/ C. Potter
By: ______________________________
C. Potter
Assistant Vice President
2
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of March 31, 1997, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on March 31, 1997, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin..................... $ 1,594,951
Interest bearing balances............................................... $620,847
Securities:....................................................................
a. Held-to-maturity securities $0
b. Available-for-sale securities $3,674,321
Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold...................................................... $447,375
Securities purchased under agreements to resell......................... $0
Loans and lease financing receivables:
Loans and leases, net of unearned income................................ $8,499,011
LESS: Allowance for loan and lease losses.............................. $ 110,978
-------------------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b).................................................... $8,388,033
Assets held in trading accounts................................................ $126,309
Premises and fixed assets (including capitalized leases)....................... $188,993
Other real estate owned........................................................ $446
Investments in unconsolidated subsidiaries and associated companies............ $53
Customer's liability to this bank on acceptances outstanding................... $66,859
Intangible assets.............................................................. $292,918
Other assets................................................................... $495,997
-------------------
TOTAL ASSETS $15,897,102
===================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices.......................................................... $8,252,773
Non-interest bearing.................................................... $3,414,150
Interest bearing........................................................ $4,838,623
In foreign offices, Edge and Agreement subsidiaries, and IBF's............... $1,989,792
Non-interest bearing.................................................... $54,391
Interest bearing........................................................ $1,935,401
Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBF's:
Federal funds purchased.& securites sold under agreements to repurchase...... $2,896,616
Trading Liabilities............................................................ 81,381
Other borrowed money:
a. With remaining maturity of one year or less................................ $991,442
b. With remaining maturity of more than one year.............................. $0
Bank's liability on acceptances executed and outstanding....................... $66,859
Subordinated notes and debentures.............................................. $310,000
Other liabilities.............................................................. $138,427
-------------------------
TOTAL LIABILITIES $14,727,290
=========================
EQUITY CAPITAL
Common stock................................................................... $100,000
Surplus........................................................................ $600,566
a. Undivided profits and capital reserves..................................... $519,518
b. Net unrealized holding gains (losses) on available-for-sale securities..... ($50,272)
-------------------------
TOTAL EQUITY CAPITAL $1,169,812
=========================
Total liabilities, limited-life preferred stock, and equity capital............ $15,897,102
=========================
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
4/30/97
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
MARIBETH S. RAHE
Directors.
4
<PAGE>
Offer To Purchase
and Consent Solicitation Statement
POLYMER GROUP, INC.
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING
12 1/4% SENIOR NOTES DUE 2002
AND SOLICITATION OF CONSENTS FOR
AMENDMENT OF THE RELATED INDENTURE
----------------
Polymer Group, Inc., a Delaware corporation (the "Company"), hereby offers
to purchase for cash, upon the terms and subject to the conditions set forth
in this Offer to Purchase and Consent Solicitation Statement (as it may be
amended or supplemented from time to time, the "Statement") and in the
accompanying Consent and Letter of Transmittal (the "Consent and Letter of
Transmittal" and, together with this Statement, the "Offer"), any and all of
its outstanding 12 1/4% Senior Notes due 2002 (the "Notes") from each
registered holder thereof (each a "Holder" and, collectively, the "Holders").
The consideration for Notes tendered pursuant to the Offer shall be the
price (calculated as described in Schedule I to this Statement) equal to (i)
the present value on the Payment Date (as defined herein) of $1,061.25 per
$1,000 principal amount of Notes (the amount payable on July 15, 1998, which
is the first date on which the Notes are redeemable (the "Earliest Redemption
Date")), determined on the basis of a yield (the "Tender Offer Yield") to the
Earliest Redemption Date equal to the sum of (x) the yield on the 8 1/4% U.S.
Treasury Note due July 15, 1998 (the "Reference Security"), as calculated by
the Dealer Manager in accordance with standard market practice, based on the
bid price for such Reference Security as of 2:00 p.m., New York City Time, on
June 18, 1997, the tenth business day immediately preceding the scheduled
Tender Offer Expiration Date (the "Price Determination Date"), as displayed on
the Bloomberg Government Pricing Monitor on "Page PX4" (the "Bloomberg Page")
(or, if any relevant price is not available on a timely basis on the Bloomberg
Page or is manifestly erroneous, such other recognized quotation source as the
Dealer Manager shall select in its sole discretion) plus (y) 75 basis points,
the fixed spread (the "Fixed Spread") (such price being rounded to the nearest
cent per $1,000 principal amount of Notes), minus (ii) $10.00 per $1,000
principal amount of Notes, which is equal to the Consent Payment referred to
below (such amount, the "Tender Offer Consideration"), plus accrued and unpaid
interest to, but not including, the Payment Date (as defined herein). In the
event the Offer is extended for any period of time longer than ten (10)
business days from the previously scheduled Tender Offer Expiration Date, a
new Price Determination Date will be established. The Tender Offer
Consideration plus the Consent Payment (as defined below) is referred to
herein as the "Total Consideration."
(Continued on following page)
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
WEDNESDAY JUNE 18, 1997 IF ON SUCH DATE THE COMPANY HAS RECEIVED THE
REQUISITE CONSENTS (AS DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE
COMPANY RECEIVES THE REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE
"CONSENT EXPIRATION DATE"). THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 2, 1997 UNLESS EXTENDED (SUCH DATE, AS
THE SAME MAY BE EXTENDED, THE "TENDER OFFER EXPIRATION DATE"). HOLDERS WHO
DESIRE TO RECEIVE THE CONSENT PAYMENT AND THE TENDER OFFER CONSIDERATION
MUST VALIDLY CONSENT TO THE PROPOSED AMENDMENTS ON OR PRIOR TO THE CONSENT
EXPIRATION DATE. HOLDERS WHO TENDER AFTER THE CONSENT EXPIRATION DATE WILL
RECEIVE ONLY THE TENDER OFFER CONSIDERATION. CONSENTS MAY ONLY BE REVOKED ON
OR PRIOR TO THE CONSENT EXPIRATION DATE. TENDERS OF NOTES MAY BE WITHDRAWN
AT ANY TIME PRIOR TO THE TENDER OFFER EXPIRATION DATE.
----------------
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
June 5, 1997
<PAGE>
(Cover page continued)
In conjunction with the Offer, the Company hereby solicits (the
"Solicitation") consents (the "Consents") of registered Holders of the Notes
to certain proposed amendments (the "Proposed Amendments") to the Indenture
dated as of June 24, 1994, between the Company and First Union National Bank
of South Carolina ("First Union"), as amended by the First Supplemental
Indenture dated as of March 15, 1995 between the Company and First Union, the
Second Supplemental Indenture dated as of September 14, 1995 among the
Company, First Union and Harris Trust and Savings Bank, as trustee (the
"Trustee"), the Third Supplemental Indenture dated as of April 9, 1996 between
the Company and the Trustee, and the Fourth Supplemental Indenture dated as of
August 14, 1996 between the Company and the Trustee (as so amended, the
"Indenture"), pursuant to which the Notes were issued, which amendments would,
among other things, eliminate substantially all of the covenants contained in
the Indenture. Subject to the terms and conditions set forth in this Statement
and the Consent and Letter of Transmittal, the Company hereby offers to pay to
each registered Holder who validly consents to the Proposed Amendments on or
prior to the Consent Expiration Date (as defined herein) an amount in cash
(the "Consent Payment") equal to 1% of the principal amount ($10.00 for each
$1,000 principal amount) of Notes for which Consents have been validly
delivered and not validly revoked as of the Consent Expiration Date, with such
payment to be made on the Payment Date if, but only if, such Holder's Notes
are accepted for payment pursuant to the terms of the Offer.
If the Proposed Amendments are adopted and the Offer is consummated, Notes
that are not tendered, or that are not accepted for purchase pursuant to the
Offer, will remain outstanding, but will be subject to the terms of the
Indenture as modified by the Supplemental Indenture (as defined herein)
described under Item 5, "Proposed Amendments." If a Holder does not properly
tender Notes pursuant to the Offer on or prior to the Consent Expiration Date,
or Consents either are not properly delivered, or are revoked and not properly
redelivered, on or prior to the Consent Expiration Date, such Holder will not
receive the Consent Payment, even though the Proposed Amendments will be
effective as to all Notes that are not purchased pursuant to the Offer.
Adoption of the Proposed Amendments may have adverse consequences for Holders
of Notes who do not validly tender Notes pursuant to the Offer. As a result of
the adoption of the Proposed Amendments, Holders of such outstanding Notes
will not be entitled to the benefit of substantially all of the covenants
presently contained in the Indenture. In addition, the trading market for any
Notes not properly tendered pursuant to the Offer is likely to be
significantly more limited in the future if the Offer is consummated. See Item
5, "Proposed Amendments," and Item 2, "Certain Significant Considerations."
Holders who tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date are obligated to Consent to the Proposed Amendments. The
completion, execution and delivery of a Consent and Letter of Transmittal in
connection with a tender of Notes pursuant to the Offer on or prior to the
Consent Expiration Date will be deemed to constitute the delivery of Consents
with respect to the Notes tendered. Holders may not deliver Consents in the
Solicitation without tendering their Notes in the Offer.
The Company and the Trustee intend to execute a supplemental indenture (the
"Supplemental Indenture") to the Indenture providing for the Proposed
Amendments promptly after the Consent Expiration Date. Although the
Supplemental Indenture containing the Proposed Amendments will have been
executed by the Company and the Trustee promptly after the Consent Expiration
Date, the Proposed Amendments will not become effective unless and until the
Notes are accepted for purchase by the Company pursuant to the Offer, which is
expected to occur promptly after the Tender Offer Expiration Date.
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent on or
prior to the Consent Expiration Date will receive the Total Consideration,
which is equal to the Tender Offer Consideration plus the Consent Payment.
Holders who validly tender Notes and deliver Consents pursuant to the Offer on
or prior to the Consent Expiration Date may not thereafter revoke such Consent
after the Consent Expiration Date. Holders who validly tender their Notes
after the Consent Expiration Date will receive only the Tender Offer
Consideration and not the Consent Payment.
-ii-
<PAGE>
(Cover page continued)
Upon the terms and subject to the conditions of the Offer and the
Solicitation (including, if the Offer or Solicitation is extended or amended,
the terms and conditions of any such extension or amendment) and applicable
law, the Company will (i) purchase Notes validly tendered on or prior to the
Tender Offer Expiration Date (and not withdrawn) pursuant to the Offer, and
(ii) pay for all Consents validly delivered on or prior to the Consent
Expiration Date (and not revoked) pursuant to the Solicitation, promptly
following the Tender Offer Expiration Date.
Notwithstanding any other provision of the Offer or the Solicitation, the
Company's obligation to accept for purchase, and to pay for, Notes validly
tendered pursuant to the Offer and the Company's obligation to make Consent
Payments is conditioned upon (a) the Supplemental Indenture Condition (b) the
Bank Condition, (c) the Financing Condition and (d) the General Conditions
(each as defined herein). See Item 9, "Conditions to the Offer."
In the event that the Offer and the Solicitation are withdrawn or otherwise
not completed, the Tender Offer Consideration and Consent Payment will not be
paid or become payable to Holders of Notes who have validly tendered their
Notes and delivered Consents in connection with the Offer and the
Solicitation. In any such event, the Notes previously tendered pursuant to the
Offer will be promptly returned to the tendering Holder and the Supplemental
Indenture will not become operative.
See Item 2, "Certain Significant Considerations," and Item 10, "Certain
U.S. Federal Income Tax Considerations," for discussions of certain factors
that should be considered in evaluating the Offer and the Solicitation. See
Item 5, "Proposed Amendments," for a description of the Proposed Amendments.
-iii-
<PAGE>
(Cover page continued)
IMPORTANT
Any Holder desiring to tender Notes and deliver Consents should either (a)
in the case of a Holder who holds physical certificates evidencing such Notes,
complete and sign the Consent and Letter of Transmittal (or a manually signed
facsimile thereof) in accordance with the instructions therein, have the
signature thereon guaranteed (if required by Instruction 1 of the Consent and
Letter of Transmittal) and send or deliver such manually signed Consent and
Letter of Transmittal (or a manually signed facsimile thereof), together with
certificates evidencing such Notes being tendered and any other required
documents to Harris Trust Company of New York, as Depositary (the
"Depositary"), at its address set forth on the back cover of this Statement,
or (b) in the case of a beneficial owner who holds Notes in book-entry form,
request such beneficial owner's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction on behalf of such beneficial owner.
See Item 7, "Procedures for Tendering Notes and Delivering Consents."
Any Holder who desires to tender Notes but who cannot comply with the
procedures set forth herein for tender on a timely basis or whose certificates
for Notes are not immediately available, may nevertheless tender the Notes by
following the procedures for guaranteed delivery set forth under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Guaranteed Delivery."
The procedures for guaranteed delivery of Notes will not operate to effect the
timely delivery of the related Consent for purposes of determining eligibility
to receive a Consent Payment.
The Depository Trust Company ("DTC") has authorized DTC participants that
hold Notes on behalf of beneficial owners of Notes through DTC to tender their
Notes as if they were Holders. To effect such a tender, DTC participants
should transmit their acceptance to DTC through the DTC Automated Tender Offer
Program ("ATOP"), for which the transaction will be eligible, and follow the
procedure for book-entry transfer set forth in Item 7, "Procedures for
Tendering Notes and Delivering Consents." NOTWITHSTANDING THE TENDER OF NOTES
BY A HOLDER PURSUANT TO ATOP, IN ORDER TO VALIDLY DELIVER A CONSENT WITH
RESPECT TO NOTES TRANSFERRED PURSUANT TO ATOP ON OR PRIOR TO THE CONSENT
EXPIRATION DATE (AND THEREBY MAKE A VALID TENDER OF SUCH NOTES), DTC
PARTICIPANTS USING ATOP MUST ALSO PROPERLY COMPLETE AND EXECUTE THE CONSENT
AND LETTER OF TRANSMITTAL AND TIMELY DELIVER IT TO THE DEPOSITARY. A
beneficial owner of Notes that are held of record by a broker, dealer,
commercial bank, trust company or other nominee must instruct such broker,
dealer, commercial bank, trust company or other nominee to tender the Notes
and deliver the related Consents on the beneficial owner's behalf. See Item 7,
"Procedures for Tendering Notes and Delivering Consents."
Tendering Holders will not be obligated to pay brokerage fees or commissions
or the fees and expenses of the Dealer Manager, the Information Agent or the
Depositary. See Item 11, "The Dealer Manager, the Information Agent and the
Depositary."
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc., the Information Agent, or Chase Securities Inc., the Dealer Manager, at
their respective addresses and telephone numbers set forth on the back cover
of this Statement. Additional copies of this Statement, the Consent and Letter
of Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Information Agent. Beneficial owners may also contact
their brokers, dealers, commercial banks or trust companies through which they
hold the Notes with questions and requests for assistance.
THIS STATEMENT CONSTITUTES NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION
OF CONSENTS IN ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION UNDER APPLICABLE
SECURITIES OR BLUE SKY LAWS. THE DELIVERY OF THIS STATEMENT SHALL NOT UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR
IN THE AFFAIRS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES SINCE
THE DATE HEREOF.
NEITHER THE COMPANY NOR THE DEALER MANAGER MAKE ANY RECOMMENDATION AS TO
WHETHER HOLDERS SHOULD TENDER NOTES PURSUANT TO THE OFFER OR PROVIDE CONSENTS
TO THE PROPOSED AMENDMENTS.
-iv-
<PAGE>
AVAILABLE INFORMATION
The Company is presently subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
can be inspected and copied at the Public Reference Section of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C.
20549 and at regional public reference facilities maintained by the Commission
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at prescribed rates. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
(http://www.sec.gov). Such reports and other information may also be inspected
and copied at the offices of the New York Stock Exchange, Inc. (the "NYSE"),
20 Broad Street, New York, New York 10005.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-14330) pursuant to the Exchange Act are incorporated herein by reference and
shall be deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1996; and
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 29, 1997.
All documents and reports filed by the Company with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Statement and on or prior to the earlier of the Payment Date or
termination of the Offer and Solicitation shall be deemed incorporated herein
by reference and shall be deemed to be a part hereof from the date of filing
of such documents and reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Statement to the extent that
a statement contained herein or in any subsequently filed document or report
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Statement.
The Company will provide without charge to each person to whom this
Statement is delivered, upon the written request of such person, a copy of any
or all of the documents which are incorporated by reference herein, other than
exhibits to such documents which are not specifically incorporated by
reference herein. Requests should be directed to the Information Agent or the
Dealer Manager at their respective addresses set forth on the back cover page
hereof. The information relating to the Company contained in this Statement
does not purport to be complete and should be read together with the
information contained in the incorporated documents.
No person has been authorized to give any information or to make any
representation not contained in this Statement and, if given or made, such
information or representation may not be relied upon as having been authorized
by the Company, the Dealer Manager, the Depositary, or the Information Agent.
Neither the delivery of this Statement nor any purchase hereunder shall, under
any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof, or that there has been
no change in the affairs of the Company as of such date.
-v-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SUMMARY.................................................................. 1
1. Terms of the Offer and the Solicitation............................. 6
2. Certain Significant Considerations.................................. 9
3. Purpose of the Offer and the Solicitation........................... 9
4. Certain Information Concerning the Company and the Notes............ 10
5. Proposed Amendments................................................. 10
Acceptance for Payment and Payment for Notes; Acceptance of
6. Consents............................................................ 12
7. Procedures for Tendering Notes and Delivering Consents.............. 13
8. Withdrawal of Tenders and Revocation of Consents.................... 16
9. Conditions to the Offer............................................. 17
10. Certain U.S. Federal Income Tax Consequences........................ 19
11. The Dealer Manager, the Information Agent and the Depositary........ 20
12. Fees and Expenses................................................... 21
13. Source and Amount of Funds.......................................... 21
14. Miscellaneous....................................................... 21
Schedule I: Formula for calculation of Tender Offer Consideration and
Total Consideration..................................................... 23
Schedule II: Hypothetical illustration of the calculation of Tender Offer
Consideration and Total Consideration........................... 24
</TABLE>
-vi-
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Statement
and the Consent and Letter of Transmittal. Capitalized terms have the meanings
assigned to them elsewhere in this Statement.
The Company..................... Polymer Group, Inc., a Delaware corporation,
is a leading worldwide manufacturer of woven
and nonwoven polyolefin products, including
medical, wiping, hygiene, and industrial and
specialty products. See Item 4, "Certain
Information Concerning the Company and the
Notes."
The Notes....................... The Offer and the Solicitation are being made
with respect to the Company's 12 1/4% Senior
Notes due 2002. See Item 4, "Certain
Information Concerning the Company and the
Notes."
The Offer....................... The Company is offering to purchase for cash
from each Holder, upon the terms and subject
to the conditions described herein, any and
all outstanding Notes. The consideration for
Notes tendered pursuant to the Offer shall be
equal to (i) the present value on the Payment
Date of $1,061.25 per $1,000 principal amount
of Notes, determined on the basis of the
Tender Offer Yield to the Earliest Redemption
Date of July 15, 1998 equal to the sum of (x)
the yield on the 8 1/4% U.S. Treasury Note
due July 15, 1998 as of 2:00 p.m., New York
City Time, on June 18, 1997, the tenth
business day immediately preceding the
scheduled Tender Offer Expiration Date plus
(y) 75 basis points, minus (ii) $10.00 per
$1,000 principal amount of Notes. Each
tendering Holder will also receive unpaid
interest up to, but not including, the
Payment Date. Holders who tender Notes
pursuant to the Offer prior to the Consent
Expiration Date are obligated to Consent to
the Proposed Amendments. The completion,
execution and delivery of a Consent and
Letter of Transmittal in connection with the
tender of Notes pursuant to the Offer on or
prior to the Consent Expiration Date is
required to effectuate the delivery of
Consents with respect to the Notes tendered.
Holders may not deliver Consents in the
Solicitation without tendering their Notes in
the Offer. See Item 1, "Terms of the Offer
and the Solicitation."
The Solicitation................ Upon the terms and subject to the conditions
described herein, the Company is soliciting
the Consents of Holders of Notes to the
Proposed Amendments to the Indenture. Each
Holder who Consents to the Proposed
Amendments prior to the Consent Expiration
Date shall be entitled to a Consent Payment
in the amount of 1% of the principal amount
($10.00 per $1,000 principal amount) of Notes
with respect to which Consents are delivered.
Each Holder who tenders Notes pursuant to the
Offer on or prior to the Consent Expiration
Date is obligated to Consent to the Proposed
Amendments, and the completion,
1
<PAGE>
execution and delivery of a Consent and
Letter of Transmittal in connection with such
a Holder's tender of Notes on or prior to the
Consent Expiration Date is required to
effectuate the delivery of Consents with
respect to the Notes tendered. Holders may
not deliver Consents in the Solicitation
without tendering their Notes in the Offer.
The Company intends to effect the Proposed
Amendments by executing a Supplemental
Indenture immediately following the Consent
Expiration Date, assuming that the Requisite
Consents have been received. Although the
Supplemental Indenture reflecting the
Proposed Amendments will become effective
upon execution by the Company and the Trustee
immediately following the Consent Expiration
Date (assuming the Requisite Consents have
been received), the Proposed Amendments will
not become operative until Notes are accepted
for purchase by the Company pursuant to the
Offer, and the Consent Payment will not be
due and payable to those Holders who deliver
Consents prior to the Consent Expiration Date
until the Payment Date. See Item 1, "Terms of
the Offer and the Solicitation," Item 5,
"Proposed Amendments" and Item 6, "Acceptance
for Payment and Payment of Notes; Acceptance
of Consents."
Expiration...................... The Solicitation will expire at 5:00 p.m.,
New York City time, on Wednesday, June 18,
1997, or on the first date thereafter that
the Company receives the Requisite Consents,
unless extended. The Offer will expire at
12:00 midnight, New York City time, on
Wednesday, July 2, 1997, unless extended. See
Item 1, "Terms of the Offer and the
Solicitation."
Purpose of the Offer and the The principal purpose of the Offer is to
Solicitation.................... acquire all outstanding Notes and reduce the
Company's aggregate amount of outstanding
senior indebtedness. The purpose of the
Solicitation is to eliminate all of the
restrictive covenants, certain event of
default provisions and certain other
provisions from the Indenture in order to,
together with the Offer, enhance the
operating and financial flexibility of the
Company. See Item 3, "Purpose of the Offer
and the Solicitation."
Conditions to the Offer......... The Offer is conditioned upon (a) the
Supplemental Indenture Condition, (b) the
Bank Condition, (c) the Financing Condition,
and (d) the General Conditions. See Item 9,
"Conditions to the Offer."
Requisite Consents.............. The aggregate outstanding principal amounts
of the Notes is $100.0 million. The Proposed
Amendments require the Consent of Holders of
at least a majority of the aggregate
principal amount of Notes outstanding.
Accordingly, the Proposed Amendments require
the Consent of Holders of Notes in an
aggregate principal amount in excess of $50.0
million. See Item 5, "Proposed Amendments."
2
<PAGE>
The Proposed Amendments......... The covenants in the Indenture set forth
under the headings "Limitation on
Indebtedness," "Limitation on Restricted
Payments," "Limitation on Transactions with
Affiliates," "Limitation on Certain
Subordinated Indebtedness," "Limitation on
Liens," "Limitation on Restricted Subsidiary
Capital Stock," and "Limitation on Dividends
and other Payment Restrictions Affecting
Restricted Subsidiaries" would be eliminated
from the Indenture. Such covenants, among
other things, generally limit the Company's
ability to (i) incur debt, (ii) permit
certain subsidiaries of the Company to incur
debt or issue preferred stock, (iii) declare
or pay certain dividends or make similar
distributions, or permit certain subsidiaries
of the Company to do the same, (iv) consent
to any encumbrance on the ability of certain
subsidiaries of the Company to pay dividends
or make loans to the Company, (v) incur
certain subordinated indebtedness, (vi) enter
into transactions with affiliates, or permit
certain subsidiaries of the Company to do the
same, and (vii) create liens on assets of the
Company or permit certain subsidiaries of the
Company to do the same. See Item 5, "Proposed
Amendments."
Withdrawal Rights............... Tenders of Notes pursuant to the Offer may be
withdrawn at any time prior to the Tender
Offer Expiration Date, upon compliance with
the procedures described herein. Tenders of
Notes may also be withdrawn if the Offer is
terminated without any Notes being purchased
thereunder. A withdrawal of tendered Notes
prior to the Consent Expiration Date shall be
deemed a revocation of the related Consent.
Consents may be revoked at any time prior to
the Consent Expiration Date, but are
thereafter irrevocable. Valid revocation of
Consents will render a tender of Notes prior
to the Consent Expiration Date defective,
and, unless the Company waives such defect
(or unless the Notes are withdrawn and re-
tendered), the tendering Holder will not be
eligible to receive the Tender Offer
Consideration with respect to such Notes. See
Item 8, "Withdrawal of Tenders and Revocation
of Consents."
Source of Funds................. Assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for
payment, approximately $112 million is
required to pay the Total Consideration in
connection with the Offer and the
Solicitation. Such funds will be obtained by
the Company from the proceeds of the Private
Placement. See Item 13, "Source and Amount of
Funds."
Untendered Notes................ Notes not tendered and purchased pursuant to
the Offer will remain outstanding. If the
Requisite Consents are received and the
Proposed Amendments become operative pursuant
to the Supplemental Indenture, such Notes
will not have the benefits of the restrictive
covenants that will be eliminated from the
Indenture by the Proposed Amendments. In
addition, as a
3
<PAGE>
result of the consummation of the Offer, the
aggregate principal amount of the Notes that
are outstanding will be significantly
reduced, which may adversely affect the
liquidity and, consequently, the market price
for the Notes, if any, that remain
outstanding after consummation of the Offer.
See Item 2, "Certain Significant
Considerations."
Holders who tender only a portion of their
Notes pursuant to the Offer will be issued
Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
Procedures for Tendering Notes
and Delivering Consents.........
Any Holder desiring to tender Notes pursuant
to the Offer and/or deliver Consents pursuant
to the Solicitation should either (a) in the
case of a Holder who holds physical
certificates evidencing such Notes, complete
and sign the enclosed Consent and Letter of
Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions
set forth therein, have the signature thereon
guaranteed if required by Instruction 1 of
the Letter of Transmittal, and send or
deliver such manually signed Consent and
Letter of Transmittal (or such manually
signed facsimile), together with the
certificates evidencing the Notes being
tendered and any other required documents to
the Depositary, or (b) in the case of Holders
who hold Notes in book-entry form, request
his or her broker, dealer, commercial bank,
trust company or other nominee to effect the
transaction for him or her. Beneficial owners
of Notes that are registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee must contact such
broker dealer, commercial bank, trust company
or other nominee if they desire to tender
their Notes and deliver Consents.
Holders of Notes who are tendering by book-
entry transfer to the Depositary's account at
DTC can execute the tender through ATOP, for
which the transaction will be eligible. DTC
participants that are accepting the Offer
must transmit their acceptance to DTC, which
will verify the acceptance and execute a
book-entry delivery to the Depositary's
account at DTC. DTC will then send an Agent's
Message to the Depositary for its acceptance.
Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to the
tender of Notes; however, any such Holders
tendering on or prior to the Consent
Expiration Date must also execute and deliver
a Consent and Letter of Transmittal. To
receive the Consent Payment, each Holder
(including any Holder tendering Notes through
ATOP) must deliver or cause to be delivered a
completed and properly executed Consent and
Letter of Transmittal and any other required
documents to the Depositary on or prior to
the Consent Expiration Date.
4
<PAGE>
A Holder who desires to tender Notes pursuant
to the Offer and who cannot comply with the
procedures set forth herein for tender or
delivery on a timely basis or whose Notes are
not immediately available may tender such
Notes pursuant to the procedures for
guaranteed delivery set forth herein. See
Item 7, "Procedures for Tendering Notes and
Delivering Consents."
Acceptance of Tendered Notes Upon the terms of the Offer and the
and Payment..................... Solicitation and upon satisfaction or waiver
of the conditions thereto, the Company will
accept for purchase Notes validly tendered
(and not properly withdrawn) on or prior to
the Tender Offer Expiration Date. Only
Holders who validly tender Notes (including a
properly completed, executed and delivered
Consent) on or prior to the Consent
Expiration Date (and do not withdraw such
tender and revoke such Consent) will receive
the Total Consideration, which includes the
Consent Payment. Payment of the Total
Consideration or the Tender Offer
Consideration, as applicable, for Notes
validly tendered and accepted for payment,
will be made by deposit of such amounts, as
applicable, with the Depositary who, in each
case, will act as agent for the tendering and
consenting Holders for the purpose of
receiving payments from the Company and
transmitting such payments to the tendering
and consenting Holders. Such payments are
expected to be made on the Payment Date,
promptly following the acceptance of the
Notes by the Company pursuant to the Offer.
See Item 6, "Acceptance for Payment and
Payment for Notes; Acceptance of Consents."
Certain Tax Considerations...... Holders of Notes should consider certain U.S.
federal income tax consequences of the Offer
and the Solicitation. See Item 10, "Certain
U.S. Federal Income Tax Consequences."
Certain Significant Holders of Notes should consider certain
Considerations.................. significant considerations relevant to the
Offer and the Solicitation. See Item 2,
"Certain Significant Considerations."
The Dealer Manager, the
Information Agent and the
Depositary......................
Chase Securities Inc. has been retained as
Dealer Manager in connection with the Offer
and the Solicitation. In such capacities, the
Dealer Manager may contact Holders regarding
the Offer and the Solicitation and may
request brokers, dealers, commercial banks,
trust companies and other nominees to forward
this Statement and related materials to
beneficial owners of Notes. The Depositary is
Harris Trust Company of New York. MacKenzie
Partners, Inc. has been retained as the
Information Agent in connection with the
Offer and the Solicitation. The respective
addresses and telephone numbers of the Dealer
Manager, the Depositary and the Information
Agent are set forth on the back cover of this
Statement. See Item 11, "The Dealer Manager,
the Information Agent and the Depositary."
5
<PAGE>
TO HOLDERS OF THE 12 1/4% SENIOR NOTES DUE 2002 OF POLYMER GROUP, INC.:
THIS STATEMENT AND THE RELATED CONSENT AND LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER AND THE SOLICITATION.
1.TERMS OF THE OFFER AND THE SOLICITATION.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) set forth herein and in the accompanying Consent and Letter of
Transmittal, the Company is offering to purchase for cash all of its
outstanding Notes at a price equal to (i) the present value on the Payment
Date (as defined herein) of $1,061.25 per $1,000 principal amount of Notes
(the amount payable on July 15, 1998, which is the first date on which the
Notes are redeemable (the "Earliest Redemption Date")), determined on the
basis of a yield (the "Tender Offer Yield") to the Earliest Redemption Date
equal to the sum of (x) the yield on the 8 1/4% U.S. Treasury Note due July
15, 1998 (the "Reference Security"), as calculated by the Dealer Manager in
accordance with standard market practice, based on the bid price for such
Reference Security as of 2:00 p.m., New York City Time, on June 18, 1997, the
tenth (10th) business day immediately preceding the scheduled Tender Offer
Expiration Date (the "Price Determination Date"), as displayed on the
Bloomberg Government Pricing Monitor on "Page PX4" (the "Bloomberg Page") (or,
if any relevant price is not available on a timely basis on the Bloomberg Page
or is manifestly erroneous, such other recognized quotation source as the
Dealer Manager shall select in its sole discretion) plus (y) 75 basis points,
the fixed spread (the "Fixed Spread") (such price being rounded to the nearest
cent per $1,000 principal amount of Notes), minus (ii) $10.00 per $1,000
principal amount of Notes, which is equal to the Consent Payment referred to
below (such amount, the "Tender Offer Consideration"), plus accrued and unpaid
interest to, but not including, the Payment Date (as defined herein). In the
event the Offer is extended for any period of time longer than ten (10)
business days from the previously scheduled Tender Offer Expiration Date, a
new Price Determination Date will be established. Payment of the Total
Consideration (i.e., the Tender Offer Consideration plus the Consent Payment)
or the Tender Offer Consideration, as applicable, for Notes validly tendered
and accepted for payment shall be made promptly following the Tender Offer
Expiration Date (the "Payment Date").
Although the Tender Offer Yield on the applicable Reference Security on the
Price Determination Date will be determined only from the source noted above,
information regarding the closing yield for the Reference Security may also be
found in The Wall Street Journal. The yield on the Reference Security for the
Notes as of 2:00 p.m., New York City time, on June 4, 1997 was 5.88%.
Accordingly, if such yield was determined to be the yield on the Reference
Security at the Price Determination Date, and July 3, 1997 was the Payment
Date for the Notes, the Tender Offer Yield, the Tender Offer Consideration and
the Total Consideration per $1,000 principal amount of Notes would be 6.63%,
$1,102.44 and $1,112.44, respectively. A hypothetical illustration of the
calculation of the Tender Offer Consideration and the Total Consideration for
the Notes demonstrating the application of the assumptions and methodologies
to be used in pricing the Offer is set forth in Schedule II hereto.
If at any time following a Price Determination Date, the Company extends the
Offer for any period of not more than ten (10) business days, the Total
Consideration and the Tender Offer Consideration, as applicable, for each Note
tendered pursuant to the Offer on or prior to the Consent Expiration Date or
the Tender Offer Expiration Date, as applicable, shall remain the Total
Consideration or Tender Offer Consideration, as applicable, as determined on
such Price Determination Date. If, however, the Company extends the Offer for
any period longer than ten (10) business days from the previously scheduled
Tender Offer Expiration Date based upon which such Price Determination Date
has been established, a new Price Determination Date shall be established
(such new Price Determination Date to be the tenth (10th) business day
immediately preceding the Tender Offer Expiration Date as so extended) and the
Total Consideration and the Tender Offer Consideration for each Note tendered
pursuant to the Offer on or prior to the Consent Expiration Date or the Tender
Offer Expiration Date, as applicable, shall be calculated based on the Tender
Offer Yield as of such new Price Determination Date. In
6
<PAGE>
either case, a Holder who tenders Notes after the Consent Expiration Date will
be entitled to receive, if Notes are accepted for payment pursuant to the
Offer, only the Tender Offer Consideration for the Notes so tendered.
Promptly after the Price Determination Date, but in any event before 9:00
a.m., New York City time, on the following business day, the Company will
publicly announce the pricing information referred to above by press release
to the Dow Jones News Service.
Prior to 2:00 p.m., New York City time, on the Price Determination Date,
holders may obtain hypothetical quotes of the yield on the Reference Security
(calculated as of a then recent time) and the resulting hypothetical Tender
Offer Consideration and the Total Consideration by contacting the Dealer
Manager at its telephone numbers set forth on the back cover of this
Statement. After such time on the Price Determination Date, holders may
ascertain the actual yield on the Reference Security as of the Price
Determination Date and the resulting actual Tender Offer Consideration and
Total Consideration by contacting the Dealer Manager at its telephone numbers
set forth on the back cover of this Statement.
Because the Tender Offer Consideration and the Total Consideration prior to
the Price Determination Date are based on a fixed spread pricing formula that
is linked to the yield on a Reference Security, the actual amount of cash that
will be received by a tendering Holder pursuant to the Offer will be affected
by changes in such yield during the term of the Offer prior to such Price
Determination Date. After the Price Determination Date when the Tender Offer
Consideration and the Total Consideration are no longer linked to the
Reference Security, the actual amount of cash that will be received by a
tendering Holder pursuant to the Offer will be known and holders will be able
to ascertain the Tender Offer Consideration and the Total Consideration in the
manner described above, unless the Offer is extended for a period longer than
ten (10) business days.
Upon the terms and subject to the conditions of the Solicitation (including,
if the Solicitation is extended or amended, the terms and conditions of any
such extension or amendment), the Company also is soliciting Consents to the
Proposed Amendments to the Indenture from Holders, and is offering to pay to
each Holder who consents to the Proposed Amendments on or prior to the Consent
Expiration Date, a Consent Payment in cash in respect of Notes for which
Consents have been validly delivered and not validly revoked on or prior to
the Consent Expiration Date, with such payment to be made promptly following
the Tender Offer Expiration Date if, but only if, the Notes are accepted for
payment pursuant to the terms of the Offer. Holders who desire to tender their
Notes pursuant to the Offer and to receive the Total Consideration are
required to validly tender such Notes and consent to the Proposed Amendments
on or prior to the Consent Expiration Date. The completion, execution and
delivery of the Consent and Letter of Transmittal by a Holder in connection
with the tender of Notes will constitute the Consent of the tendering Holder
to the Proposed Amendments with respect to such Notes. If a Holder's Notes are
not properly tendered pursuant to the Offer on or prior to the Consent
Expiration Date, such Holder will not receive the Consent Payment, even though
the Proposed Amendments will be effective as to all Notes that are not
purchased in the Offer. The Company is not soliciting and will not accept
Consents to the Proposed Amendments from Holders who are not also tendering
their Notes pursuant to the Offer.
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent on or
prior to the Consent Expiration Date will receive the Total Consideration,
which is equal to the Tender Offer Consideration plus the Consent Payment.
Holders who validly tender Notes and deliver Consents pursuant to the Offer on
or prior to the Consent Expiration Date may not thereafter revoke such Consent
after the Consent Expiration Date. Holders who validly tender their Notes
after the Consent Expiration Date will receive only the Tender Offer
Consideration and not the Consent Payment.
Holders may not deliver Consents without tendering their Notes in the Offer,
and may not revoke Consents on or prior to the Consent Expiration Date without
withdrawing the previously tendered Notes to which such Consent relates.
Holders may not withdraw previously tendered Notes on or prior to the Consent
Expiration Date without revoking the previously delivered Consents to which
such tender relates. Consents may not be revoked
7
<PAGE>
after the Consent Expiration Date. Tenders of Notes may be withdrawn at any
time prior to the Tender Offer Expiration Date.
All Notes validly tendered in accordance with the procedures set forth under
Item 7, "Procedures for Tendering Notes and Delivering Consents," and not
withdrawn in accordance with the procedures set forth under Item 8,
"Withdrawal of Tenders and Revocation of Consents," on or prior to the Tender
Offer Expiration Date will, upon the terms and subject to the conditions
hereof, including satisfaction of the Supplemental Indenture Condition, the
Bank Condition, the Financing Condition and the General Conditions, be
accepted for payment by the Company, and payments will be made therefor,
promptly after the Tender Offer Expiration Date on the Payment Date.
The Company and the Trustee intend to execute the Supplemental Indenture
promptly after the Consent Expiration Date, but the elimination of the
covenants set forth in the Supplemental Indenture will not become operative
unless and until the Notes are accepted for purchase by the Company pursuant
to the Offer, which is expected to occur promptly after the later of (a) the
Tender Offer Expiration Date or (b) subject to Rule 14e-1 under the Exchange
Act, as amended (the "Exchange Act"), the satisfaction or waiver of the
conditions to the Offer described herein. If the Offer is terminated or
withdrawn, or the Notes are not accepted for payment, the Supplemental
Indenture will not become operative, and no Tender Offer Consideration,
Consent Payment or Total Consideration will be paid or payable. If any
tendered Notes are not purchased pursuant to the Offer for any reason, or
certificates are submitted evidencing more Notes than are tendered, such Notes
not purchased will be returned, without expense, to the tendering Holder (or,
in the case of Notes tendered by book-entry transfer, such Notes will be
credited to the account maintained at DTC from which such Notes were
delivered) unless otherwise requested by such Holder under "Special Delivery
Instructions" in the Consent and Letter of Transmittal, promptly following the
Tender Offer Expiration Date or termination of the Offer.
IF THE REQUISITE CONSENTS ARE RECEIVED AND THE SUPPLEMENTAL INDENTURE HAS
BECOME OPERATIVE, THE PROPOSED AMENDMENTS WILL BE BINDING ON ALL NON-TENDERING
HOLDERS OF NOTES. ACCORDINGLY, CONSUMMATION OF THE OFFER AND THE ADOPTION OF
THE PROPOSED AMENDMENTS MAY HAVE ADVERSE CONSEQUENCES FOR HOLDERS WHO ELECT
NOT TO TENDER IN THE OFFER. SEE ITEM 2, "CERTAIN SIGNIFICANT CONSIDERATIONS."
The Company's obligation to accept, and pay for, Notes validly tendered
pursuant to the Offer is conditioned upon satisfaction of (a) the Supplemental
Indenture Condition, (b) the Bank Condition, (c) the Financing Condition and
(d) the General Conditions. Consent Payments to Holders who have validly
consented to (and not revoked) the Proposed Amendments on or prior to the
Consent Expiration Date are conditioned upon the Company's acceptance of Notes
for purchase pursuant to the Offer. Subject to applicable securities laws and
the terms and conditions set forth in this Statement, the Company reserves the
right, on or prior to the Tender Offer Expiration Date, (i) to waive any and
all conditions to the Offer or the Solicitation, (ii) to extend or terminate
the Offer or the Solicitation or (iii) to otherwise amend the Offer or the
Solicitation in any respect. See Item 9, "Conditions to the Offer." The rights
reserved by the Company in this paragraph are in addition to the Company's
rights to terminate the Offer described under Item 9, "Conditions to the
Offer." Any extension, amendment or termination will be followed promptly by
public announcement thereof, the announcement in the case of an extension of
the Offer to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Tender Offer Expiration Date.
Without limiting the manner in which any public announcement may be made, the
Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to
the Dow Jones News Service.
If the Company extends the Offer, or if, for any reason, the acceptance for
payment of, or the payment for, Notes is delayed or if the Company is unable
to accept for payment or pay for Notes pursuant to the Offer, then, without
prejudice to the Company's rights under the Offer, the Depositary may retain
tendered Notes on behalf of the Company, and such Notes may not be withdrawn
except to the extent tendering Holders are entitled to withdrawal rights as
described in Item 8, "Withdrawal of Tenders and Revocation of Consents."
However, the ability of the Company to delay the payment for Notes which the
Company has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return
8
<PAGE>
the securities deposited by or on behalf of holders of securities promptly
after the termination or withdrawal of a tender offer.
If the Company makes a material change in the terms of the Offer or the
Solicitation or the information concerning the Offer or the Solicitation, the
Company will disseminate additional offering materials and extend such Offer
or, if applicable, the Solicitation, to the extent required by law. If the
Solicitation is amended on or prior to the Consent Expiration Date in a manner
determined by the Company to constitute a material adverse change to the
Holders of the Notes, the Company promptly will disclose such amendment and,
if necessary, extend the Solicitation for a period deemed by the Company to be
adequate to permit Holders of the Notes to withdraw their Notes and revoke
their Consents. In addition, if the consideration to be paid in the Offer is
increased or decreased or the principal amount of Notes subject to the Offer
is decreased, the Offer will remain open at least 10 business days from the
date the Company first gives notice to Holders, by public announcement or
otherwise, of such increase or decrease. See Item 8, "Withdrawal of Tenders
and Revocation of Consents."
2.CERTAIN SIGNIFICANT CONSIDERATIONS.
The following considerations, in addition to the other information described
elsewhere in this Statement, should be carefully considered by each Holder
before deciding whether to participate in the Offer and the Solicitation.
Effects of the Proposed Amendments. If the Proposed Amendments become
effective, Holders of Notes that are not tendered and purchased pursuant to
the Offer will no longer be entitled to the benefits of substantially all of
the covenants contained in the Indenture which will be eliminated by the
Proposed Amendments. The Indenture, as amended with respect to the Notes, will
continue to govern the terms of all Notes that remain outstanding after the
consummation of the Offer. The elimination of these covenants and other
provisions would permit the Company to take certain actions previously
prohibited that could increase the credit risks with respect to the Company,
adversely affect the market price and credit rating of the remaining Notes or
otherwise be materially adverse to the interests of Holders, which would
otherwise not have been permitted pursuant to the Indenture. See Item 5,
"Proposed Amendments."
Limited Trading Market. The Notes were issued in 1994 and are not listed on
any national or regional securities exchange. To the Company's knowledge, the
Notes are traded infrequently in transactions arranged through brokers.
Quotations for securities that are not widely traded, such as the Notes, may
differ from actual trading prices and should be viewed as approximations.
Holders are urged to contact their brokers with respect to current information
regarding the Notes. To the extent that Notes are tendered and accepted in the
Offer, any existing trading market for the remaining Notes may become more
limited. A debt security with a smaller outstanding principal amount available
for trading (a smaller "float") may command a lower price than would a
comparable debt security with a greater float. The reduced float may also make
the trading price of the Notes that are not tendered and accepted for payment
more volatile. Consequently, the liquidity, market value and price volatility
of Notes which remain outstanding may be adversely affected. Holders of
unpurchased Notes may attempt to obtain quotations for the Notes from their
brokers; however, there can be no assurance that any trading market will exist
for the Notes following consummation of the Offer. The extent of the public
market for the Notes following consummation of the Offer will depend upon the
number of Holders remaining at such time, the interest in maintaining a market
in such Notes on the part of securities firms and other factors.
3.PURPOSE OF THE OFFER AND THE SOLICITATION.
The purpose of the Offer, which is conditioned upon, among other things, the
satisfaction of the Supplemental Indenture Condition, the Bank Condition, the
Financing Condition and the General Conditions, is to reduce the Company's
aggregate amount of outstanding senior indebtedness. The purpose of the
Solicitation and the Proposed Amendments is to eliminate substantially all of
the covenants contained in the Indenture, and, together with the Offer, to
enhance the operating and financial flexibility of the Company. If the
Requisite
9
<PAGE>
Consents are not obtained with respect to the Notes, the covenants currently
contained in the Indenture will continue to be in effect.
The Company expressly reserves the absolute right, in its sole discretion,
from time to time to purchase any Notes after the Tender Offer Expiration
Date, through open market or privately negotiated transactions, one or more
additional tender or exchange offers or otherwise on terms that may differ
materially from the terms of the Offer.
4.CERTAIN INFORMATION CONCERNING THE COMPANY AND THE NOTES.
The Company. The Company is a leading worldwide manufacturer and marketer of
a broad range of nonwoven and woven polyolefin products. The Company's
principal lines of business include industrial and specialty products and
disposable wiping, medical and hygiene products. The Company believes that it
is the fourth largest producer of nonwovens in the world and that it employs
the most extensive range of nonwoven technologies of any nonwovens producer.
The Company operates thirteen manufacturing facilities located in five
countries and is currently the only nonwovens producer that utilizes all of
the established nonwoven process technologies. The Company also believes that
it is the largest producer of woven polyethylene fabrics in North America.
The Company supplies nonwovens to a number of the largest consumer products
manufacturers in the world and specifically targets market niches with high
value-added products for these customers. The Company has a global presence
with an established customer base in the three major developed markets of
North America, Europe and Japan, as well as developing markets such as Latin
America. The Company's products are sold principally to converters that
manufacture a wide range of end-use products, such as hospital surgical gowns
and drapes, wound care sponges, multi-use wiping cloths and towels, flexible
industrial packaging, filtration media, battery separators, diapers, feminine
hygiene products and automotive insulation products. The Company supplies
nonwovens to customers such as Johnson & Johnson for medical and hygiene
products, Procter & Gamble for Pampers(R) and Luvs(R) diapers, Confab for
hygiene products, and Paragon Trade Brands for private label diapers.
Management has built the Company through a series of strategic business
acquisitions that have broadened the Company's technology base and increased
its product lines. The Company's strategic acquisitions have helped it to
establish strong positions in both the nonwoven and woven polyolefin fabric
markets. Synergies realized through these acquisitions have enabled the
Company to better meet the needs of existing customers, to reach emerging
geographic markets and to exploit niche market opportunities through customer-
interactive specialty product development. On May 9, 1996, the Company was
restructured and recapitalized, and consummated its initial public offering of
11.5 million shares of common stock. The Company's common stock is traded on
the New York Stock Exchange, Inc. under the trading symbol "PGH." The
Company's corporate headquarters are located at 4838 Jenkins Avenue, North
Charleston, South Carolina 29405.
The Notes. The Notes were issued by the Company in 1994 in the aggregate
principal amount of $150,000,000, of which $100,000,000 remain outstanding as
of the date of this Offer. The Notes, which are unsecured senior obligations
of the Company and mature on July 15, 2002, were issued under the Indenture.
Pursuant to the Indenture, the Notes may be redeemed on or after July 15, 1998
at a price equal to 106.125% of the principal amount outstanding, and at
lesser prices in each succeeding year from that date. A copy of the Indenture
(including the related Supplemental Indentures) was filed as an exhibit to the
Company's registration statement on Form S-1 (Reg. No. 333-2424), or
incorporated by reference therein from other public filings, as appropriate,
and in a Form 8-K filed on August 14, 1996.
5.PROPOSED AMENDMENTS.
This section sets forth a brief description of the Proposed Amendments to
the Indenture for which Consents are being sought pursuant to the
Solicitation. The summaries of provisions of the Indenture set forth below are
qualified in their entirety by reference to the full and complete terms
contained in the Indenture. Capitalized
10
<PAGE>
terms appearing below but not defined in this Statement have the meanings
assigned to such terms in the Indenture.
Deletion of Covenants in the Indenture. The Proposed Amendments would delete
in their entirety the following covenants and references thereto from the
Indenture as well as the events of default related to such covenants:
SECTION 1011 . Limitation on Indebtedness. This provision currently restricts
the ability of the Company and its Restricted Subsidiaries to
incur certain Indebtedness.
SECTION 1012 . Limitation on Restricted Payments. This provision currently
restricts the ability of the Company or any Restricted
Subsidiary of the Company to make certain Restricted Payments,
including (i) dividends or distributions in respect of any
shares of Capital Stock of the Company or of any Restricted
Subsidiary, (ii) purchases, redemptions, other acquisitions or
retirements of Capital Stock of the Company, any Restricted
Subsidiary or any Affiliate (other than a Wholly Owned
Restricted Subsidiary), including options, warrants or other
rights to acquire such Capital Stock, held by persons other
than the Company or any Wholly Owned Restricted Subsidiary,
(iii) voluntary or optional principal payments, repurchases,
redemptions, defeasance, retirements or other acquisitions of
any subordinated indebtedness of the Company or of any
governmental indebtedness of Fabrene or (iv) Investments in
any Person (other than the Permitted Investments).
SECTION 1013 . Limitation on Transactions with Affiliates. This provision
currently restricts the ability of the Company and its
Subsidiaries to engage in certain transactions with
Affiliates.
SECTION 1014 . Limitation on Certain Subordinated Indebtedness. This
provision restricts the ability of the Company or any
Guarantor to incur certain subordinated indebtedness.
SECTION 1015 . Limitation on Liens. This provision currently restricts the
ability of the Company and its Restricted Subsidiaries to
create, incur, affirm or suffer to exist any Lien upon any of
its property or assets without taking certain actions.
SECTION 1018 . Limitation on Restricted Subsidiary Capital Stock. This
provision currently restricts the Company from permitting (i)
any Restricted Subsidiary of the Company directly to issue any
Capital Stock except to the Company or a Wholly Owned
Restricted Subsidiary or in certain situations where such
Capital Stock is issued prior to the issuer's becoming or
merging with a Restricted Subsidiary, or (ii) Preferred Stock
of any Restricted Subsidiary to remain outstanding.
SECTION 1019 . Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. This provision currently
restricts the Company and its Restricted Subsidiaries from
permitting to exist certain encumbrances or restrictions on
the ability of any Restricted Subsidiary of the Company to (i)
pay dividends or make any other distributions on its Capital
Stock, (ii) pay any Indebtedness owed to the Company or a
Restricted Subsidiary of the Company, (iii) make any
investment in the Company or a Restricted Subsidiary of the
Company or (iv) transfer any of its properties or assets to
the Company or any Restricted Subsidiary, except in certain
circumstances.
Deletion of Definitions. The Proposed Amendments would delete definitions
from the Indenture when all references to such definitions would be eliminated
as a result of the foregoing.
The Proposed Amendments with respect to the Indenture constitute a single
proposal and a consenting Holder must consent to the Proposed Amendments as an
entirety and may not consent selectively with respect to certain of the
Proposed Amendments.
11
<PAGE>
The Supplemental Indenture relating to the Indenture will be executed by the
Company and the Trustee at or promptly after the Consent Expiration Date, but
the modification or elimination of the covenants set forth in the Supplemental
Indenture will not become operative unless and until the Notes are accepted
for purchase by the Company pursuant to the Offer, which is expected to occur
promptly after the Tender Offer Expiration Date. If the Requisite Consents are
not obtained with respect to the Notes on or prior to the Consent Expiration
Date, no Supplemental Indenture relating to the Indenture will be executed or
become operative.
IF THE PROPOSED AMENDMENTS ARE ADOPTED AND THE OFFER IS CONSUMMATED, NOTES
THAT ARE NOT TENDERED, OR THAT ARE NOT ACCEPTED FOR PURCHASE PURSUANT TO THE
OFFER, WILL REMAIN OUTSTANDING, BUT WILL BE SUBJECT TO THE TERMS OF THE
INDENTURE AS MODIFIED BY THE SUPPLEMENTAL INDENTURE.
Pursuant to the terms of the Indenture, the Proposed Amendments to the
Indenture require the written consent of the Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes issued
pursuant to the Indenture, excluding for such purposes any Notes owned at the
time by the Company or any of its affiliates (the "Requisite Consents").
The valid tender by a Holder of Notes pursuant to the Offer on or prior to
the Consent Expiration Date will be deemed to constitute the giving of a
Consent by such Holder to the Proposed Amendments with respect to such Notes.
The Company is not soliciting and will not accept Consents from Holders who
are not tendering their Notes pursuant to the Offer.
6.ACCEPTANCE FOR PAYMENT AND PAYMENT FOR NOTES; ACCEPTANCE OF CONSENTS.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, the Company will purchase, by accepting for
payment, and will pay for, all Notes validly tendered (and not withdrawn)
pursuant to the Offer on or prior to the Tender Offer Expiration Date, such
payment to be made by the deposit of the Tender Offer Consideration and
Consent Payment, as applicable, in immediately available funds by the Company
on the Payment Date with the Depositary. The Depositary will act as agent for
tendering Holders for the purpose of receiving payment from the Company and
transmitting such payment to tendering Holders. Under no circumstances will
interest on the Tender Offer Consideration and the Consent Payment, as
applicable, be paid by the Company by reason of any delay on behalf of the
Depositary in making such payment.
The Company expressly reserves the right, in its sole discretion and subject
to Rule 14e-1(c) under the Exchange Act, to delay acceptance for payment of or
payment for Notes in order to comply, in whole or in part, with any applicable
law. See Item 9, "Conditions to the Offer." In all cases, payment by the
Depositary to Holders of the Tender Offer Consideration for Notes accepted for
purchase pursuant to the Offer or Consent Payments for Consents delivered on
or prior to the Consent Expiration Date will be made only after timely receipt
by the Depositary of (i) certificates representing such Notes or timely
confirmation of a book-entry transfer of such Notes into the Depositary's
account at DTC pursuant to the procedures set forth under Item 7, "Procedures
for Tendering Notes and Delivering Consents," (ii) a properly completed and
duly executed Consent and Letter of Transmittal (or manually signed facsimile
thereof) and (iii) any other documents required by the Consent and Letter of
Transmittal, as applicable.
For purposes of the Offer, validly tendered Notes (or defectively tendered
Notes for which the Company has waived such defect) will be deemed to have
been accepted for payment by the Company if, as and when the Company gives
oral or written notice thereof to the Depositary. For purposes of the
Solicitation, Consents delivered to the Depositary will be deemed to have been
accepted by the Company if, as and when (a) the Company and the Trustee
execute the Supplemental Indenture promptly after the Consent Expiration Date,
and (b) the Company has accepted the Notes for purchase pursuant to the Offer.
If any tendered Notes are not purchased pursuant to the Offer for any
reason, or certificates are submitted evidencing more Notes than are tendered,
such Notes not purchased will be returned, without expense, to the
12
<PAGE>
tendering Holder (or, in the case of Notes tendered by book-entry transfer,
such Notes will be credited to the account maintained at DTC from which such
Notes were delivered) unless otherwise requested by such Holder under "Special
Delivery Instructions" in the Consent and Letter of Transmittal, promptly
following the Tender Offer Expiration Date or termination of the Offer.
The Company reserves the right to transfer or assign, in whole at any time
or in part from time to time, to one or more of its affiliates, the right to
purchase Notes tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Company of its obligations under the Offer or
prejudice the rights of tendering Holders to receive the Tender Offer
Consideration or Consent Payments, as applicable, pursuant to the Offer and
Solicitation.
It is a condition precedent to the Company's obligation to purchase Notes
pursuant to the Offer that, among other conditions, the Supplemental Indenture
relating to the Indenture will have been executed. It is a condition
subsequent to the effectiveness of the Proposed Amendments contained in the
Supplemental Indenture that the Company accept for payment all Notes validly
tendered (and not withdrawn) pursuant to the Offer (in which event, the
Company will be obligated to promptly pay the Tender Offer Consideration or
the Total Consideration, as applicable, for the Notes so accepted). See Item
9, "Conditions to the Offer."
7.PROCEDURES FOR TENDERING NOTES AND DELIVERING CONSENTS.
HOLDERS WILL NOT BE ENTITLED TO RECEIVE THE TOTAL CONSIDERATION UNLESS THEY
BOTH TENDER THEIR NOTES PURSUANT TO THE OFFER AND DELIVER CONSENTS TO THE
PROPOSED AMENDMENTS WITH RESPECT TO SUCH NOTES ON OR PRIOR TO THE CONSENT
EXPIRATION DATE. THE TENDER OF NOTES PURSUANT TO THE OFFER AND IN ACCORDANCE
WITH THE PROCEDURES DESCRIBED BELOW WILL CONSTITUTE (I) A TENDER OF THE NOTES
AND (II) THE DELIVERY OF A CONSENT BY SUCH HOLDER WITH RESPECT TO SUCH NOTES
(IF SUCH TENDER IS ON OR PRIOR TO THE CONSENT EXPIRATION DATE). ON OR PRIOR TO
THE CONSENT EXPIRATION DATE, THE COMPANY IS NOT SOLICITING AND WILL NOT ACCEPT
CONSENTS TO THE PROPOSED AMENDMENTS FROM HOLDERS WHO ARE NOT TENDERING THEIR
NOTES PURSUANT TO THE OFFER. HOLDERS WHO TENDER AFTER THE CONSENT EXPIRATION
DATE WILL RECEIVE ONLY THE TENDER OFFER CONSIDERATION.
THE METHOD OF DELIVERY OF NOTES AND CONSENTS AND LETTERS OF TRANSMITTAL, ANY
REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE TRANSMITTED
THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING NOTES AND
DELIVERING CONSENTS AND LETTERS OF TRANSMITTAL AND, EXCEPT AS OTHERWISE
PROVIDED IN THE CONSENT AND LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, IT
IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
CONSENT EXPIRATION DATE OR TENDER OFFER EXPIRATION DATE, AS APPLICABLE, TO
PERMIT DELIVERY TO THE DEPOSITARY ON OR PRIOR TO SUCH DATE.
Tender of and Consent for Notes. The tender by a Holder of Notes and
delivery of Consents (and subsequent acceptance of such tender by the Company)
pursuant to one of the procedures set forth below will constitute a binding
agreement between such Holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Consent and Letter of
Transmittal.
Only registered Holders are authorized to tender their Notes and deliver
their Consent to the Proposed Amendments. The procedures by which Notes may be
tendered and Consents given by beneficial owners who are not registered
Holders will depend upon the manner in which the Notes are held.
Tender of Notes Held in Physical Form. To effectively tender Notes held in
physical form (and deliver the related Consents), a properly completed Consent
and Letter of Transmittal (or a manually signed facsimile thereof) duly
executed by the Holder thereof, and any other documents required by the
Consent and Letter of Transmittal, must be received by the Depositary at its
address set forth on the back cover of this Statement on or prior to the
Consent Expiration Date or the Tender Offer Expiration Date, as applicable. A
tender of Notes may also be effected through the deposit of Notes with DTC and
making book-entry delivery as described below;
13
<PAGE>
however, a completed and executed Consent and Letter of Transmittal is still
required to effectuate the valid delivery of related Consents with respect to
such Notes. After the Consent Expiration Date, a tendering Holder may comply
with the guaranteed delivery procedure set forth below if, such Holder is
unable to tender Notes on or prior to the Tender Offer Expiration Date. The
guaranteed delivery procedure set forth below may not be used to tender Notes
or deliver Consents on or prior to the Consent Expiration Date. In order to
receive both the Consent Payment and the Tender Offer Consideration, the Notes
and the Consent and Letter of Transmittal must be received by the Depositary
on or prior to the Consent Expiration Date. Consents and Letters of
Transmittal and Notes should be sent only to the Depositary and should not be
sent to the Company, the Information Agent, the Dealer Manager or the Trustee.
Tender of Notes Held Through DTC. To effectively tender Notes (and deliver
the related Consents) that are held through DTC, DTC participants should
either (i) properly complete and duly execute the Consent and Letter of
Transmittal (or a manually signed facsimile thereof), together with any other
documents required by the Consent and Letter of Transmittal, and mail or
deliver the Consent and Letter of Transmittal and such other documents to the
Depositary, or (ii) electronically transmit their acceptance through ATOP (and
thereby tender Notes), for which the transaction will be eligible, followed by
a properly completed and duly executed Consent and Letter of Transmittal
delivered to the Depositary to effectuate the delivery of the related Consent.
Upon receipt of such Holder's acceptance through ATOP, DTC will edit and
verify the acceptance and send an Agent's Message (as defined below) to the
Depositary for its acceptance. Delivery of tendered Notes must be made to the
Depositary pursuant to the book-entry delivery procedures set forth below or
the tendering DTC participant must comply with the guaranteed delivery
procedures set forth below but such guaranteed delivery procedures may only be
used for tenders of Notes after the Consent Expiration Date.
Except as provided below, unless the Notes being tendered are deposited with
the Depositary on or prior to the Consent Expiration Date or on or prior to
the Tender Offer Expiration Date, as the case may be (accompanied by a
properly completed and duly executed Consent and Letter of Transmittal or a
properly transmitted Agent's Message), the Company may, at its option, treat
such tender as defective for purposes of the right to receive the Total
Consideration or Tender Offer Consideration, as applicable. Payment for the
Notes will be made only against deposit of the tendered Notes and delivery of
any other required documents.
Book-Entry Delivery Procedures. The Depositary will establish accounts with
respect to the Notes at DTC for purposes of the Offer within two business days
after the date of this Statement, and any financial institution that is a
participant in DTC may make book-entry delivery of the Notes by causing DTC to
transfer such Notes into the Depositary's account in accordance with DTC's
procedures for such transfer. However, although delivery of Notes may be
effected through book-entry transfer into the Depositary's account at DTC, the
Consent and Letter of Transmittal (or a manually signed facsimile thereof),
with any required signature guarantees or an Agent's Message (as defined
below) in connection with a book-entry transfer, and any other required
documents, must, in any case, be transmitted to and received by the Depositary
at one or more of its addresses set forth on the back cover of this Statement
on or prior to the Consent Expiration Date or the Tender Offer Expiration
Date, as the case may be, in connection with the tender of such Notes. Holders
tendering on or prior to the Consent Expiration Date must also consent to the
Proposed Amendments by completing, executing and timely delivering the Consent
and Letter of Transmittal (or a manually signed facsimile thereof) to the
Depositary. Holders tendering after the Consent Expiration Date but on or
prior to the Tender Offer Expiration Date may validly tender Notes by
complying with the guaranteed delivery procedure described below. Holders who
tender Notes after the Consent Expiration Date will only receive the Tender
Offer Consideration and will not be entitled to the Consent Payment. Delivery
of documents to DTC does not constitute delivery to the Depositary. The
confirmation of a book-entry transfer into the Depositary's account at DTC as
described above is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each
participant in DTC tendering the Notes and that such participants have
received the Consent and Letter of Transmittal and agree to be bound by the
terms of the Consent and Letter of Transmittal and the Company may enforce
such agreement against such participants.
14
<PAGE>
In order to validly deliver a Consent with respect to Notes transferred
pursuant to ATOP, a DTC participant using ATOP must also properly complete and
duly execute the Consent and Letter of Transmittal and deliver it to the
Depositary. Pursuant to authority granted by DTC, any DTC participant which
has Notes credited to its DTC account at any time (and thereby held of record
by DTC's nominee) may directly provide a Consent to the Proposed Amendments as
though it were the registered Holder by so completing, executing and
delivering the Consent and Letter of Transmittal.
Signature Guarantees. Signatures on all Consents and Letters of Transmittal
must be guaranteed by a recognized participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (each a "Medallion Signature
Guarantor"), unless the Notes tendered and Consents delivered thereby are
tendered and delivered (i) by a registered Holder of Notes (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Notes) who has not completed any of the boxes entitled "Special
Payment Instructions" or "Special Delivery Instructions" on the Consent and
Letter of Transmittal, or (ii) for the account of a member firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. ("NASD") or a commercial bank or trust company
having an office or correspondent in the United States (each of the foregoing
being referred to as an "Eligible Institution"). See Instruction 1 of the
Consent and Letter of Transmittal. If the Notes are registered in the name of
a person other than the signer of the Consent and Letter of Transmittal or if
Notes not accepted for payment or not tendered are to be returned to a person
other than the registered Holder, then the signature on the Consent and Letter
of Transmittal accompanying the tendered Notes must be Guaranteed by a
Medallion Signature Guarantor as described above. See Instructions 1 and 5 of
the Consent and Letter of Transmittal.
Guaranteed Delivery. If a registered Holder desires to tender Notes pursuant
to the Offer after the Consent Expiration Date and (a) certificates
representing such Notes are not immediately available, (b) time will not
permit such Holder's Consent and Letter of Transmittal, certificates
representing such Notes and all other required documents to reach the
Depositary on or prior to the Tender Offer Expiration Date, or (c) the
procedures for book-entry transfer (including delivery of an Agent's Message)
cannot be completed on or prior to the Tender Offer Expiration Date, such
Holder may nevertheless tender such Notes with the effect that such tender
will be deemed to have been received on or prior to the Tender Offer
Expiration Date if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to guaranteed delivery that is accepted by the
Company, is received by the Depositary on or prior to the Tender Offer
Expiration Date as provided below; and
(iii) the certificates for the tendered Notes, in proper form for
transfer (or a Book-Entry Confirmation of the transfer of such Notes into
the Depositary's account at DTC as described above), together with a
Consent and Letter of Transmittal (or manually signed facsimile thereof)
properly completed and duly executed, with any signature guarantees and any
other documents required by the Consent and Letter of Transmittal or a
properly transmitted Agent's Message, are received by the Depositary within
two business days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE COMPANY BY REASON OF ANY
DELAY IN MAKING PAYMENT TO ANY PERSON USING THE GUARANTEED DELIVERY
PROCEDURES. THE TENDER OFFER CONSIDERATION FOR NOTES TENDERED PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES WILL BE THE SAME AS FOR NOTES DELIVERED TO THE
DEPOSITARY AFTER THE CONSENT EXPIRATION DATE AND ON OR PRIOR TO THE TENDER
OFFER EXPIRATION DATE, EVEN IF THE NOTES TO BE DELIVERED PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES ARE NOT SO DELIVERED TO
15
<PAGE>
THE DEPOSITARY, AND THEREFORE PAYMENT BY THE DEPOSITARY ON ACCOUNT OF SUCH
NOTES IS NOT MADE, UNTIL AFTER THE PAYMENT DATE. HOLDERS SHOULD BE AWARE THAT,
ON OR PRIOR TO THE CONSENT EXPIRATION DATE, TENDERS OF NOTES AND THE RELATED
CONSENTS CANNOT BE DELIVERED USING THE GUARANTEED DELIVERY PROCESS AND THAT
USE OF THE GUARANTEED DELIVERY PROCESS COULD RESULT IN A TENDER OF NOTES AND
THE RELATED CONSENT BEING DEFECTIVE.
Holders who tender Notes after the Consent Expiration Date will only receive
the Tender Offer Consideration and will not be entitled to the Consent
Payment. Notwithstanding any other provision hereof, payment of the Tender
Offer Consideration for Notes tendered and accepted for payment pursuant to
the Offer will, in all cases, be made only after receipt by the Depositary of
the tendered Notes (or Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), and a Consent and
Letter of Transmittal (or manually signed facsimile thereof) with respect to
such Notes, properly completed and duly executed, with any signature
guarantees and any other documents required by the Consent and Letter of
Transmittal, or a properly transmitted Agent's Message.
Backup U.S. Federal Income Tax Withholding. To prevent backup U.S. federal
income tax withholding, each tendering Holder of Notes must provide the
Depositary with such Holder's correct taxpayer identification number and
certify that such Holder is not subject to backup U.S. federal income tax
withholding by completing the Substitute Form W-9 included in the Consent and
Letter of Transmittal. See Item 10, "Certain U.S. Federal Income Tax
Consequences."
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered Notes
or delivery of Consents pursuant to any of the procedures described above will
be determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right, in its sole
discretion, subject to applicable law, to waive or amend any of the conditions
of the Offer or the Solicitation or to waive any defect or irregularity in any
tender with respect to Notes or delivery of Consents of any particular Holder,
whether or not similar defects or irregularities are waived in the case of
other Holders. The Company's interpretation of the terms and conditions of the
Offer and Solicitation (including the Consent and Letter of Transmittal and
the Instructions thereto) will be final and binding. Neither the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. If the Company waives its right to reject a defective
tender of Notes, the Holder will be entitled to the Tender Offer Consideration
and, if applicable, the Consent Payment.
8.WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS.
Tenders of Notes may be withdrawn at any time prior to the Tender Offer
Expiration Date. Consents may only be revoked at any time on or prior to the
Consent Expiration Date. A valid withdrawal of tendered Notes effected on or
prior to the Consent Expiration Date will constitute the concurrent valid
revocation of such Holder's related Consent. Consents may not be revoked after
the Consent Expiration Date except in the limited circumstances described
below. In order for a Holder to revoke a Consent, such Holder must withdraw
the related tendered Notes. Tenders of Notes may be validly withdrawn if the
Offer is terminated without any Notes being purchased thereunder. In the event
of a termination of the Offer, the Notes tendered pursuant to the Offer will
be promptly returned to the tendering Holder and the Supplemental Indenture
will not become operative. If the Solicitation is amended on or prior to the
Consent Expiration Date in a manner determined by the Company to constitute a
material adverse change to the Holders of the Notes, the Company promptly will
disclose such amendment and, if necessary, extend the Solicitation for such
Notes for a period deemed by the Company to be adequate to permit Holders of
the Notes to withdraw their Notes and revoke their Consents. In addition, if
the consideration to be paid in the Offer is increased or decreased or the
principal amount of Notes subject to the
16
<PAGE>
Offer is decreased, the Offer will remain open at least 10 business days from
the date the Company first gives notice to Holders, by public announcement or
otherwise, of such increase or decrease.
For a withdrawal of tendered Notes (and the concurrent revocation of the
related Consents, as the case may be) to be effective, a written or facsimile
transmission notice of withdrawal must be received by the Depositary on or
prior to the Tender Offer Expiration Date (or Consent Expiration Date, in the
case of a concurrent revocation of Consents) at its address set forth on the
back cover of this Statement. Any such notice of withdrawal must (i) specify
the name of the person who tendered the Notes to be withdrawn, (ii) contain
the description of the Notes to be withdrawn and identify the certificate
number or numbers shown on the particular certificates evidencing such Notes
(unless such Notes were tendered by book-entry transfer) and the aggregate
principal amount represented by such Notes, and (iii) be signed by the Holder
of such Notes in the same manner as the original signature on the Consent and
Letter of Transmittal by which such Notes were tendered (including any
required signature Guarantees), or be accompanied by (x) documents of transfer
sufficient to have the Trustee register the transfer of the Notes into the
name of the person withdrawing such Notes and (y) a properly completed
irrevocable proxy authorizing such person to effect such withdrawal on behalf
of such Holder. If the Notes to be withdrawn have been delivered or otherwise
identified to the Depositary, a signed notice of withdrawal is effective
immediately upon written or facsimile notice of such withdrawal even if
physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Consent Expiration
Date. After the Consent Expiration Date, Consents may not be revoked, except
in the limited circumstances described above.
If the Company extends the Offer or is delayed in its acceptance for
purchase of Notes or is unable to purchase Notes pursuant to the Offer for any
reason, then, without prejudice to the Company's rights hereunder, tendered
Notes may be retained by the Depositary on behalf of the Company and may not
be withdrawn (subject to Rule 14e-1(c) under the Exchange Act, which requires
that an offeror pay the consideration offered or return the securities
deposited by or on behalf of the investor promptly after the termination or
withdrawal of a tender offer), except as otherwise provided in this section.
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
9.CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer and the Solicitation and
in addition to (and not in limitation of) the Company's rights to extend
and/or amend the Offer and the Solicitation, the Company shall not be required
to accept for payment, purchase or pay for, and may delay the acceptance for
payment of, or payment for, any tendered Notes, in each event subject to Rule
14e-1(c) under the Exchange Act, and may terminate the Offer and the
Solicitation, if the Supplemental Indenture Condition, the Bank Condition, the
Financing Condition or the General Conditions shall not have been satisfied.
The "Supplemental Indenture Condition" shall mean receipt of the Requisite
Consents with respect to the Proposed Amendments and the execution of the
Supplemental Indenture providing for the Proposed Amendments.
17
<PAGE>
The "Bank Condition" shall mean the reaching of an agreement by and among
the Company and the applicable banks (on terms and conditions satisfactory to
the Company in its sole discretion) as to the amendment and restatement of the
Credit Agreement (as defined below) (i) permitting borrowing under the Credit
Agreement of up to $325 million from time to time and (ii) allowing the
purchase of the Notes pursuant to the Offer, the payment of the Consent
Payments, and the amendment of the Indenture pursuant to the Solicitation.
Although the Company has already requested such amendment and restatement of
the Credit Agreement, there can be no assurances that the Bank Condition will
be satisfied on or prior to the Tender Offer Expiration Date. "Credit
Agreement" shall mean the Credit Agreement dated as of May 15, 1996, among the
Company, various financial institutions, Chase Bank, as Administrative Agent,
and Chemical Bank, as Operations Agent, as amended.
The "Financing Condition" shall mean that, on the Tender Offer Expiration
Date, the Company shall have available to it (on terms and conditions
satisfactory to the Company in its sole discretion) all of the financing
necessary for payment of that portion of the anticipated aggregate
consideration payable for the Notes to be accepted and for the Consents duly
delivered, which will be provided through the consummation of a private
placement (the "Private Placement") and resale pursuant to Rule 144A
promulgated under the Securities Act of 1933, as amended, of at least $350
million principal amount of a new issue of Senior Subordinated Notes. Although
the Company believes, based on its current financial condition, that the
Financing Condition should be satisfied, there can be no assurances that the
Financing Condition will in fact be satisfied on the Tender Offer Expiration
Date.
The "General Conditions" shall mean the conditions set forth below in
paragraphs (i) through (v). The General Conditions shall be deemed to have
been satisfied or waived unless any of the following conditions shall occur on
or prior to the Tender Offer Expiration Date.
(i) There shall have been instituted, threatened or be pending any action
or proceeding (or there shall have been any material adverse development in
any action or proceeding currently instituted, threatened or pending)
before or by any court, governmental, regulatory or administrative agency
or instrumentality, or by any other person, in connection with the Offer or
the Solicitation that is, or is reasonably likely to be, in the sole
judgment of the Company, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or which
would or might, in the sole judgment of the Company, prohibit, prevent,
restrict or delay consummation of the Offer or the Solicitation;
(ii) An order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been proposed, enacted, entered, issued,
promulgated, enforced or deemed applicable by any court or governmental,
regulatory or administrative agency or instrumentality that, in the sole
judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Offer or the Solicitation or that is, or is
reasonably likely to be, in the sole judgment of the Company, materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole;
(iii) There shall have occurred or be likely to occur any event affecting
the business or financial affairs of the Company that, in the sole judgment
of the Company, would or might prohibit, prevent, restrict or delay
consummation of the Offer or the Solicitation;
(iv) The Trustee under the Indenture shall have objected in any respect
to, or taken action that could, in the sole judgment of the Company,
adversely affect the consummation of the Offer or the Solicitation or the
Company's ability to cause the Proposed Amendments to become operative or
shall have taken any action that challenges the validity or effectiveness
of the Supplemental Indenture or the procedures used by the Company in
soliciting the Consents (including the form thereof) or in the making of
the Offer or the Solicitation or the acceptance of, or payment for, the
Notes or the Consents; or
(v) There shall have occurred (1) any general suspension of, shortening
of hours for, or limitation on prices for, trading in securities in the
United States securities or financial markets, (2) any significant adverse
change in the price of the Notes or any publicly traded securities of the
Company or any of its affiliates in the United States or other major
European securities or financial markets, (3) a material
18
<PAGE>
impairment in the trading market for debt securities, (4) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States or other major financial markets, (5) any limitation
(whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, or
other event that, in the reasonable judgment of the Company, might affect
the extension of credit by banks or other lending institutions, (6) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (7) in the case of any of the foregoing existing on the date hereof, a
material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company, in its sole discretion, regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Company) and may be waived by the Company, in whole or in
part, at any time and from time to time, in the sole discretion of the
Company, whether any other condition of the Offer and the Solicitation is also
waived. The failure by the Company at any time to exercise any of the
foregoing rights will not be deemed a waiver of any other right and each right
will be deemed an ongoing right which may be asserted at any time and from
time to time.
10.CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the principal United States federal
income tax consequences to a Holder of (i) the Offer and the Solicitation to
Holders of Notes and (ii) the retention of Notes and the adoption of the
Proposed Amendments. This summary is based upon current provisions of the
United States Internal Revenue Code of 1986, as amended (the "Code"),
applicable United States Treasury regulations promulgated thereunder, judicial
authority and current Internal Revenue Service ("IRS") rulings and practice,
all of which are subject to change, possibly on a retroactive basis. The tax
treatment of a Holder of Notes may vary depending upon such Holder's
particular situation, and certain Holders (including insurance companies, tax
exempt organizations, financial institutions, brokers, dealers, nonresident
aliens, foreign corporations, foreign partnerships or foreign estates or
trusts) might be subject to special rules not discussed below. This discussion
assumes that Notes are held as capital assets and is directed to Holders who
are United States persons. As used herein, a "Holder" means a beneficial owner
of a Note that is for United States federal income tax purposes (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any political subdivision thereof, (iii) an estate whose income is subject to
United States federal income tax regardless of its source, (iv) a trust if a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States fiduciaries have
the authority to control all substantial decisions of the trust, or (v) any
other person whose income or gain in respect of a Note is effectively
connected with the conduct of a United States trade or business. No
information is provided herein with respect to foreign, state or local tax
laws or estate and gift tax considerations. Each Holder is urged to consult
its own tax advisor regarding federal, state, local, foreign and any other tax
consequences of tendering the Notes pursuant to the Offer or retaining the
Notes, especially in light of the Holder's particular circumstances.
This summary is based in part on certain recently finalized United States
Treasury regulations addressing the United States federal income tax treatment
of modifications of debt instruments (the "Regulations"). The Regulations are
effective for modifications occurring on or after September 24, 1996 and may
be relied upon for modifications occurring after December 2, 1992. Therefore,
the Regulations will apply to the Offer and the Solicitation. No assurances
can be given that the treatment described herein of the Proposed Amendments or
the cash payments pursuant to the Offer will be accepted by the IRS or, if
challenged, by a court.
Sale of Notes Pursuant to the Offer. In general, a Holder who receives cash
in exchange for Notes pursuant to the Offer will recognize gain or loss for
United States federal income tax purposes equal to the difference between (i)
the amount of cash received (other than cash attributable to accrued interest,
which will be taxable as ordinary income) in exchange for such Notes, and (ii)
such Holder's adjusted tax basis in such Notes at the time of the sale. A
Holder's adjusted tax basis for Notes generally will be the price such Holder
paid for the
19
<PAGE>
Notes increased by original issue discount which was previously included in
income by the Holder (including any original issue discount includible in the
taxable year of the sale prior to the sale) and by market discount to the
extent such market discount was previously included in income by the Holder
(including any market discount included in the taxable year of the sale prior
to the sale) and reduced (but not below zero) by amortized premium and any
payments received by the Holder other than interest payments.
If the Consent Payment is treated as a separate fee for consenting to the
Proposed Amendments, it is possible that such amount would be taxable as
ordinary income to the Holder (rather than as sales proceeds, discussed
above).
Any gain or loss recognized on a sale of a Note pursuant to the Offer should
be capital gain or loss and will be long-term capital gain or loss if the
Holder has held the Note for more than one year at the time of sale. A Holder
who has acquired a Note with market discount generally will be required to
treat a portion of any gain on a sale of the Note as ordinary income to the
extent of the market discount accrued to the date of the disposition, less any
accrued market discount previously reported as ordinary income.
Retention of Notes; Adoption of Proposed Amendments. In the case of a Holder
who does not tender its Notes pursuant to the Offer, the adoption of the
Proposed Amendments should not cause a deemed exchange of the Notes under the
Regulations because the Proposed Amendments should not constitute a
significant modification to the terms of the Notes for federal income tax
purposes. Alternatively, even if the Proposed Amendments were to cause a
deemed exchange of the Notes for federal income tax purposes, a Holder who
does not tender its Notes pursuant to the Offer should not recognize gain or
loss on such deemed exchange since such deemed exchange should qualify as a
tax-free recapitalization; provided, however, that to the extent that such
Holder were deemed to receive new Notes with a principal amount in excess of
the principal amount of the Notes surrendered, gain would be recognized to the
extent of such excess. There can be no assurance, however, that the IRS will
not take a contrary view. If an exchange were deemed to have occurred and such
exchange did not qualify as a tax-free recapitalization, a Holder would
recognize gain or loss on such exchange and would have a new holding period
for the Notes. In the event that the adoption of the Proposed Amendments
causes a deemed exchange and the issue price of the new Notes is less than
their principal amount, the new Notes would generally have original issue
discount and a Holder of such new Note would generally be required to include
such original issue discount in income as it accrues (regardless of whether
such Holder is a cash or accrual basis taxpayer).
Backup Withholding and Information Reporting. In general, information
reporting requirements will apply to the payment of the gross proceeds of the
Offer to the Holders of Notes. Federal income tax law requires that a Holder
whose tendered Notes are accepted for payment must provide the Depositary (as
payor) with such Holder's correct taxpayer identification number ("TIN")
which, in the case of a Holder who is an individual, is his or her social
security number, and certain other information, or otherwise establish a basis
for exemption from backup withholding. Exempt Holders (including, among
others, all corporations and certain foreign individuals) are not subject to
these backup withholding and information reporting requirements.
If the Depositary is not provided with the correct TIN or an adequate basis
for exemption, the Holder may be subject to a penalty imposed by the IRS and
the gross proceeds of the Offer paid to the Holder may be subject to a 31%
backup withholding tax. If withholding results in an overpayment of taxes, a
refund or credit may be obtained, provided that the required information is
provided to the IRS.
To prevent backup withholding, each tendering Holder must complete the
Substitute Form W-9 provided in the Consent and Letter of Transmittal and
either (i) provide the Holder's correct TIN and certain other information
under penalties of perjury or (ii) provide an adequate basis for exemption.
11.THE DEALER MANAGER, THE INFORMATION AGENT AND THE DEPOSITARY.
Chase Securities Inc. has been engaged to act as Dealer Manager and
Solicitation Agent in connection with the Offer and the Solicitation (the
"Dealer Manager"). In such capacity, the Dealer Manager may contact
20
<PAGE>
Holders of Notes regarding the Offer and the Solicitation and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward this Statement and related materials to beneficial owners of Notes.
The Company has agreed to indemnify the Dealer Manager against certain
liabilities, including certain liabilities under the federal securities laws.
The Dealer Manager has provided in the past, and is currently providing other
investment banking and financial advisory services to the Company.
At any given time, the Dealer Manager may trade the Notes of the Company for
its own account or for the accounts of customers and, accordingly, may hold a
long or short position in the Notes.
Any Holder that has questions concerning the terms of the Offer or the
Solicitation may contact the Dealer Manager at its address and telephone
numbers set forth on the back cover of this Statement.
MacKenzie Partners, Inc. has been appointed Information Agent (the
"Information Agent") for the Offer and the Solicitation. Questions and
requests for assistance or additional copies of this Statement, the Consent
and Letter of Transmittal or the Notice of Guaranteed Delivery may be directed
to the Information Agent at the address and telephone numbers set forth on the
back cover of this Statement. Holders of Notes may also contact their broker,
dealer, commercial bank or trust company for assistance concerning the Offer
and Solicitation.
Harris Trust Company of New York has been appointed as Depositary (the
"Depositary") for the Offer and the Solicitation. Consents and Letters of
Transmittal and all correspondence in connection with the Offer and the
Solicitation should be sent or delivered by each Holder or a beneficial
owner's broker, dealer, commercial bank, trust company or other nominee to the
Depositary at the addresses and telephone number set forth on the back cover
of this Statement. Any Holder or beneficial owner that has questions
concerning the procedures for tendering Notes or whose Notes have been
mutilated, lost, stolen or destroyed should contact the Depositary at the
addresses and telephone number set forth on the back cover of this Statement.
12.FEES AND EXPENSES.
The Company will pay the Dealer Manager, the Information Agent and the
Depositary reasonable and customary fees for their services and will reimburse
them for their reasonable out-of-pocket expenses in connection therewith. The
Company will pay brokerage firms and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Statement and related materials to the beneficial
owners of Notes.
13.SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Company to pay the Total
Consideration in connection with the Offer and the Solicitation is estimated
to be approximately $112 million (assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for payment). Such funds will be
obtained by the Company from the proceeds of the Private Placement.
Consummation of the Offer and the Solicitation is subject to satisfaction of
the Bank Condition and the Financing Condition, in addition to the
Supplemental Indenture Condition and the General Conditions. See Item 9,
"Conditions to the Offer."
14.MISCELLANEOUS.
The Offer and the Solicitation are being made to all Holders of the Notes.
The Company is not aware of any jurisdiction in which the making of the Offer
and the Solicitation is not in compliance with applicable law. If the Company
becomes aware of any jurisdiction in which the making of the Offer and the
Solicitation would not be in compliance with applicable law, the Company will
make a good faith effort to comply with any such law. If, after such good
faith effort, the Company cannot comply with any such law, the Offer and the
Solicitation will not be made to (nor will tenders of Notes and Consents be
accepted from or on behalf of) the owners of Notes residing in such
jurisdiction.
21
<PAGE>
No person has been authorized to give any information or make any
representation on behalf of the Company not contained in this Statement or in
the Consent and Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
POLYMER GROUP, INC.
June 5, 1997
22
<PAGE>
SCHEDULE I
YLD = The Tender Offer Yield equals the sum of the yield on
the 8 1/4% U.S. Treasury Note due July 15, 1998 (the
"Reference Security"), as calculated by the Dealer
Manager in accordance with standard market practice,
based on the bid price for such Reference Security as
of 2:00 p.m., New York City time, on the Price
Determination Date, as displayed on the Bloomberg
Government Pricing Monitor on "Page PX4" (the
"Bloomberg Page") (or, if any relevant price is not
available on a timely basis on the Bloomberg Page or is
manifestly erroneous, such other recognized quotation
source as the Dealer Manager shall select in its sole
discretion), plus 75 basis points, expressed as a
decimal number.
CPN = the contractual rate of interest payable on a Note
expressed as a decimal number.
N = the number of semi-annual interest payments, based on
the Earliest Redemption Date, from (but not including)
the expected Payment Date to (and including) the
Earliest Redemption Date.
S = the number of days from and including the semi-annual
interest payment date immediately preceding the
expected Payment Date up to, but not including, the
expected Payment Date. The number of days is computed
using the 30/360 day-count method.
exp = Exponentiate. The term to the left of "exp" is raised
to the power indicated by the term to the right of
"exp."
CP = $10 per $1,000 principal amount per Note, which is
equal to the Consent Payment.
RV = the assumed redemption amount, based on the Earliest
Redemption Date, for each Note per $1,000 principal
amount of a Note (as rounded to the nearest one
hundredth of one percent).
Total Consideration = the Tender Offer Consideration plus the Consent Payment
of a Note per $1,000 principal amount of a Note if
tender is made on or prior to 5:00 p.m., New York City
time, on the Consent Expiration Date. The Total
Consideration is rounded to the nearest cent.
Tender Offer Consideration
= the applicable purchase price of a Note per $1,000
principal amount of a Note if tender is made after 5:00
p.m., New York City time, on the Consent Expiration
Date. The Tender Consideration is rounded to the
nearest cent.
Total Consideration =
<TABLE>
<S> <C> <C> <C> <C> <C>
N
RV + S $1,000 (CPN/2) - $1,000 (CPN/2)(S/180)
- --------------------------- ---------------------------
(1 + YLD/2) exp (N - S/180) k=1 (1 + YLD/2) exp (k - S/180)
Tender Offer Consideration
=
N
RV + S $1,000 (CPN/2) - $1,000 (CPN/2)(S/180) - CP
- --------------------------- ---------------------------
(1 + YLD/2) exp (N - S/180) k=1 (1 + YLD/2) exp (k - S/180)
</TABLE>
23
<PAGE>
SCHEDULE II
This Schedule provides a hypothetical illustration of the Total
Consideration (i.e., Tender Offer Consideration plus Consent Payment) of the
12 1/4% Senior Notes due 2002 based on hypothetical data, and should,
therefore, be used solely for the purpose of obtaining an understanding of the
calculation of the Total Consideration, as quoted at hypothetical rates and
times, and should not be used or relied upon for any other purpose:
12 1/4% SENIOR NOTES DUE 2002
Earliest Redemption Date= July 15, 1998
Reference Security = 8 1/4% U.S. Treasury Note due July 15, 1998 as
displayed on the Bloomberg Government Pricing
Monitor on "Page PX4"
Fixed Spread = 0.75% (75 basis points)
EXAMPLE
Assumed Pricing Determination Date and Time
= 2:00 p.m., New York City time, on June 18, 1997
Assumed Payment Date = July 3, 1997
Assumed Reference Security Yield as of Assumed Price Determination Date and
Time
= 5.88%
Fixed Spread = 0.75%
YLD = .0663
CPN = .1225
N = 3
S = 168
RV = $1,061.25
CP = $10.00
Total Consideration = $1,112.44
<TABLE>
<S> <C> <C> <C> <C> <C>
N
$1,061.25 + S $1,000 (.1225/2) - $1,000 (.1225/2)(168/180)
- ------------------------------- -------------------------------
(1 + .0663/2) exp (3 - 168/180) k=1 (1 + .0663/2) exp (k - 168/180)
Tender Offer Consideration
= $1,102.44
N
$1,061.25 + S $1,000 (.1225/2) - $1,000 (.1225/2)(168/180) - $10.00
- ------------------------------- -------------------------------
(1 + .0663/2) exp (3 - 168/180) k=1 (1 + .0663/2) exp (k - 168/180)
</TABLE>
24
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand:
Wall Street Station P.O. 77 Water Street, 4th Receive Window 77 Water
Box 1023 New York, NY Floor New York, NY 10005Street, 5th Floor New York,
10268-1023 Attention: Attention: Reorganization NY 10005 Attention:
Reorganization Dept. Dept. Reorganization Dept.
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at its
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
9th Floor
New York, New York 10010
(212) 929-5500 (collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017
Attention: Robert Berk
Telephone: (212) 270-1100 (collect)
<PAGE>
CONSENT AND LETTER OF TRANSMITTAL
TO TENDER AND TO GIVE CONSENT IN RESPECT OF
12 1/4% SENIOR NOTES DUE 2002
(CUSIP: 731745AB1)
OF
POLYMER GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT DATED
JUNE 5, 1997
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY,
JUNE 18, 1997, IF ON SUCH DATE THE COMPANY HAS RECEIVED THE REQUISITE
CONSENTS (AS DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE COMPANY
RECEIVES THE REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE "CONSENT
EXPIRATION DATE"). THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 2, 1997, UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY
BE EXTENDED, THE "TENDER OFFER EXPIRATION DATE"). HOLDERS WHO DESIRE TO
RECEIVE THE CONSENT PAYMENT AND THE TENDER OFFER CONSIDERATION MUST VALIDLY
CONSENT TO THE PROPOSED AMENDMENTS ON OR PRIOR TO THE CONSENT EXPIRATION
DATE. HOLDERS WHO TENDER AFTER THE CONSENT EXPIRATION DATE WILL RECEIVE ONLY
THE TENDER OFFER CONSIDERATION. CONSENTS MAY ONLY BE REVOKED ON OR PRIOR TO
THE CONSENT EXPIRATION DATE. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE TENDER OFFER EXPIRATION DATE.
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand:
Wall Street Station P.O. 77 Water Street, 4th Receive Window 77 Water
Box 1023 New York, NY Floor New York, NY 10005 Street, 5th Floor New
10268-1023 Attention: Attention: Reorganization York, NY 10005 Attention:
Reorganization Dept. Dept. Reorganization Dept.
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO CONSENT TO THE PROPOSED AMENDMENTS AND TO RECEIVE THE
CONSENT PAYMENT PURSUANT TO THE SOLICITATION MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR NOTES TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT EXPIRATION
DATE.
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER (AS DEFINED BELOW) SHOULD
BE READ CAREFULLY BEFORE THIS CONSENT AND LETTER OF TRANSMITTAL IS COMPLETED.
List below the Notes to which this Consent and Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate
numbers and principal amounts on a separately executed schedule and affix the
schedule to this Consent and Letter of Transmittal. Tenders of Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
DESCRIPTION OF NOTES
<TABLE>
<CAPTION>
- -------------------------------------------------------
NAME(S) AND
ADDRESS(ES)
OF PRINCIPAL AMOUNT
HOLDER(S) AGGREGATE TENDERED AND
(PLEASE PRINCIPAL AS TO WHICH
FILL IN, IF CERTIFICATE AMOUNT CONSENTS ARE
BLANK) NUMBER(S)* REPRESENTED** GIVEN
- -------------------------------------------------------
<S> <C> <C> <C>
----------
----------
----------
----------
- -------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF NOTES
- ----------------------------------------------
</TABLE>
*Need not be completed by Holders tendering by book-entry transfer (see
below).
**Unless otherwise indicated in the column labeled "Principal Amount Tendered
And As To Which Consents Are Given" and subject to the terms and conditions
of the Statement, a Holder will be deemed to have tendered the entire
aggregate principal amount represented by the Notes indicated in the column
labeled "Aggregate Principal Amount Represented." See Instruction 5.
THE COMPLETION, EXECUTION AND DELIVERY OF THIS CONSENT AND LETTER OF
TRANSMITTAL IN CONNECTION WITH THE TENDER OF NOTES AND DELIVERY OF CONSENTS ON
OR PRIOR TO THE CONSENT EXPIRATION DATE WILL CONSTITUTE A CONSENT TO THE
PROPOSED AMENDMENTS WITH RESPECT TO SUCH NOTES TENDERED. HOLDERS WHO TENDER
THEIR NOTES AFTER THE CONSENT EXPIRATION DATE WILL NOT RECEIVE THE CONSENT
PAYMENT.
2
<PAGE>
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: ______________________________________________
Account Number with DTC: ____________________________________________________
Transaction Code Number: ____________________________________________________
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s): _______________________________________________
Window Ticket No. (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Eligible Institution that Guaranteed Delivery: ______________________
If Delivered by Book-Entry Transfer:
Account Number with DTC: _________________________________________________
Transaction Code Number: _________________________________________________
3
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and Consent Solicitation Statement, dated June 5, 1997 (as the same
may be amended from time to time, the "Statement") of Polymer Group, Inc., a
Delaware corporation (the "Company"), and this Consent and Letter of
Transmittal and instructions hereto (the "Consent and Letter of Transmittal"
and together with the Statement, the "Offer"), which together constitute (i)
the Company's offer to purchase any and all of its outstanding Notes, upon the
terms and subject to the conditions set forth in the Statement, and (ii) the
Company's solicitation (the "Solicitation") of consents (the "Consents") from
each registered holder (each a "Holder" and, collectively, the "Holders") to
certain proposed amendments (the "Proposed Amendments") to the Indenture dated
as of June 24, 1994, between the Company and First Union National Bank of
South Carolina ("First Union"), as amended by the First Supplemental Indenture
dated as of March 15, 1995 between the Company and First Union, the Second
Supplemental Indenture dated as of September 14, 1995 among the Company, First
Union and Harris Trust and Savings Bank, as trustee (the "Trustee"), the Third
Supplemental Indenture dated as of April 9, 1996 between the Company and the
Trustee, and the Fourth Supplemental Indenture dated as of August 14, 1996
between the Company and the Trustee (as so amended, the "Indenture"), pursuant
to which the Notes were issued. Holders who tender Notes under this Consent
and Letter of Transmittal on or prior to the Consent Expiration Date will be
deemed to consent with respect to the Proposed Amendments.
This Consent and Letter of Transmittal is to be used by Holders if (i)
certificates representing Notes are to be physically delivered to the
Depositary herewith by Holders, (ii) tender of Notes is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in the Statement under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Tender of Notes Held
Through DTC," by any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of Notes,
unless such tender is made after the Consent Expiration Date and an Agent's
Message is delivered in connection with such book-entry transfer, or (iii)
tender of Notes after the Consent Expiration Date is to be made according to
the guaranteed delivery procedures set forth in the Statement under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Guaranteed Delivery."
Delivery of documents to DTC does not constitute delivery to the Depositary.
The undersigned has completed, executed and delivered this Consent and
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Offer and the Solicitation.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
The instructions included with this Consent and Letter of Transmittal must
be followed. Questions and requests for assistance or for additional copies of
the Statement, this Consent and Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to Chase Securities Inc., the Dealer
Manager for the Offer and Solicitation, or MacKenzie Partners, Inc., the
Information Agent, in each case at the address and telephone number set forth
on the back cover page of this Consent and Letter of Transmittal. See
Instruction 13 below.
Holders of Notes that are tendering by book-entry transfer to the
Depositary's account at DTC can execute the tender through the DTC Automated
Tender Offer Program ("ATOP"), for which the transaction will be eligible. DTC
participants that are accepting the Offer must transmit their acceptance to
DTC, which will verify the acceptance and execute a book-entry delivery to the
Depositary's DTC account. DTC will then send an Agent's Message to the
Depositary for its acceptance. DTC participants may also accept the Offer
after the Consent Expiration Date by submitting a Notice of Guaranteed
Delivery through ATOP.
To validly deliver a Consent with respect to Notes transferred pursuant to
ATOP on or prior to the Consent Expiration Date (and thereby make a valid
tender), a DTC participant using ATOP must also properly complete and duly
execute a Consent and Letter of Transmittal and timely deliver it to the
Depositary. Pursuant to authority granted by DTC, any DTC participant which
has Notes credited to its DTC account at any time (and thereby held of record
by DTC's nominee) may directly provide a Consent to the Proposed Amendments as
though it were a registered Holder by so completing, executing and delivering
the Consent and Letter of Transmittal.
4
<PAGE>
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer (including
delivery of an Agent's Message) cannot be completed on or prior to the Tender
Offer Expiration Date, such Holder may nevertheless tender such Notes with the
effect that such tender will be deemed to have been received on or prior to
the Tender Offer Expiration Date. Holders may effect such a tender of Notes in
accordance with the guaranteed delivery procedures set forth in the Statement
under Item 7, "Procedures for Tendering Notes and Delivering Consents--
Guaranteed Delivery." See Instruction 2 below.
5
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer and Solicitation,
the undersigned hereby tenders to the Company the principal amount of Notes
indicated above and consents to the Proposed Amendments.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the principal amount of Notes tendered with this Consent and Letter of
Transmittal, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Company, all right, title and interest in and to the Notes
that are being tendered hereby, waives any and all other rights with respect
to the Notes (including without limitation any existing or past defaults and
their consequences in respect of the Notes and the Indenture under which the
Notes were issued) and releases and discharges the Company from any and all
claims such Holder may have now, or may have in the future, arising out of, or
related to, the Notes, including without limitation any claims that such
Holder is entitled to receive additional principal or interest payments with
respect to the Notes or to participate in any redemption or defeasance of the
Notes, and also consents to the Proposed Amendments (as defined in the
Statement). The undersigned hereby irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that the Depositary also acts as the agent of the
Company) with respect to such Notes, with full power of substitution and
resubstitution (such power-of-attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by DTC to, or upon the order of, the Company, (ii)
present such Notes for transfer of ownership on the books of the Company,
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Notes and (iv) deliver to the Company and the Trustee this
Consent and Letter of Transmittal on or prior to the Consent Expiration Date
as evidence of the undersigned's Consent to the Proposed Amendments and as
certification that validly tendered and not revoked Consents from Holders of a
majority of the aggregate principal amount of outstanding Notes not owned by
the Company or its affiliates (the "Requisite Consents") to the Proposed
Amendments duly executed by Holders of such Notes have been received, all in
accordance with the terms and conditions of the Offer and Solicitation.
Execution and delivery of this Consent and Letter of Transmittal on or prior
to the Consent Expiration Date will also be deemed to constitute a Consent to
the Proposed Amendments.
The undersigned agrees and acknowledges that, by the execution and delivery
hereof, the undersigned makes and provides the written Consent, with respect
to the Notes tendered hereby, to the Proposed Amendments as permitted by
Article Nine of the Indenture if this Consent and Letter of Transmittal is
executed and delivered on or prior to the Consent Expiration Date. The
undersigned understands that the Consent provided hereby shall remain in full
force and effect until such Consent is revoked in accordance with the
procedures set forth in the Statement and this Consent and Letter of
Transmittal, which procedures are hereby agreed to be applicable in lieu of
any and all other procedures for revocation set forth in the Indenture, which
are hereby waived.
The undersigned understands that Consents may not be revoked after the
Consent Expiration Date. The Company intends to execute the supplemental
indenture to the Indenture providing for the Proposed Amendments (the
"Supplemental Indenture") on or promptly after the Consent Expiration Date.
The Proposed Amendments will become effective upon certification that the
Requisite Consents have been received, but will not become operative until the
Company accepts for purchase the Notes tendered in the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time on or
prior to the Tender Offer Expiration Date. Holders may not deliver Consents
without tendering their Notes in the Offer, and may not revoke Consents on or
prior to the Consent Expiration Date without withdrawing the previously
tendered Notes to which such Consent relates. Holders may not withdraw
previously tendered Notes on or prior to the Consent Expiration Date without
revoking the previously delivered Consents to which such tender relates.
Consents may not be revoked after the Consent Expiration Date, except under
certain limited circumstances.
6
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Notes tendered
hereby and to give the Consent contained herein, and that when such Notes are
accepted for purchase and payment by the Company, the Company will acquire
good title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim or right. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Depositary or the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Notes tendered hereby, to perfect the
undersigned's Consent to the Proposed Amendments and to complete the execution
of the Supplemental Indenture reflecting such Proposed Amendments.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Statement and in the instructions hereto and
acceptance thereof by the Company will constitute a binding agreement between
the undersigned and the Company, upon the terms and subject to the conditions
of the Offer and Solicitation.
For purposes of the Offer, the undersigned understands that the Company will
be deemed to have accepted for purchase validly tendered Notes if, as and when
the Company gives oral or written notice thereof to the Depositary.
The undersigned understands that the Company's obligation to accept for
payment, and to pay for, Notes validly tendered pursuant to the Offer is
conditioned upon the satisfaction of (a) the Supplemental Indenture Condition,
(b) the Bank Condition, (c) the Financing Condition and (d) the General
Conditions. See Item 9, "Conditions to the Offer," in the Statement. Any Notes
not accepted for purchase will be returned promptly to the undersigned at the
address set forth above unless otherwise indicated herein under "Special
Delivery Instructions" below.
All authority conferred or agreed to be conferred by this Consent and Letter
of Transmittal shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Consent and Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives.
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Consent and Letter of
Transmittal (or a manually signed facsimile hereof) properly completed and
duly executed, together with all accompanying evidences of authority and any
other required documents in form satisfactory to the Company or receipt of an
Agent's Message. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Notes and deliveries and revocations of Consents will be determined by the
Company, in its sole discretion, which determination shall be final and
binding.
Unless otherwise indicated under "Special Payment Instructions" below,
please issue a check from the Depositary for the Total Consideration or Tender
Offer Consideration, as the case may be, for any Notes tendered hereby that
are purchased, and/or return any certificates representing Notes not tendered
or not accepted for purchase in the name(s) of the Holder(s) appearing under
"Description of Notes." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the Total Consideration or
Tender Offer Consideration, as the case may be, and/or return any certificates
representing Notes not tendered or not accepted for purchase (and accompanying
documents, as appropriate) to the address(es) of the Holder(s) appearing under
"Description of Notes." In the event that both the Special Payment
Instructions and the Special Delivery Instructions are completed, please issue
the check for the Total Consideration or Tender Offer Consideration, as the
case may be, and/or return any certificates representing Notes not tendered or
not accepted for purchase (and any accompanying documents, as appropriate) to,
the person or persons so indicated. In the case of a book-entry delivery of
Notes, please credit the account maintained at DTC with any Notes not tendered
or not accepted for purchase. The undersigned recognizes that the Company does
not have any obligation pursuant to the Special Payment Instructions to
transfer any Notes from the name of the Holder thereof if the Company does not
accept for purchase any of the Notes so tendered.
7
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL CONSENTING HOLDERS)
(TO BE COMPLETED BY ALL TENDERING HOLDERS
REGARDLESS OF WHETHER NOTES ARE BEING
PHYSICALLY DELIVERED HEREWITH, UNLESS AN AGENT'S MESSAGE IS
DELIVERED IN CONNECTION WITH A BOOK-ENTRY
TRANSFER OF SUCH NOTES)
The completion, execution and delivery of this Consent and Letter of
Transmittal on or prior to the Consent Expiration Date, will be deemed to
constitute a Consent to the Proposed Amendments.
This Consent and Letter of Transmittal must be signed by the registered
holder(s) of Notes exactly as their name(s) appear(s) on certificate(s) for
Notes or, if tendered by a participant in DTC, exactly as such participant's
name appears on a security position listing as the owner of Notes, or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Consent and Letter of Transmittal. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must set forth his or her full title below under "Capacity" and submit
evidence satisfactory to the Company of such person's authority to so act. See
Instruction 6 below.
If the signature appearing below is not of the registered holder(s) of the
Notes, then the registered holder(s) must sign a valid proxy.
X
-----------------------------------------------------------------------------
X
-----------------------------------------------------------------------------
(Signature(s) of Holder(s) or Authorized Signatory)
Date: , 1997.
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:
--------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTIONS 1 AND 6 BELOW)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
- --------------------------------------------------------------------------------
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code) of
Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date: , 1997.
8
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase are to be
issued in the name of, or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and Solicitation are to be
issued to the order of, someone
other than the person or persons
whose signature(s) appear(s) within
this Consent and Letter of
Transmittal or issued to an address
different from that shown in the
box entitled "Description of Notes"
within this Consent and Letter of
Transmittal.
Issue: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
------------------------------------
Taxpayer Identification or Security
Number
(See Substitute Form W-9 herein)
SIGNATURE GUARANTEE (See
Instruction 1 below)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
------------------------------------
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
------------------------------------
------------------------------------
------------------------------------
(Address (including zip code) and Telephone Number) (including area code of
Firm)
------------------------------------
(Authorized Signature)
------------------------------------
(Printed Name)
------------------------------------
(Title)
Date: , 1997
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and the Solicitation are to
be sent to someone other than the
person or persons whose
signature(s) appear(s) within this
Consent and Letter of Transmittal
or to an address different from
that shown in the box entitled
"Description of Notes" within this
Consent and Letter of Transmittal.
Deliver: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
9
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER AND SOLICITATION
1. GUARANTEE OF SIGNATURES. Signatures on this Consent and Letter of
Transmittal must be guaranteed by a recognized participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (each a "Medallion
Signature Guarantor"), unless the Notes tendered thereby are tendered (i) by a
registered Holder of Notes (or by a participant in DTC whose name appears on a
security position listing as the owner of such Notes) who has not completed
any of the boxes entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Consent and Letter of Transmittal, or (ii) for the
account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. ("NASD") or a
commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being referred to as an "Eligible
Institution"). If the Notes are registered in the name of a person other than
the signer of the Consent and Letter of Transmittal or if Notes not accepted
for payment or not tendered are to be returned to a person other than the
registered Holder, then the signature on this Consent and Letter of
Transmittal accompanying the tendered Notes must be guaranteed by a Medallion
Signature Guarantor as described above. Beneficial owners whose Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender Notes and deliver Consents with
respect to Notes so registered. See Item 7, "Procedures for Tendering Notes
and Delivering Consents," in the Statement.
2. REQUIREMENTS OF TENDER. This Consent and Letter of Transmittal is to be
completed by registered Holders of Notes if certificates representing such
Notes are to be forwarded herewith, or if delivery of such certificates is to
be made by book-entry transfer to the account maintained by DTC, pursuant to
the procedures set forth in the Statement under Item 7, "Procedures for
Tendering Notes and Delivering Consents," unless such Notes are being
transferred through ATOP in connection with a tender after the Consent
Expiration Date. For a holder to properly tender Notes and deliver Consents
pursuant to the Offer and the Solicitation, a properly completed and duly
executed Consent and Letter of Transmittal (or a manually signed facsimile
thereof), together with any signature guarantees and any other documents
required by these Instructions, must be received by the Depositary at its
address set forth herein on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable, and either (i) certificates representing
such Notes must be received by the Depositary at its address or (ii) such
Notes must be transferred pursuant to the procedures for book-entry transfer
described in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents," and a Book-Entry Confirmation must be received by the
Depositary, in each case, on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable; provided, however, that no Consent
Payment will be paid to Holders who tender Notes and deliver their Consents
after the Consent Expiration Date. A Holder who desires to tender Notes and
who cannot comply with procedures set forth herein for tender on a timely
basis or whose Notes are not immediately available must comply with the
guaranteed delivery procedures discussed below, but only if such Notice of
Guaranteed Delivery is transmitted after the Consent Expiration Date.
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Tender Offer Expiration Date, such Holder may
nevertheless tender such Notes with the effect that such tender will be deemed
to have been received on or prior to the Tender Offer Expiration Date if the
procedures set forth in the Statement under Item 7, "Procedures for Tendering
Notes and Delivering Consents--Guaranteed Delivery," are followed. Pursuant to
such procedures, (i) the tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to a guaranteed delivery that is accepted by the
Company, must be received by the Depositary on or prior to the Tender Offer
Expiration Date, and (iii) the certificates for the tendered Notes, in proper
form for transfer (or a Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described in the Statement), together
with a Consent and Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with
10
<PAGE>
any required signature guarantees and any other documents required by the
Consent and Letter of Transmittal or a properly transmitted Agent's Message,
must be received by the Depositary within two business days after the date of
execution of the Notice of Guaranteed Delivery.
3. CONSENTS TO PROPOSED AMENDMENTS. A valid Consent to the Proposed
Amendments may be given only by the Holder or their attorney-in-fact. A
beneficial owner who is not a Holder must arrange with the Holder to execute
and deliver a Consent on their behalf, obtain a properly completed irrevocable
proxy that authorizes such beneficial owner to consent to the Proposed
Amendments on behalf of such Holder or become a Holder. Notwithstanding the
foregoing, any DTC participant which has Notes credited to its DTC account at
any time (and thereby held of record by DTC's nominee) may directly provide a
Consent to the Proposed Amendments as though it were the registered Holder by
so completing, executing and delivering the Consent and Letter of Transmittal.
TO VALIDLY DELIVER A CONSENT WITH RESPECT TO NOTES TRANSFERRED PURSUANT TO
ATOP ON OR PRIOR TO THE CONSENT EXPIRATION DATE, A DTC PARTICIPANT USING ATOP
MUST ALSO PROPERLY COMPLETE AND DULY EXECUTE A CONSENT AND LETTER OF
TRANSMITTAL AND DELIVER IT TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT
EXPIRATION DATE.
4. WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS. Tenders of Notes may be
withdrawn at any time prior to the Tender Offer Expiration Date. Consents may
be revoked at any time on or prior to the Consent Expiration Date. A valid
withdrawal of tendered Notes effected on or prior to the Consent Expiration
Date will constitute the concurrent valid revocation of such Holder's related
Consent. Consents may not be revoked after the Consent Expiration Date except
in the limited circumstances described below. In order for a Holder to revoke
a Consent, such Holder must withdraw the related tendered Notes. Tenders of
Notes may be validly withdrawn if the Offer is terminated without any Notes
being purchased thereunder. In the event of a termination of the Offer, the
Notes tendered pursuant to the Offer will be promptly returned to the
tendering Holder and the Supplemental Indenture will not become operative. If
the Solicitation is amended on or prior to the Consent Expiration Date in a
manner determined by the Company to constitute a material adverse change to
the Holders of the Notes, the Company promptly will disclose such amendment
and, if necessary, extend the Solicitation for such Notes for a period deemed
by the Company to be adequate to permit Holders of the Notes to withdraw their
Notes and revoke their Consents. In addition, if the consideration to be paid
in the Offer is increased or decreased or the principal amount of Notes
subject to the Offer is decreased, the Offer will remain open at least 10
business days from the date the Company first gives notice to Holders, by
public announcement or otherwise, of such increase or decrease.
For a withdrawal of a tender of Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
on or prior to Tender Offer Expiration Date at its address set forth on the
back cover of the Statement. Any such notice of withdrawal must (i) specify
the name of the person who tendered the Notes to be withdrawn, (ii) contain
the description of the Notes to be withdrawn and identify the certificate
number or numbers shown on the particular certificates evidencing such Notes
(unless such Notes were tendered by book-entry transfer) and the aggregate
principal amount represented by such Notes and (iii) be signed by the Holder
of such Notes in the same manner as the original signature on the Consent and
Letter of Transmittal by which such Notes were tendered (including any
required signature guarantees), or be accompanied by (x) documents of transfer
sufficient to have the Trustee register the transfer of the Notes into the
name of the person withdrawing such Notes or (y) a properly completed
irrevocable proxy authorizing such person to effect such withdrawal on behalf
of such Holder. If the Notes to be withdrawn have been delivered or otherwise
identified to the Depositary, a signed notice of withdrawal is effective
immediately upon written or facsimile notice of such withdrawal even if
physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Tender Offer
Expiration Date or the Consent Expiration Date, as applicable. After the
Consent Expiration Date, Consents may not be revoked, except in the limited
circumstances described above.
11
<PAGE>
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
5. PARTIAL TENDERS AND CONSENTS. Tenders of Notes pursuant to the Offer (and
the corresponding Consents thereto pursuant to the Solicitation) will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. If less than the entire principal amount of any Notes evidenced by a
submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description
of Notes" herein. The entire principal amount represented by the certificates
for all Notes delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Notes is not
tendered or not accepted for purchase, certificates for the principal amount
of Notes not tendered or not accepted for purchase will be sent (or, if
tendered by book-entry transfer, returned by credit to the account at DTC
designated herein) to the Holder unless otherwise provided in the appropriate
box on this Consent and Letter of Transmittal (see Instruction 7) promptly
after the Notes are accepted for purchase.
6. SIGNATURES ON THIS CONSENT AND LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENT; GUARANTEE OF SIGNATURES. If this Consent and Letter of
Transmittal is signed by the registered holder(s) of the Notes tendered hereby
or with respect to which Consent is given, the signature(s) must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Consent and Letter
of Transmittal is signed by a participant in DTC whose name is shown as the
owner of the Notes tendered hereby, the signature must correspond with the
name shown on the security position listing as the owner of the Notes.
IF THIS CONSENT AND LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES
WHO IS NOT THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID
PROXY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A MEDALLION
SIGNATURE GUARANTOR.
If any of the Notes tendered hereby (and with respect to which Consent is
given) are owned of record by two or more joint owners, all such owners must
sign this Consent and Letter of Transmittal. If any tendered Notes are
registered in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Consent and Letter
of Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Consent and Letter of Transmittal is signed by the Holder, and the
certificates for any principal amount of Notes not tendered or accepted for
purchase are to be issued (or if any principal amount of Notes that is not
tendered or not accepted for purchase is to be reissued or returned) to or, if
tendered by book-entry transfer, credited to the account at DTC of, the
registered Holder, and checks constituting payments for Notes to be purchased
and Consent Payments to be made in connection with the Offer and Solicitation
are to be issued to the order of the registered Holder, then the registered
Holder need not endorse any certificates for tendered Notes, nor provide a
separate bond power. In any other case (including if this Consent and Letter
of Transmittal is not signed by the registered Holder), the registered Holder
must either properly endorse the certificates for Notes tendered or transmit a
separate properly completed bond power with this Consent and Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
holder(s) appear(s) on such Notes, and, with respect to a participant in DTC
whose name appears on a security position listing as the owner of Notes,
exactly as the name(s) of the participant(s) appear(s) on such security
position listing), with the signature on the endorsement or bond power
guaranteed by a Medallion Signature Guarantor, unless such certificates or
bond powers are executed by an Eligible Institution. See Instruction 1.
If this Consent and Letter of Transmittal or any certificates of Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must
be submitted with this Consent and Letter of Transmittal.
12
<PAGE>
Endorsements on certificates for Notes, signatures on bond powers and
proxies and Consents provided in accordance with this Instruction 6 by
registered holders not executing this Consent and Letter of Transmittal must
be guaranteed by a Medallion Signature Guarantor. See Instruction 1.
7. SPECIAL PAYMENT AND SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or
checks constituting payments for Notes to be purchased and Consent Payments to
be made in connection with the Offer and Solicitation are to be issued or
sent, if different from the name and address of the registered Holder signing
this Consent and Letter of Transmittal. In the case of issuance in a different
name, the taxpayer identification or social security number of the person
named must also be indicated. If no instructions are given, Notes not tendered
or not accepted for purchase will be returned to the registered Holder of the
Notes tendered. For Holders of Notes tendering by book-entry transfer, Notes
not tendered or not accepted for purchase will be returned by crediting the
account at DTC designated above.
8. TAXPAYER IDENTIFICATION NUMBER. Each tendering Holder is required to
provide the Depositary with the Holder's correct taxpayer identification
number ("TIN"), generally the Holder's social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another
basis for exemption from backup withholding. A Holder must cross out item (2)
in the Certification box on Substitute Form W-9 if such Holder is subject to
backup withholding. Failure to provide the information on the form may subject
the tendering Holder to 31% federal income tax backup withholding on the
payments, including the Consent Payment, made to the Holder or other payee
with respect to Notes purchased pursuant to the Offer. The box in Part 3 of
the form should be checked if the tendering Holder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked and the Depositary is not provided with a TIN
within 60 days, thereafter the Depositary will withhold 31% from all such
payments with respect to the Notes to be purchased and the Consent Payments to
be made until a TIN is provided to the Depositary.
9. TRANSFER TAXES. The Company will pay all transfer taxes applicable to the
purchase and transfer of Notes pursuant to the Offer, except in the case of
deliveries of certificates for Notes for principal amounts not tendered or not
accepted for payment that are registered or issued in the name of any person
other than the registered Holder of Notes tendered hereby. Except as provided
in this Instruction 9, it will not be necessary for transfer stamps to be
affixed to the certificates listed in this Consent and Letter of Transmittal.
10. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tendered Notes or delivery
of Consents pursuant to any of the procedures described above will be
determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right, in its sole
discretion, subject to applicable law, to waive or amend any of the conditions
of the Offer or the Solicitation or to waive any defect or irregularity in any
tender with respect to Notes or delivery of Consents of any particular Holder,
whether or not similar defects or irregularities are waived in the case of
other Holders. The Company's interpretation of the terms and conditions of the
Offer and Solicitation (including the Consent and Letter of Transmittal and
the Instructions thereto) will be final and binding. Neither the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. If the Company waives its right to reject a defective
tender of Notes, the Holder will be entitled to the Tender Offer Consideration
and, if applicable, the Consent Payment.
11. WAIVER OF CONDITIONS. The Company expressly reserves the absolute right,
in its sole discretion, to amend or waive any of the conditions to the Offer
or Solicitation in the case of any Notes tendered or Consents delivered, in
whole or in part, at any time and from time to time.
12. MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES FOR NOTES. Any Holder
of Notes whose certificates for Notes have been mutilated, lost, stolen or
destroyed should write to or telephone Harris Trust and Savings Bank, the
Trustee, at 311 West Monroe, 12th Floor, Chicago, Illinois 60606, Attention:
Judy Bartolini, Corporate Trust Department, telephone (312) 461-2527.
13
<PAGE>
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering Notes and consenting to the Proposed Amendments and
requests for assistance or additional copies of the Statement and this Consent
and Letter of Transmittal may be directed to, and additional information about
the Offer and Solicitation may be obtained from, either the Dealer Manager or
the Information Agent, whose address and telephone number appear below.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Notes are accepted
for payment is required to provide the Depositary (as payer) with such
Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Depositary is not provided with
the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service,
and payments, including any Consent Payment, made with respect to Notes
purchased pursuant to the Offer may be subject to backup withholding. Failure
to comply truthfully with the backup withholding requirements also may result
in the imposition of severe criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including entities, may qualify as an
exempt recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any Total Consideration
or Tender Offer Consideration, as the case may be, made with respect to Notes
purchased pursuant to the Offer, the Holder is required to provide the
Depositary with either: (i) the Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (a) the Holder has not been
notified by the Internal Revenue Service that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the Holder that the Holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., social security
number or employer identification number) of the registered holder of the
Notes. If the Notes are held in more than one name or are held not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
14
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
------------------------------
SUBSTITUTE PART 1--PLEASE Social Security Number
PROVIDE YOUR TIN IN OR
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
FORM W-9 ------------------------------
Employer Identification
Number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
---------------------------------------------------------
PAYER'S REQUEST FOR PART 2--Certification--Under PART 3--
Penalties of Perjury, I Certify
that:
(1) The number shown on this form
is my correct Taxpayer
Identification Number (or I am
waiting for a number to be
issued to me) and
TAXPAYER IDENTIFICATION
NUMBER (TIN) Awaiting TIN [_]
- --------------------------------------------------------------------------------
Certificate instructions--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out item (2).
(2) I am not subject to backup
withholding either because I
have not been notified by the
Internal Revenue Service
("IRS") that I am subject to
backup withholding as a result
of failure to report all
interest or dividends, or the
IRS has notified me that I am
no longer subject to backup
withholding.
SIGNATURE _________________________________________ DATE ____________ , 1997
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND SOLICITATION.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
------------------------------------------ _______________________ , 1997
Signature Date
15
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 Attention: Reorganization Dept. New York, NY 10005
Attention: Reorganization Dept. Attention: Reorganization Dept.
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at its
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
9th Floor
New York, New York 10010
(212) 929-5500 (collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017
Attention: Robert Berk
Telephone: (212) 270-1100 (collect)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
ALL OF THE OUTSTANDING
12 1/4% SENIOR NOTES DUE 2002
OF
POLYMER GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT
DATED JUNE 5, 1997
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Overnight Courier: By Hand:
Wall Street Station 77 Water Street, 4th Receive Window
P.O. Box 1023 Floor 77 Water Street, 5th
New York, NY 10268- New York, NY 10005 Floor
1023 Attention: New York, NY 10005
Attention: Reorganization Dept. Attention:
Reorganization Dept. Reorganization Dept.
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
As set forth in the Offer to Purchase and Consent Solicitation Statement
dated June 5, 1997 (as it may be supplemented and amended from time to time,
the "Statement") of Polymer Group, Inc. (the "Company") under Item 7,
"Procedures for Tendering Notes and Delivery Consents," and in the
Instructions of the Consent and Letter of Transmittal (the "Consent and Letter
of Transmittal"), this form, or one substantially equivalent hereto, or an
Agent's Message relating to the guaranteed delivery procedures, must be used
to accept the Company's offer (the "Offer") to purchase for cash any and all
of its outstanding 12 1/4% Senior Notes due 2002 (the "Notes"), if, after the
Consent Expiration Date (as defined in the Statement), time will not permit
the Consent and Letter of Transmittal, certificates representing such Notes
and other required documents to reach the Depositary, or the procedures for
book-entry transfer cannot be completed, on or prior to the Tender Offer
Expiration Date (as defined in the Statement).
In conjunction with the Offer, the Company is also soliciting (the
"Solicitation") consents (the "Consents") to certain proposed amendments (the
"Proposed Amendments") to the Indenture dated as of June 24, 1994, between the
Company and First Union National Bank of South Carolina ("First Union"), as
amended by the First Supplemental Indenture dated as of March 15, 1995 between
the Company and First Union, the Second Supplemental Indenture dated as of
September 14, 1995 among the Company, First Union and Harris Trust and Savings
Bank, as trustee (the "Trustee"), the Third Supplemental Indenture dated as of
April 9, 1996 between the Company and the Trustee, and the Fourth Supplemental
Indenture dated as of August 14, 1996 between the Company and the Trustee (as
so amended, the "Indenture"), pursuant to which the Notes were issued. This
Notice of Guaranteed Delivery may not be used to tender Notes or deliver
Consents on or prior to the Consent Expiration Date. This form must be
delivered by an Eligible Institution (as defined herein) by mail or hand
delivery or transmitted via facsimile to the Depositary as set forth above.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
This form is not to be used to guarantee signatures. If a signature on the
Consent and Letter of Transmittal is required to be guaranteed by a Medallion
Signature Guarantor under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the Consent and Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Statement and the Consent and Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents -- Guaranteed Delivery." The undersigned hereby authorizes
the Depositary to deliver this Notice of Guaranteed Delivery to the Company
and the Trustee with respect to the Notes tendered pursuant to the Offer.
The undersigned understands that Holders who desire to tender their Notes
pursuant to the Offer and receive the Total Consideration are required to
provide Consents to the Proposed Amendments with respect to the full principal
amount of the Notes so tendered on or prior to the Consent Expiration Date.
The undersigned understands that tenders of Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. The
undersigned also understands that tenders of Notes may be withdrawn at any
time prior to the Tender Offer Expiration Date. This Notice of Guaranteed
Delivery may only be utilized after the Consent Expiration Date and on or
prior to the Tender Offer Expiration Date.
The undersigned understands that payment for Notes purchased will be made
only after timely receipt by the Depositary of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Consent and Letter of Transmittal (or a manually
signed facsimile thereof), including by means of an Agent's Message, of the
transfer of such Notes into the Depositary's account at a Book-Entry Transfer
Facility, with respect to such Notes, properly completed and duly executed,
with any signature guarantees and any other documents required by the Consent
and Letter of Transmittal within two New York Stock Exchange, Inc. trading
days after the execution hereof. The undersigned also understands that under
no circumstances will interest be paid by the Company by reason of any delay
in making payment to the undersigned and that the Tender Offer Consideration
for Notes tendered pursuant to the guaranteed delivery procedures will be the
same as that for Notes delivered to the Depositary after the Consent
Expiration Date and on or prior to the Tender Offer Expiration Date, even if
the Notes to be delivered pursuant to the guaranteed delivery procedures are
not so delivered to the Depositary, and therefore payment by the Depositary on
account of such Notes is not made, until after the Payment Date. THE
UNDERSIGNED IS AWARE THAT, ON OR PRIOR TO THE CONSENT EXPIRATION DATE, TENDERS
OF NOTES AND THE RELATED CONSENTS CANNOT BE DELIVERED USING THE GUARANTEED
DELIVERY PROCESS AND THAT USE OF THE GUARANTEED DELIVERY PROCESS COULD RESULT
IN A TENDER OF NOTES AND THE RELATED CONSENT BEING DEFECTIVE.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
2
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Date: _____________________________
Holder(s) or Authorized
Signatory: ________________________
Address: __________________________
----------------------------------- -----------------------------------
----------------------------------- Area Code and Telephone No. _______
Name(s) of Registered Holder(s): __ If Notes will be delivered by
book-entry transfer, check trust
company below:
-----------------------------------
----------------------------------- [_] The Depositary Trust Company
Principal Amount of Notes DepositoryAccount No. _____________
Tendered: _________________________
-----------------------------------
HOLDERS WHO DESIRE TO TENDER THEIR NOTES PURSUANT TO THE OFFER AND RECEIVE
THE TOTAL CONSIDERATION ARE REQUIRED TO CONSENT TO THE PROPOSED AMENDMENTS
WITH RESPECT TO SUCH NOTES ON OR PRIOR TO THE CONSENT EXPIRATION DATE.
Certificate No.(s) of Notes (if
available) ________________________
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear(s) on certificate(s) for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): ____________________________________________________________________
-----------------------------------------------------------------------------
Capacity: ___________________________________________________________________
Address(es): ________________________________________________________________
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE DEPOSITARY
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED CONSENT AND LETTER OF
TRANSMITTAL.
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. Medallion Signature Program (each, an "Eligible
Institution"), hereby represents that the tender of Notes hereby complies
with Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, and guarantees that the Notes tendered hereby are in proper form
for transfer (pursuant to the procedures set forth in the Statement under
Item 7, "Procedures for Tendering Notes and Delivering Consents-- Guaranteed
Delivery"), and that the Depositary will receive (a) such Notes, or a Book-
Entry Confirmation of the transfer of such Notes into the Depositary's
account at a Book-Entry Transfer Facility and (b) a properly completed and
duly executed Consent and Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and any other documents required by the
Consent and Letter of Transmittal, or a properly transmitted Agent's
Message, within two New York Stock Exchange, Inc. trading days after the
date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Consent and Letter of
Transmittal and Notes to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________________________________________________
Authorized Signature: _______________________________________________________
Title: ______________________________________________________________________
Address: ____________________________________________________________________
-----------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number: _____________________________________________
Dated: _____________________ , 1997
4
<PAGE>
Exhibit 99.4
LETTER OF TRANSMITTAL
To Tender for Exchange
9% Senior Subordinated Notes due 2007
of
POLYMER GROUP, INC.
Pursuant to the Prospectus dated , 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997 UNLESS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal should be
completed, signed, and submitted to the Exchange Agent:
Harris Trust and Savings Bank
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 Attn: Reorganization Dept. New York, NY 10005
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Delivery of this Letter of Transmittal to an address, or transmission via
facsimile to a number, other than as set forth above will not constitute a valid
delivery.
For any questions regarding this Letter of Transmittal or for any
additional information, you may contact the Exchange Agent.
The undersigned hereby acknowledges receipt of the Prospectus dated
________, 1997 (as it may be supplemented and amended from time to time, the
"Prospectus") of Polymer Group, Inc., a Delaware corporation ("Company"), and
this Letter of Transmittal (the "Letter of Transmittal"), that together
constitute the Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of its 9% Senior Subordinated Notes due 2007, Series B (the
"Exchange Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement, for
each $1,000 in principal amount of its outstanding 9% Senior Subordinated Notes
due 2007 (the "Notes"), of which $400,000,000 aggregate principal amount is
outstanding. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
<PAGE>
Subject to, and effective upon, the acceptance for exchange of the Tendered
Notes, the undersigned hereby exchanges, assigns and transfers to, or upon the
order of, the Company all right, title, and interest in, to and under the
Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "SPECIAL
DELIVERY INSTRUCTIONS" below (see Box 3), please send or cause to be sent the
certificates for the Exchange Notes (and accompanying documents, as appropriate)
to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Company or cause ownership of the Tendered
Notes to be transferred to, or upon the order of, the Company, on the books of
the registrar for the Notes and deliver all accompanying evidences of transfer
and authenticity to, or upon the order of, the Company upon receipt by the
Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon acceptance by the Company of the Tendered Notes
pursuant to the Exchange Offer, and (ii) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Tendered Notes, all in
accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer-- Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and any Beneficial Owner(s), and
every obligation of the undersigned or any Beneficial Owner(s) hereunder shall
be binding upon the heirs, representatives, successors, and assigns of the
undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company or the
Exchange Agent as necessary or desirable to complete and give effect to the
transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
and (iv) the undersigned and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer with the intention or for the
purpose of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), in connection with a secondary resale of the Exchange Notes acquired by
such person and cannot rely on the position of the Staff of the Securities and
Exchange Commission (the "Commission") set forth in the no-action letters that
are discussed in the section of the Prospectus entitled "The Exchange Offer." In
addition, by accepting the Exchange Offer, the undersigned hereby (i) represents
and warrants that, if the undersigned or any Beneficial Owner of the Notes is a
Participating Broker-Dealer, such Participating Broker-Dealer acquired the Notes
for its own account as a result of market-making activities or other trading
activities and has not entered into any arrangement or understanding with the
Company or any "affiliate" of the Company (within the meaning of Rule 405 under
the Securities Act) to distribute the Exchange Notes to be received in the
Exchange Offer, and (ii) acknowledges that, by receiving Exchange Notes for its
own account in exchange for Notes, where such Notes were acquired as a result of
market-making activities or other trading activities,
-2-
<PAGE>
such Participating Broker-Dealer will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes.
Holders of Notes that are tendering by book-entry transfer to the Exchange
Agent's account at DTC can execute the tender through the DTC Automated Tender
Offer Program ("ATOP"), for which the transaction will be eligible. DTC
participants that are accepting the Exchange Offer must transmit their
acceptance to DTC, which will verify the acceptance and execute a book-entry
delivery to the Exchange Agent's DTC account. DTC will then send an Agent's
Message to the Exchange Agent for its acceptance. DTC participants may also
accept the Exchange Offer prior to the Expiration Date by submitting a Notice of
Guaranteed Delivery through ATOP.
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
"USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF NOTES TENDERED
(Attach additional signed pages, if necessary)
- -------------------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Note Holder(s), exactly as Certificate Aggregate Principal Aggregate Principal
name(s) appear(s) on Note Certificate(s) Number(s) of Amount Amount
(Please fill in, if blank) Notes* Represented by Tendered**
Certificate(s)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All other tenders must be in integral multiples of
$1,000 of principal amount. Unless otherwise indicated in this column, the principal amount of all Note Certificates
identified in this Box 1 or delivered to the Exchange Agent herewith shall be deemed tendered. See Instruction 4.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
- ----------------------------------------------------------------------------
BOX 2
BENEFICIAL OWNER(S)
- ----------------------------------------------------------------------------
State of Principal Residence of Each Principal Amount of Tendered Notes
Beneficial Owner of Tendered Notes Held for Account of Beneficial Owner
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5, 6 and 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
- ---------------------------------------------------------------------------
(please print)
Address:
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
- ---------------------------------------------------------------------------
-4-
<PAGE>
- --------------------------------------------------------------------------------
BOX 4
USE OF GUARANTEED DELIVERY
(See Instruction 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): _______________________________________________
Window Ticket No. (if any): ____________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ____________________________
Name of Institution that Guaranteed Delivery: __________________________________
If Delivered by Book-Entry Transfer:
Account Number with DTC: ____________________________________________
Transaction Code Number: ____________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX 5
USE OF BOOK-ENTRY TRANSFER
(See Instruction 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution: _________________________________________________
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
- --------------------------------------------------------------------------------
-5-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BOX 6
TENDERING HOLDER SIGNATURE
(See Instructions 1 and 5)
In Addition, Complete Substitute Form W-9
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Signature Guarantee
X ___________________________________________________ (If required by Instruction 5)
X ___________________________________________________ Authorized Signature
(Signature of Registered Holder(s)
or Authorized Signatory)
X __________________________________________________
Note: The above lines must be signed by the registered
holder(s) of Notes as their name(s) appear(s) on the Name: ____________________________________________
Notes or by persons(s) authorized to become registered (please print)
holder(s) (evidence of such authorization must be
transmitted with this Letter of Transmittal). If Title: ____________________________________________
signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer, or other person Name of Firm:_______________________________________
acting in a fiduciary or representative capacity, such (Must be an Eligible Institution as
person must set forth his or her full title below. See defined in Instruction 2)
Instruction 5.
Address: ___________________________________________
Name(s): ___________________________________________
___________________________________________
Capacity: __________________________________________
___________________________________________
Street Address: ____________________________________ (Zip Code)
____________________________________ Area Code and Telephone Number:
(Zip Code)
__________________________________________
Area Code and Telephone Number:
Dated: __________________________________________
____________________________________
Tax Identification or Social Security Number:
____________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
BOX 7
BROKER-DEALER STATUS
- ------------------------------------------------------------------------------------------------------------------------------------
[_] Check this box if the Beneficial Owner of the Notes is a Participating Broker-Dealer and such Participating Broker-Dealer
acquired the Notes for its own account as a result of market-making activities or other trading activities. If this box is
checked, regardless of whether you are tendering by book-entry transfer through ATOP, an executed copy of this Letter of
Transmittal must be received within three NYSE trading days after the Expiration Date by Polymer Group, Inc., attention James
G. Boyd, facsimile (803) 747-4092.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYORS' NAME: HARRIS TRUST & SAVINGS BANK
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity whose number you
enter in Part 1 below. See instructions if your name has changed.)
---------------------------------------------------------------------------------------------------
SUBSTITUTE Address
---------------------------------------------------------------------------------------------------
Form W-9 City, State and ZIP Code
---------------------------------------------------------------------------------------------------
Department of the Treasury List account number(s) here (optional)
---------------------------------------------------------------------------------------------------
Internal Revenue Service Part 1--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER Social Security Number or TIN
("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND
DATING BELOW
---------------------------------------------------------------------------------------------------
Part 2--Check the box if you are NOT subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified that
you are subject to backup withholding as a result of failure to report all interest or dividends
or (2) the Internal Revenue Service has notified you that you are no longer subject to backup
withholding. [_]
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT Part 3--
THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND Awaiting TIN [_]
COMPLETE.
SIGNATURE DATE
----------------------- ---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Note: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
</TABLE>
-7-
<PAGE>
POLYMER GROUP, INC.
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Notes. This Letter of
Transmittal is to be completed by registered Holders of Notes if certificates
representing such Notes are to be forwarded herewith pursuant to the procedures
set forth in the Prospectus under "The Exchange Offer -- Procedures for
Tendering," unless delivery of such certificates is to be made by book-entry
transfer to the Exchange Agent's account maintained by DTC through ATOP. For a
holder to properly tender Notes pursuant to the Exchange Offer, a properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either (i) certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein, or (ii) such Tendered Notes must
be transferred pursuant to the procedures for book-entry transfer described
in the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering" (and a confirmation of such transfer received by the Exchange Agent),
in each case prior to 5:00 p.m., New York City time, on the Expiration Date. The
method of delivery of certificates for Tendered Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the tendering holder and the delivery will be deemed made
only when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or Tendered Notes should be
sent to the Company. Neither the Company nor the Exchange Agent is under any
obligation to notify any tendering holder of the Company's acceptance of
tendered Notes prior to the closing of the Exchange Offer.
2. Guaranteed Delivery Procedures. If a registered Holder desires to tender
Notes pursuant to the Exchange Offer and (a) certificates representing such
tendered Notes are not immediately available, (b) time will not permit such
Holder's Letter of Transmittal, certificates representing such tendered Notes
and all other required documents to reach the Exchange Agent on or prior to the
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Expiration Date, such Holder may nevertheless
tender such tendered Notes with the effect that such tender will be deemed to
have been received on or prior to the Expiration Date if the procedures set
forth below and in the Statement under "The Exchange Offer -- Guaranteed
Delivery Procedures" (including the completion of Box 4 above) are followed.
Pursuant to such procedures, (i) the tender must be made by or through an
Eligible Institution (as defined), (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the Company
herewith, or an Agent's Message with respect to a guaranteed delivery that is
accepted by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date, and (iii) the certificates for the tendered Notes, in
proper form for transfer (or a Book-Entry Confirmation of the transfer of such
tendered Notes to the Exchange Agent's account at DTC as described in the
Prospectus), together with a Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with any required signature
guarantees and any other documents required by the Letter of Transmittal or a
properly transmitted Agent's Message, must be received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution of
the Notice of Guaranteed Delivery. Any holder who wishes to tender Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent's receives the Notice of Guaranteed Delivery relating to such
tendered Notes prior to 5:00 p.m., New York City time, on the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will not,
of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by an Eligible Holder who
attempted to use the guaranteed delivery process.
3. Beneficial Owner Instructions to Registered Holders. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder to execute and deliver this Letter of Transmittal on his or her behalf
through the execution and delivery to the registered holder of the "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" form accompanying this Letter of Transmittal.
-8-
<PAGE>
4. Partial Tenders. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should fill
in the principal amount tendered in the column labeled "Aggregate Principal
Amount Tendered" of the box entitled "Description of Notes Tendered" (see Box 1)
above. The entire principal amount of Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Notes held by the holder is not tendered, then Notes for
the principal amount of Notes not tendered and Exchange Notes issued in exchange
for any Notes tendered and accepted will be sent to the Holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, as soon as practicable following the
Expiration Date.
5. Signatures on the Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should not
endorse any Tendered Notes, nor provide a separate bond power. In any other
case, such registered holder(s) must either properly endorse the Tendered Notes
or transmit a properly completed separate bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by a Medallion Signature Guarantor (as defined below).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name(s)
of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program (each a "Medallion Signature Guarantor"), unless the Tendered Notes are
tendered (i) by a registered Holder of Tendered Notes (or by a participant in
DTC whose name appears on a security position listing as the owner of such
Tendered Notes) who has not completed Box 3 ("Special Delivery Instructions") on
this Letter of Transmittal, or (ii) for the account of a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc. ("NASD") or a commercial bank or trust company having
an office or correspondent in the United States (each of the foregoing being
referred to as an "Eligible Institution"). If the Tendered Notes are registered
in the name of a person other than the signor of the Letter of Transmittal or if
Notes not tendered are to be returned to a person other than the registered
Holder, then the signature on this Letter of Transmittal accompanying the
Tendered Notes must be guaranteed by a Medallion Signature Guarantor as
described above. Beneficial owners whose Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if they
desire to tender such Notes.
6. Special Delivery Instructions. Tendering holders should indicate in Box
3 the name and address to which the Exchange Notes and/or substitute Notes for
principal amounts not tendered or not accepted for exchange are to be sent, if
different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer. If,
however, a transfer tax is imposed for any reason other than the transfer and
-9-
<PAGE>
exchange of Tendered Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with this
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter of
Transmittal.
8. Tax Identification Number. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide the
Exchange Agent (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the Holder may be subject to backup withholding and a $50 penalty imposed
by the Internal Revenue Service. (If withholding results in an over-payment of
taxes, a refund may be obtained.) Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
failure to report all interest or dividends or (ii) if previously so notified,
the Internal Revenue Service has notified the holder that such holder is no
longer subject to backup withholding. If the Tendered Notes are registered in
more than one name or are not in the name of the actual owner, consult the
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. Validity of Tenders. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of Tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the right to reject any and all Notes
not validly tendered or any Notes the Company's acceptance of which would, in
the opinion of the Company or its counsel, be unlawful. The Company also
reserves the right to waive any conditions of the Exchange Offer or defects or
irregularities in tenders of Notes as to any ineligibility of any holder who
seeks to tender Notes in the Exchange Offer. The interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
10. Waiver of Conditions. The Company reserves the absolute right to amend,
waive or modify any of the conditions in the Exchange Offer in the case of any
Tendered Notes.
11. No Conditional Tender. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
12. Mutilated, Lost, Stolen or Destroyed Notes. Any tendering Holder whose
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated herein for further instructions.
13. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
-10-
<PAGE>
14. Acceptance of Tendered Notes and Issuance of Exchange Notes; Return of
Notes. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted Tendered Notes when, as and if the Company has given
written or oral notice (immediately followed in writing) thereof to the Exchange
Agent. If any Tendered Notes are not exchanged pursuant to the Exchange Offer
for any reason, such unexchanged Notes will be returned, without expense, to the
undersigned at the address shown in Box 1 or at a different address as may be
indicated herein under "Special Delivery Instructions" (Box 3).
15. Withdrawal. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of
Tenders."
-11-
<PAGE>
Exhibit 99.5
NOTICE OF GUARANTEED DELIVERY
in Respect of
9% Senior Subordinated Notes due 2007
of
POLYMER GROUP, INC.
Pursuant to the Prospectus dated , 1997
The Exchange Agent for the Exchange Offer is:
Harris Trust and Savings Bank
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 Attn: Reorganization Dept. New York, NY 10005
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Delivery of this Notice of Guaranteed Delivery to an address, or
transmission via facsimile to a number, other than as set forth above will not
constitute valid delivery.
As set forth in the Prospectus dated , 1997 (as it may be
supplemented and amended from time to time, the "Prospectus") of Polymer Group,
Inc. (the "Company") under "The Exchange Offer -- Guaranteed Delivery
Procedures," and in the Instructions to the related Letter of Transmittal (the
"Letter of Transmittal"), this form, or one substantially equivalent hereto, or
an Agent's Message relating to the guaranteed delivery procedures, must be used
to accept the Company's offer (the "Exchange Offer") to exchange any and all of
its outstanding 9% Senior Subordinated Notes due 2007 (the "Notes"), for new 9%
Senior Subordinated Notes due 2007, Series B (the "Exchange Notes"), if time
will not permit the Letter of Transmittal, certificates representing such Notes
and other required documents to reach the Exchange Agent, or the procedures for
book-entry transfer cannot be completed, on or prior to the Expiration Date (as
defined).
This form must be delivered by an Eligible Institution (as defined herein)
by mail or hand delivery or transmitted via facsimile to the Exchange Agent as
set forth above. If a signature on the Letter of Transmittal is required to be
guaranteed by a Medallion Signature Guarantor under the instructions thereto,
such signature guarantee must appear in the applicable space provided in the
Letter of Transmittal. This form is not to be used to guarantee signatures.
Questions and requests for assistance and requests for additional copies of
the Prospectus may be directed to the Exchange Agent at the address above.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997, UNLESS EXTENDED ("THE EXPIRATION DATE").
- --------------------------------------------------------------------------------
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount
of the Notes specified below pursuant to the guaranteed delivery procedures
set forth in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures" and in Instruction 2 to the Letter of Transmittal.
The undersigned hereby authorizes the Exchange Agent to deliver this Notice
of Guaranteed Delivery to the Company with respect to the Notes tendered
pursuant to the Exchange Offer.
The undersigned understands that Notes will be exchanged only after timely
receipt by the Exchange Agent of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), including by means of an Agent's Message, of the
transfer of such Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility, with respect to such Notes, properly completed and duly
executed, with any signature guarantees and any other documents required by
the Letter of Transmittal within three New York Stock Exchange, Inc.
trading days after the execution hereof. The undersigned also understands
that the method of delivery of this Notice of Guaranteed Delivery and any
other required documents to the Exchange Agent is at the election and sole
risk of the holder, and the delivery will be deemed made only when actually
received by the Exchange Agent.
The undersigned understands that tenders of Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. The
undersigned also understands that tenders of Notes may be withdrawn at any
time prior to the Expiration Date.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death
or incapacity of the undersigned, and every obligation of the undersigned
under this Notice of Guaranteed Delivery shall be binding upon the heirs,
executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Prospectus.
-2-
<PAGE>
PLEASE SIGN AND COMPLETE
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------
Signature(s) of Registered Holder(s) or Date:___________________________________________________
Authorized Signatory:_______________________________
Address:________________________________________________
____________________________________________________
________________________________________________________
____________________________________________________
Area Code and Telephone No._____________________________
Name(s) of Registered Holder(s):____________________
If Notes will be delivered by book-entry transfer, check
____________________________________________________ book-entry transfer facility below:
____________________________________________________ [_] The Depository Trust Company
Principal Amount of Notes Tendered:_________________
____________________________________________________
Certificate No.(s) of Notes Depository
(if available)______________________________________ Account No._____________________________________________
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly as their name(s) appear(s) on certificate(s)
for Notes or on a security position listing as the owner of Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Notice of Guaranteed Delivery without alteration, enlargement or any
change whatsoever. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s):_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
Capacity:______________________________________________________________________________________________________________
Address(es):___________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER
OF TRANSMITTAL.
-3-
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE
(Not To Be Used for Signature Guarantee)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each, an "Eligible Institution"), hereby (i)
represents that the above-named persons are deemed to own the Notes tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (ii) represents that such
tender of Notes complies with Rule 14e-4 and (iii) guarantees that the Notes
tendered hereby are in proper form for transfer (pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures"), and that the Exchange Agent will receive (a) such Notes, or a
Book-Entry Confirmation of the transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility and (b) a properly completed and
duly executed Letter of Transmittal or facsimile thereof (or Agent's message)
with any required signature guarantees and any other documents required by the
Letter of Transmittal within three New York Stock Exchange, Inc. trading days
after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
Notes to the Exchange Agent within the time period shown herein. Failure to do
so could result in a financial loss to such Eligible Institution.
Name of Firm:__________________________________________________________________
Authorized Signature:__________________________________________________________
Title:_________________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(Zip Code)
Area Code and Telephone Number:________________________________________________
Dated: ___________________, 1997
- --------------------------------------------------------------------------------
-4-
<PAGE>
Exhibit 99.6
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
POLYMER GROUP, INC.
9% Senior Subordinated Notes due 2007
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
, 1997 (as the same may be amended or supplemented from time to time,
the "Prospectus") of Polymer Group, Inc., a Delaware corporation (the
"Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 9% Senior Subordinated Notes due 2007 (the "Notes")
held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (fill in amount):
$ of the 9% Senior Subordinated Notes due 2007
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[_] TO TENDER the following Notes held by you for the account of the
undersigned (insert principal amount of Notes to be tendered, if
any): $
[_] NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representation and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (fill in state) ,
(ii) the undersigned is acquiring the Exchange Notes in the ordinary course of
business of the undersigned, (iii) the undersigned is not participating, does
not participate, and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the Exchange Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Act"), in connection with a secondary resale transaction of the Exchange Notes
acquired by such person and cannot rely on the position of the Staff of the
Securities and Exchange Commission set forth in no-action letters that are
discussed in the section of the Prospectus entitled "The Exchange Offer--Resale
of the Exchange Notes," and (v) the undersigned is not an "affiliate," as
defined in Rule 405 under the Act, of the Company or any Guarantor; (b) to
agree, on behalf of the undersigned, as set forth in the Letter of Transmittal;
and (c) to take such other action as necessary under the Prospectus or the
Letter of Transmittal to effect the valid tender of such Notes.
- --------------------------------------------------------------------------------
Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
[_] its own account as a result of market-making activities or other trading
activities. If this box is checked, a copy of these Instructions must be
received within three New York Stock Exchange trading days after the
Expiration Date by Polymer Group, Inc., attention James G. Boyd, facsimile
(803) 747-4092.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s):___________________________________________________
Signature(s):__________________________________________________________________
Name (please print):___________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Telephone number: _____________________________________________________________
Taxpayer Identification or Social Security Number:_____________________________
Date:__________________________________________________________________________
- --------------------------------------------------------------------------------
