<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED APRIL 4, 1998
COMMISSION FILE NUMBER 1-14330
POLYMER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 57-1003983
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4838 JENKINS AVENUE
NORTH CHARLESTON, SOUTH CAROLINA 29405
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (843) 566-7293
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
On May 11, 1998 there were 32,000,000 Common Shares, $.01 par value
outstanding.
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<PAGE>
POLYMER GROUP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I. Financial Information............................................. 3
Item 1. Financial Statements............................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 15
Part II. Other Information................................................ 16
Signatures................................................................ 17
Exhibit Index............................................................. 18
</TABLE>
2
<PAGE>
PART I.
FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
APRIL 4, JANUARY 3,
ASSETS 1998 1998
------ ----------- ----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents................................. $ 64,339 $ 50,190
Marketable securities................................ 8,167 7,754
Accounts receivable, net............................. 115,800 107,328
Inventories.......................................... 106,379 94,128
Assets held for disposition, net..................... -- 464,524
Other................................................ 26,920 31,146
---------- ----------
Total current assets............................... 321,605 755,070
Property, plant and equipment, net..................... 641,155 606,260
Intangibles, loan acquisition and organization costs,
net................................................... 262,340 229,391
Other.................................................. 46,806 37,032
---------- ----------
Total assets....................................... $1,271,906 $1,627,753
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable, accrued liabilities and other...... $ 130,631 $ 105,824
Short-term bridge financing.......................... -- 425,945
Current portion of long-term debt.................... 3,711 3,276
---------- ----------
Total current liabilities.......................... 134,342 535,045
---------- ----------
Long-term debt, less current portion................... 848,552 741,860
Deferred income taxes.................................. 81,339 82,213
Other noncurrent liabilities........................... 15,464 14,815
Minority interest...................................... -- 54,730
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)............................................ (39,788) (39,355)
Other ............................................... (11,985) (5,537)
---------- ----------
192,209 199,090
---------- ----------
Total liabilities and shareholders' equity......... $1,271,906 $1,627,753
========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
------------------
MARCH
APRIL 4, 29,
1998 1997
-------- --------
<S> <C> <C>
Net sales..................... $193,336 $128,947
Cost of goods sold............ 147,058 96,362
-------- --------
Gross profit.................. 46,278 32,585
Selling, general and
administrative expenses...... 26,025 18,656
-------- --------
Operating income.............. 20,253 13,929
Other (income) expense:
Interest expense, net....... 15,980 6,834
Foreign currency transaction
(gains) losses, net........ 676 (320)
-------- --------
16,656 6,514
-------- --------
Income before income taxes and
extraordinary item........... 3,597 7,415
Income taxes.................. 1,302 2,453
-------- --------
Income before extraordinary
item......................... 2,295 4,962
Extraordinary item, (loss)
from extinguishment of debt.. (2,728) --
-------- --------
Net income (loss)....... $ (433) $ 4,962
======== ========
Net income (loss) per common
share:
Basic:
Average common shares
outstanding.............. 32,000 32,000
Income before
extraordinary item....... $ 0.07 $ 0.16
Extraordinary item, (loss)
from extinguishment of
debt..................... (0.09) --
-------- --------
Net income (loss) per
common share--basic.... $ (0.02) $ 0.16
======== ========
Diluted:
Average common shares
outstanding.............. 32,000 32,000
Income before
extraordinary item....... $ 0.07 $ 0.16
Extraordinary item, (loss)
from extinguishment of
debt..................... (0.09) --
-------- --------
Net income (loss) per
common share--diluted.. $ (0.02) $ 0.16
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
POLYMER GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
APRIL 4, MARCH 29,
1998 1997
--------- ---------
<S> <C> <C>
Operating activities
Net income (loss)....................................... $ (433) $ 4,962
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary item.................................... 2,728 --
Depreciation and amortization expense................. 13,769 9,901
Foreign currency transaction (gains) losses, net...... 676 (320)
Changes in operating assets and liabilities, net of
effects of business acquisition:
Accounts receivable................................... (223) (2,539)
Inventories........................................... (6,962) (1,144)
Accounts payable and other............................ 17,987 (845)
--------- --------
Net cash provided by operating activities........... 27,542 10,015
--------- --------
Investing activities
Purchases of property, plant and equipment.............. (19,122) (13,369)
Purchases of marketable securities classified as
available for sale..................................... (3,990) (7,335)
Proceeds from sales of marketable securities classified
as available for sale.................................. 3,540 5,965
Proceeds from sale of assets, net of canceled
subordinated advance................................... 323,524 --
Minority interest....................................... (54,730) --
Other, including business acquisition................... (49,157) (146)
--------- --------
Net cash provided by (used in) investing activities. 200,065 (14,885)
--------- --------
Financing activities
Proceeds from debt...................................... 576,531 7,150
Payment of debt......................................... (778,572) (3,284)
Loan acquisition costs, net............................. (9,376) (14)
--------- --------
Net cash provided by (used in) financing activities. (211,417) 3,852
--------- --------
Effect of exchange rate changes on cash................... (2,041) (3,985)
--------- --------
Net increase (decrease) in cash and equivalents........... 14,149 (5,003)
Cash and equivalents at beginning of period............... 50,190 37,587
--------- --------
Cash and equivalents at ending of period.................. $ 64,339 $ 32,584
========= ========
</TABLE>
See accompanying notes.
5
<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 oriented polyolefin fabrics. The
Company's principal lines of business include hygiene, medical, wiping and
industrial and specialty products. The Company operates manufacturing
facilities in the United States, Canada, Mexico, Germany, the Netherlands,
France and England.
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 months ended April 4, 1998, are not
necessarily indicative of the results that may be expected for fiscal 1998.
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:
<TABLE>
<CAPTION>
APRIL 4, JANUARY 3,
1998 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
Inventories:
Finished goods.................................. $ 58,321 $48,769
Work in process and stores and maintenance
parts.......................................... 11,402 11,201
Raw materials................................... 36,656 34,158
-------- -------
Total......................................... $106,379 $94,128
======== =======
</TABLE>
NOTE 3. NET INCOME (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share" ("FAS 128"). FAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. The numerator for both basic and diluted earnings per
share is net income (loss) applicable to common stock. The denominator for
both basic and diluted earnings per share is average common shares
outstanding.
NOTE 4. ACQUISITIONS
On December 19, 1997, DT Acquisition Inc. ("DTA"), a special-purpose
subsidiary of the Company, completed the purchase of approximately 98% of the
outstanding common shares of Dominion Textile Inc. ("Dominion") for Cdn$14.50
per share and approximately 96% of the outstanding first preferred
6
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. ACQUISITIONS--(CONTINUED)
shares of Dominion for Cdn$150 per share. The acquisition, which was accounted
for using the purchase method of accounting, was financed with $215.9 million
of borrowings under DTA's $600.0 million senior secured credit facilities, and
subordinated advances of $141.0, $69.0 and $25.0 million by Galey & Lord, Inc.
("Galey"), ZB Holdings, Inc. ("ZB Holdings") and the Company, respectively. ZB
Holdings is a wholly-owned subsidiary of The InterTech Group, Inc., an
affiliate of the Company.
On January 29, 1998, DTA acquired all remaining common and preferred shares,
at which time Dominion underwent a "winding up". All assets of Dominion were
transferred to DTA, all liabilities of Dominion were assumed by DTA and all
outstanding common shares and first preferred shares held by DTA were
redeemed. Immediately thereafter, pursuant to a purchase agreement dated
October 27, 1997, the apparel fabrics business of Dominion was sold to Galey
for approximately $464.5 million, including related fees and expenses, and the
Company acquired (the "Nonwovens Acquisition") the assets and liabilities of
Dominion that comprised the nonwovens and industrial fabrics operations (the
"Nonwovens Business") for approximately $351.6 million, including fees and
expenses. The Nonwovens Business includes a 50% interest in Argentina-based
Dominion Nonwovens Sudamerica S.A. ("DNS"). DNS manufactures and markets
nonwovens to hygiene markets in South America. Concurrently, Dominion Textile
(USA) Inc. ("DT USA"), a wholly-owned subsidiary of Dominion, purchased
approximately $145.6 million of its $150.0 million outstanding 8.875%
Guaranteed Senior Notes due 2003 and, at the same time, purchased
approximately $124.5 million of its $125.0 million outstanding 9.25%
Guaranteed Senior Notes due 2006. Net assets of the apparel fabrics business
of Dominion were classified as assets held for disposition on the Company's
consolidated balance sheet at January 3, 1998. Operating results of the
apparel fabrics business of Dominion have been excluded from the Company's
results of operations for the three months ended April 4, 1998.
In connection with the Nonwovens Acquisition and related transactions, the
Company also amended its senior secured credit facility to provide for $125.0
million in term loans. The Company used borrowings under the credit facility,
as amended, to finance the purchase of the Nonwovens Business, in part by
retiring amounts outstanding under the DTA $600.0 million credit facility and
repaying the subordinated advance made by ZB Holdings.
On March 5, 1998, the Company issued $200.0 million of 8.75% Senior
Subordinated Notes due 2008 (the "2008 Notes") to qualified buyers pursuant to
Rule 144A under the Securities Act (the "March 1998 Offering"). Proceeds from
the sale of the 2008 Notes were used, in part, to finance the Oriented Polymer
Acquisition (as defined below) and to repay existing revolving obligations.
On March 16, 1998, the Company completed the acquisition (the "Oriented
Polymer Acquisition") of a leading North American manufacturer of
polypropylene-based commercial twine and polyethylene-based specialty knitted
products for approximately $47.0 million in a transaction accounted for by the
purchase method of accounting. Supplemental pro forma information for the
Oriented Polymer Acquisition is not presented because the acquisition was not
material to the consolidated results of operations.
7
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. SELECTED FINANCIAL DATA OF GUARANTORS
Payment of the 2007 Notes and 2008 Notes is guaranteed jointly and severally on
a senior subordinated basis by certain of the Company's subsidiaries.
Management has determined that separate complete financial statements of the
guarantors are not material to users of the financial statements. The following
sets forth selected financial data of the guarantor and non-guarantor
subsidiaries (in thousands):
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF APRIL 4, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- ---------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 91,662 $ 104,588 $ (9,050) $ 63 $ 187,263
Total assets............ 1,983,879 985,657 1,409,259 (3,106,889) 1,271,906
Total debt.............. 1,237,332 779,475 1,187,730 (2,352,274) 852,263
Shareholders' equity.... 621,547 133,030 192,209 (754,577) 192,209
CONDENSED CONSOLIDATING SELECTED BALANCE SHEET FINANCIAL DATA
AS OF JANUARY 3, 1998
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- ---------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Working capital......... $ 68,859 $ 137,167 $ 3,100 $ 10,899 $ 220,025
Total assets............ 1,164,642 1,141,546 950,260 (1,628,695) 1,627,753
Total debt.............. 2,050 342,320 425,767 (25,001) 745,136
Shareholders' equity.... 586,079 82,720 199,090 (668,799) 199,090
</TABLE>
8
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. SELECTED FINANCIAL DATA OF GUARANTORS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE THREE MONTHS ENDED APRIL 4, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED RECLASSIFICA-
GUARANTOR NON-GUARANTOR THE TIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $119,933 $77,010 $ 59 $(3,666) $193,336
Operating income........ 12,353 6,491 1,409 -- 20,253
Income (loss) before
income taxes and
extraordinary item..... 4,686 3,314 (4,403) -- 3,597
Income taxes (benefit).. 93 1,328 (119) -- 1,302
Income (loss) before
extraordinary item..... 4,593 1,986 (4,284) -- 2,295
Extraordinary item...... -- (2,728) -- -- (2,728)
Equity in earnings
(loss) of subsidiaries. -- -- 3,851 (3,851) --
Net income (loss)....... 4,593 (742) (433) (3,851) (433)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS SELECTED FINANCIAL DATA
FOR THE THREE MONTHS ENDED MARCH 29, 1997
<CAPTION>
COMBINED COMBINED RECLASSIFICA-
GUARANTOR NON-GUARANTOR THE TIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $82,007 $48,762 $ -- $ (1,822) $128,947
Operating income........ 5,163 7,343 1,423 -- 13,929
Income (loss) before
income taxes and
extraordinary item..... 3,969 6,567 (3,121) -- 7,415
Income taxes (benefit).. (298) 502 2,249 -- 2,453
Income (loss) before
extraordinary item..... 4,267 6,065 (5,370) -- 4,962
Extraordinary item...... -- -- -- -- --
Equity in earnings of
subsidiaries........... -- -- 10,332 (10,332) --
Net income.............. 4,267 6,065 4,962 (10,332) 4,962
</TABLE>
NOTE 6. OTHER
In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" ("FAS 130") which is effective for fiscal
years beginning after December 15, 1997. FAS 130 establishes new rules for the
reporting and display of comprehensive income and its components. FAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities and the foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity, to be included in
other comprehensive income. The Company's comprehensive loss approximated $6.9
million and $2.7 million for the three months ended April 4, 1998 and March
29, 1997, respectively.
9
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. OTHER (CONTINUED)
In 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131") which is effective for years beginning after December 15, 1997. FAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. FAS 131 does not require interim disclosures during the initial
year of application; however, the segment information must be reported for
comparative purposes in interim financial statements in the second year of
application. The Company has adopted FAS 131 and will defer reporting segment
information in the interim financial statements until the second year of
application.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto contained in Part I of this report on Form 10-Q and with the
Company's Annual Report on Form 10-K for the fiscal year ended January 3,
1998.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships to net sales of
certain income statement items.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------
APRIL 4, MARCH 29,
1998 1997
-------- ---------
<S> <C> <C>
Net sales by product category:
Hygiene............................................. 41.5% 42.0%
Medical............................................. 11.8 16.7
Wiping.............................................. 13.6 20.4
Industrial and specialty............................ 33.1 20.9
----- -----
100.0 100.0
Cost of goods sold.................................... 76.1 74.7
----- -----
Gross profit........................................ 23.9 25.3
Selling, general and administrative expenses.......... 13.4 14.5
----- -----
Operating income...................................... 10.5 10.8
Other (income) expense
Interest expense, net............................... 8.3 5.3
Foreign currency (gains) losses, net................ 0.3 (0.2)
----- -----
8.6 5.1
Income before income taxes and extraordinary item..... 1.9 5.7
Income taxes.......................................... 0.7 1.9
----- -----
Income before extraordinary item...................... 1.2 3.8
Extraordinary item, (loss) from extinguishment of
debt................................................. (1.4) --
----- -----
Net income (loss)..................................... (0.2)% 3.8%
===== =====
</TABLE>
COMPARISON OF THREE MONTHS ENDED APRIL 4, 1998 AND MARCH 29, 1997
NET SALES
The following table sets forth components of the Company's net sales by
product category for the three months ended April 4, 1998 and the
corresponding increase/(decrease) over the comparable fiscal period in the
prior year:
<TABLE>
<CAPTION>
%
FIRST QTR FIRST QTR INCREASE/ INCREASE/
1998 1997 (DECREASE) (DECREASE)
--------- --------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales by product
category:
Hygiene................... $ 80,173 $ 54,198 $25,975 47.9%
Medical................... 22,827 21,460 1,367 6.4
Wiping.................... 26,260 26,303 (43) (0.2)
Industrial and specialty.. 64,076 26,986 37,090 137.4
-------- -------- -------
Total net sales......... $193,336 $128,947 $64,389 49.9
======== ======== =======
</TABLE>
11
<PAGE>
COMPARISON OF THREE MONTHS ENDED APRIL 4, 1998 AND MARCH 29, 1997--(CONTINUED)
NET SALES--(CONTINUED)
Consolidated net sales increased $64.4 million, or approximately 50.0%, from
$128.9 million for the three months ended March 29, 1997 to $193.3 million for
the three months ended April 4, 1998. The increase was comprised of $53.6
million in net sales due to the Nonwovens Acquisition and the Oriented Polymer
Acquisition and $14.2 million due to organic growth, offset by a $3.4 million
decline in net sales due to weak European currencies.
Hygiene product net sales increased 48.0%, or $26.0 million, from $54.2
million in 1997 to $80.2 million in 1998. The increase was due primarily to
(i) acquisition growth, including the addition of new key hygiene product
customers, (ii) additional manufacturing capacity and (iii) increased volume
output of other process technology. The increase was offset by $1.9 million
due to European currency translation losses.
Medical product net sales increased 6.4%, or $1.4 million, from $21.5 million
in 1997 to $22.8 million in 1998. Medical product revenues represented 11.8%
of consolidated net sales for the fiscal quarter. Increases in medical product
net sales were primarily a result of higher sales in surgical gowns and
drapes.
Wipes net sales were $26.3 million in the first quarter of 1998 and 1997.
North American sales of food service wiping applications and Handi-wipes
increased by approximately $1.1 million; however, this increase was offset by
$1.2 million from European currency translation losses.
Industrial and specialty product net sales increased 137.4%, or $37.1 million,
from $27.0 million in 1997 to $64.1 million in 1998. Industrial and specialty
product revenues represented 33.1% of net sales for the fiscal quarter.
Approximately $35.5 million in growth is attributable to the Nonwovens
Acquisition and the Oriented Polymer Acquisition. Sales of existing products
increased $1.6 million due to strong sales of alkaline battery separators,
apparel lining materials, housewrap and crop cover materials.
GROSS PROFIT
Gross profit increased to $46.3 million, or 23.9% of consolidated net sales,
for the first quarter of 1998 versus $32.6 million for the comparable period
of 1997. Raw material costs in the first quarter of 1998 were approximately
$82.1 million, or 42.5% of net sales, compared to $55.5 million, or 43.1% of
net sales, in the first quarter of 1997. The decline in raw material costs as
a percentage of net sales reflects the continued trend in lower raw material
costs versus prior periods. Direct labor costs were $16.0 million, or 8.3% of
net sales, in the first quarter of 1998 as compared to $10.2 million, or
approximately 8.0% of net sales, in the first quarter of 1997. Overhead costs
were $48.9 million in the first quarter of 1998 versus $30.6 million in the
first quarter of 1997. The increase in overhead costs between 1998 and 1997
resulted from higher depreciation on completed capital expenditures and higher
incremental overhead associated with the Nonwovens Business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased from 14.5% of net sales
in the first quarter of 1997 to 13.4% of net sales in the first quarter of
1998 as a result of lower distribution costs and other general and
administrative costs as a percentage of sales. Selling, general and
administrative expenses for the first quarter of 1998 were $26.0 million, up
approximately $7.3 million versus $18.7 million for the first quarter of 1997
due primarily to additional costs associated with the Nonwovens Acquisition
and the Oriented Polymer Acquisition.
12
<PAGE>
OTHER
Interest expense increased $9.2 million, from $6.8 million in the first
quarter of 1997 to $16.0 million in the first quarter of 1998. Interest
expense as a percentage of net sales increased from 5.3% in the first quarter
of 1997 to 8.3% in the first quarter of 1998. The increase in interest expense
is principally due to a higher average amount of indebtedness outstanding.
Net foreign currency transaction losses were approximately $0.7 million during
the first quarter of 1998 versus gains of $0.3 million in the first quarter of
1997.
The Company provided for income taxes of approximately $1.3 million for the
three months ended April 4, 1998, representing an effective tax rate of 36.2%.
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 higher
foreign tax rates and to an increase in non-deductible goodwill amortization
in 1998. The Company provided for income taxes of $2.5 million during the
first quarter of 1997, representing an effective tax rate of 33.1%.
INCOME BEFORE EXTRAORDINARY ITEM
Income before extraordinary item was $2.3 million, or $0.07 per share, in the
first quarter of 1998 as compared to $5.0 million, or $0.16 per share, for the
comparable period in the previous year. The approximate $2.7 million decrease
between first quarter 1998 and first quarter 1997 was attributable primarily
to higher interest expense of $9.2 million resulting from the Nonwovens
Acquisition.
EXTRAORDINARY ITEM
As a result of the Nonwovens Acquisition, the Company recorded one-time
charges of $2.7 million for the write-off of previously capitalized deferred
financing costs.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
APRIL 4, JANUARY 3,
1998 1998
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Balance sheet data:
Cash and equivalents and marketable securities....... $ 72,506 $ 57,934
Current assets....................................... 321,605 755,070
Current liabilities (excluding current portion of
long-term debt)..................................... 130,631 531,769
Working capital...................................... 190,974 223,301
Total assets......................................... 1,271,906 1,627,753
Debt (including current portion)..................... 852,263 745,136
Shareholders' equity................................. 192,209 199,090
<CAPTION>
THREE MONTHS ENDED
----------------------
APRIL 4, MARCH 29,
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Cash flow data:
Net cash provided by operating activities............ $ 27,542 $ 10,015
Net cash provided by (used in) investing activities.. 200,065 (14,885)
Net cash provided by (used in) financing activities.. (211,417) 3,852
</TABLE>
13
<PAGE>
Operating Activities
During the three months ended April 4, 1998, the Company's operations
generated $27.5 million in cash. The Company's working capital, excluding
assets held for disposition and short-term bridge financing, increased $6.3
million, from $184.7 million at January 3, 1998 to $191.0 million at April 4,
1998. Cash and equivalents and marketable securities were $72.5 million at
April 4, 1998 as compared to $57.9 million at January 3, 1998. This increase
arose principally from increased operating income during the first quarter of
1998.
Investing and Financing Activities
Capital expenditures for the three months ended April 4, 1998 totaled $19.1
million, related primarily to margin-enhancing projects. For the remainder of
fiscal 1998, the Company expects capital expenditures to approximate $63.9
million.
As discussed in "Note 4. Acquisitions", on December 19, 1997, DTA completed
the purchase of approximately 98% of the outstanding common shares of Dominion
for Cdn$14.50 per share and approximately 96% of the outstanding first
preferred shares of Dominion for Cdn$150 per share. The acquisition, which was
accounted for using the purchase method of accounting, was financed with
$215.9 million of borrowings under DTA's $600.0 million senior secured credit
facilities, and subordinated advances of $141.0, $69.0 and $25.0 million by
Galey, ZB Holdings and the Company, respectively.
On January 29, 1998, DTA acquired all remaining common and preferred shares of
Dominion, at which time Dominion underwent a "winding up". All assets of
Dominion were transferred to DTA, all liabilities of Dominion were assumed by
DTA and all outstanding common shares and preferred shares held by DTA were
redeemed. Immediately thereafter, pursuant to a purchase agreement dated
October 27, 1997, the apparel fabrics business of Dominion was sold to Galey
for approximately $464.5 million, including related fees and expenses, and the
Company acquired the Nonwovens Business for approximately $351.6 million,
including fees and expenses. Concurrently, DT USA purchased approximately
$145.6 million of its $150.0 million outstanding 8.875% Guaranteed Senior
Notes due 2003 and, at the same time, purchased approximately $124.5 million
of its $125.0 million outstanding 9.25% Guaranteed Senior Notes due 2006. Net
assets of the apparel business of Dominion were classified as assets held for
disposition on the Company's consolidated balance sheet at January 3, 1998. In
connection with the Nonwovens Acquisition and related transactions, the
Company also amended its credit facility to provide for $125.0 million in term
loans.
On March 5, 1998, the Company issued $200.0 million of 8.75% Senior
Subordinated Notes due 2008 to qualified buyers pursuant to Rule 144A under
the Securities Act.
On March 16, 1998, the Company completed the Oriented Polymer Acquisition for
approximately $47.0 million in a transaction accounted for by the purchase
method of accounting.
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, to permit anticipated
capital expenditures and to fund the Company's working capital requirements.
EFFECT OF INFLATION
Inflation generally affects the Company by increasing the cost of labor,
equipment and new materials. The Company believes that inflation had no
material effect on the Company's business during the three months ended April
4, 1998.
14
<PAGE>
FOREIGN CURRENCY
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
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.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995
Except for historical information contained herein, certain matters set forth
within Management's Discussion and Analysis of Financial Condition and Results
of Operations of this Form 10-Q are forward looking statements. Certain risks
and uncertainties could cause actual results to differ materially from those
set forth in the forward looking statements. The following factors could cause
actual results to differ materially from historical results or those
anticipated: adverse economic conditions, competition in the Company's
markets, fluctuation in raw material costs, and other risks detailed in
documents filed by the Company with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
15
<PAGE>
PART II.
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On May 11, 1998, the Company's trading symbol on the New York Stock Exchange
for its common stock, par value $.01 per share, was changed to "PGI" from
"PGH." The Company issued a press release announcing the change on May 11,
1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits required to be filed with this report on Form 10-Q are listed in the
following Exhibit Index.
On February 13, 1998 and April 14, 1998 the Company filed reports on Form 8-K
and Form 8-K/A, respectively, relating to the Nonwovens Acquisition.
16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
Polymer Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, President, Chief
Executive Officer and Director
(Principal Executive Officer)
/s/ James G. Boyd
By: _________________________________
James G. Boyd
Executive Vice President,
Treasurer and Director (Principal
Financial Officer and Principal
Accounting Officer)
May 19, 1998
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S> <C>
2.1 Agreement dated October 27, 1997, among Polymer Group, Inc.,
Galey & Lord, Inc. and DT Acquisition Inc.(1)
2.2 Letter Agreement, dated October 27, 1997, among Polymer Group,
Inc., Galey & Lord, Inc. and DT Acquisition Inc.(2)
2.3 Operating Agreement, dated December 19, 1997, among Polymer
Group, Inc., Galey & Lord, Inc. and DT Acquisition Inc.(1)
2.4 DT Acquisition Inc. Offers to Purchase Statement for all out-
standing Common Shares and all outstanding First Preferred
Shares of Dominion Textile Inc., dated October 29, 1997.(2)
2.5 Notice of Extension and Variation by DT Acquisition Inc. in
respect of its Offers to Purchase, dated November 18, 1997.(2)
2.6 Notice of Extension by DT Acquisition Inc. in respect of its
Offers to Purchase, dated December 2, 1997.(2)
2.7 Notice of Extension and Variation by DT Acquisition Inc. in
respect of its Offers to Purchase, dated December 8, 1997.(2)
2.8 Notice of Extension by DT Acquisition Inc. in respect of its
Offers to Purchase, dated December 17, 1997.(2)
2.9 Letter Agreement between DT Acquisition Inc., Polymer Group,
Inc. and Dominion Textile Inc. dated November 16, 1997.(2)
2.10 Notice of Redemption pursuant to the provisions of Section 206
of the Canada Business Corporations Act in regard to holders
of Common Shares of Dominion Textile Inc., dated December 30,
1997.(2)
2.11 Notice of Redemption pursuant to the provisions of Section 206
of the Canada Business Corporations Act in regard to holders
of First Preferred Shares of Dominion Textile Inc., dated De-
cember 30, 1997.(2)
2.12 Notice of Redemption in regard to holders of Second Preferred
Shares, Series D of Dominion Textile Inc., dated December 23,
1997.(2)
2.13 Notice of Redemption in regard to holders of Second Preferred
Shares, Series E of Dominion Textile Inc., dated December 23,
1997.(2)
2.14 Indenture, winding up Dominion Textile Inc. pursuant to the
Canada Business Corporations Act, dated January 29, 1998.(2)
2.15 Master Separation Agreement, among Polymer Group, Inc., Galey
& Lord, Inc. and DT Acquisition Inc., dated January 29,
1998.(3)*
3.1(i) Form of Amended and Restated Certificate of Incorporation of
the Company.(3)
3.1(ii) Certificate of Designation of the Company.(4)
3.2 Amended and Restated By-laws of the Company.(3)
4.1 Indenture, dated as of March 1, 1998, among Polymer Group,
Inc., the Guarantors named therein and Harris Trust & Savings
Bank, as trustee.
4.2 Forms of Series A and Series B 8 3/4% Senior Subordinated
Notes due 2008 (contained in Exhibit 4.1 as Exhibit A and B
thereto, respectively).
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S> <C>
4.3 Form of Guarantee (contained in Exhibit 4.2)
4.4 Registration Rights Agreement, dated as of March 5, 1998,
among Polymer Group, Inc., the Guarantors named therein and
Chase Securities Inc.
4.5 Second Supplemental Indenture dated January 29, 1998, to In-
denture dated as of June 30, 1997, among Polymer Group, Inc.,
Dominion Textile (USA) Inc., DomTex Industries Inc., Poly-Bond
Inc. and Harris Trust & Savings Bank with respect to the 9%
Senior Subordinated Notes due 2007.(2)
10.1 Purchase Agreement, dated February 27, 1998, by and among Pol-
ymer Group, Inc., the Guarantors named therein and Chase Secu-
rities Inc., as Initial Purchaser, with respect to the 8 3/4%
Senior Subordinated Notes due 2008.
10.2 Amendment No. 2, dated January 29, 1998, to the Amended, Re-
stated and Consolidated Credit Agreement dated July 3, 1997 by
and among Polymer Group, Inc., the Guarantors named therein,
the lenders named therein and The Chase Manhattan Bank, as
agent.
11 Statement of Computation of Per Share Earnings
27 Financial Data Schedule
</TABLE>
- --------
(1) Incorporated by reference to the respective exhibit to the Company's Form
8-K, dated February 13, 1998.
(2) Incorporated by reference to the respective exhibit to the Company's Form
10-K, dated April 3, 1998.
(3) Incorporated by reference to the respective exhibit to the Company's Form
8-K/A, dated April 14, 1998.
(4) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-1 (Reg. No. 333-2424).
(5) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-4 (Reg. No. 333-32605).
*Certain portions of this Exhibit have been omitted & filed separately with
the Commission pursuant to an Application for Confidential Treatment.
19
<PAGE>
================================================================================
INDENTURE
Dated as of March 1, 1998
Among
POLYMER GROUP, INC., as Issuer,
The GUARANTORS Named herein
and
HARRIS TRUST AND SAVINGS BANK, as Trustee
----------
$200,000,000
8 3/4% Senior Subordinated Notes due 2008, Series A
8 3/4% Senior Subordinated Notes due 2008, 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...........................22
SECTION 2.05. Holder Lists...................................................22
SECTION 2.06. Transfer and Exchange..........................................22
SECTION 2.07. Replacement Securities.........................................23
SECTION 2.08. Outstanding Securities.........................................23
SECTION 2.09. Treasury Securities............................................24
SECTION 2.10. Temporary Securities...........................................24
SECTION 2.11. Cancellation...................................................24
SECTION 2.12. Defaulted Interest.............................................24
SECTION 2.13. CUSIP Number...................................................25
SECTION 2.14. Deposit of Moneys..............................................25
SECTION 2.15. Book-Entry Provisions for Global Securities....................25
SECTION 2.16. Registration of Transfers and Exchanges........................26
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.............................................30
SECTION 3.02. Selection of Securities To Be Redeemed.........................30
SECTION 3.03. Notice of Redemption...........................................30
SECTION 3.04. Effect of Notice of Redemption.................................31
SECTION 3.05. Deposit of Redemption Price....................................31
SECTION 3.06. Securities Redeemed in Part....................................32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities..........................................32
SECTION 4.02. Maintenance of Office or Agency................................32
SECTION 4.03. Transactions with Affiliates...................................32
-i-
<PAGE>
SECTION 4.04. Limitation on Indebtedness.....................................33
SECTION 4.05. Disposition of Proceeds of Asset Sales.........................34
SECTION 4.06. Limitation on Restricted Payments..............................36
SECTION 4.07. Corporate Existence............................................38
SECTION 4.08. [Intentionally Omitted]........................................38
SECTION 4.09. Notice of Defaults.............................................38
SECTION 4.10. [Intentionally Omitted]........................................39
SECTION 4.11. Compliance Certificate.........................................39
SECTION 4.12. Provision of Financial Information.............................39
SECTION 4.13. [Intentionally Omitted]........................................39
SECTION 4.14. Change of Control..............................................39
SECTION 4.15. Limitation on Senior Subordinated Indebtedness.................40
SECTION 4.16. Limitations on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries..............................40
SECTION 4.17. Designation of Unrestricted Subsidiaries.......................41
SECTION 4.18. Limitation on Liens............................................42
SECTION 4.19. Guarantee of Notes by Restricted Subsidiaries..................42
SECTION 4.20. Limitation on the Sale or Issuance of Equity Interests of
Restricted Subsidiaries........................................42
ARTICLE FIVE
MERGERS; SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Sale of Assets, etc...................................43
SECTION 5.02. Successor Corporation Substituted..............................44
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default..............................................44
SECTION 6.02. Acceleration...................................................46
SECTION 6.03. Other Remedies.................................................46
SECTION 6.04. Waiver of Past Default.........................................47
SECTION 6.05. Control by Majority............................................47
SECTION 6.06. Limitation on Suits............................................47
SECTION 6.07. Rights of Holders To Receive Payment...........................48
SECTION 6.08. Collection Suit by Trustee.....................................48
SECTION 6.09. Trustee May File Proofs of Claim...............................48
SECTION 6.10. Priorities.....................................................48
SECTION 6.11. Undertaking for Costs..........................................49
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee..............................................49
SECTION 7.02. Rights of Trustee..............................................50
SECTION 7.03. Individual Rights of Trustee...................................51
SECTION 7.04. Trustee's Disclaimer...........................................51
-ii-
<PAGE>
SECTION 7.05. Notice of Defaults..............................................51
SECTION 7.06. Reports by Trustee to Holders...................................52
SECTION 7.07. Compensation and Indemnity......................................52
SECTION 7.08. Replacement of Trustee..........................................53
SECTION 7.09. Successor Trustee by Merger, etc................................54
SECTION 7.10. Eligibility; Disqualification...................................54
SECTION 7.11. Preferential Collection of Claims Against Company...............54
ARTICLE EIGHT
SUBORDINATION OF SECURITIES
SECTION 8.01. Securities Subordinated to Senior Indebtedness..................54
SECTION 8.02. No Payment on Securities in Certain Circumstances...............55
SECTION 8.03. Payment Over of Proceeds upon Dissolution, etc..................56
SECTION 8.04. Subrogation.....................................................57
SECTION 8.05. Obligations of Company Unconditional............................57
SECTION 8.06. Notice to Trustee...............................................57
SECTION 8.07. Reliance on Judicial Order or Certificate of Liquidating Agent..58
SECTION 8.08. Trustee's Relation to Senior Indebtedness.......................58
SECTION 8.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.......................59
SECTION 8.10. Holders Authorize Trustee To Effectuate Subordination of
Securities......................................................59
SECTION 8.11. This Article Not To Prevent Events of Default...................59
SECTION 8.12. Trustee's Compensation Not Prejudiced...........................59
SECTION 8.13. No Waiver of Subordination Provisions...........................59
SECTION 8.14. Subordination Provisions Not Applicable to Money Held in
Trust for Holders; Payments May Be Paid Prior to Dissolution....60
SECTION 8.15. Acceleration of Securities......................................60
ARTICLE NINE
DISCHARGE OF INDENTURE
SECTION 9.01. Termination of Company's Obligations............................60
SECTION 9.02. Application of Trust Money......................................61
SECTION 9.03. Repayment to Company............................................62
SECTION 9.04. Reinstatement...................................................62
ARTICLE TEN
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.01. Without Consent of Holders.....................................62
SECTION 10.02. With Consent of Holders........................................63
SECTION 10.03. Compliance with Trust Indenture Act............................64
SECTION 10.04. Record Date for Consents and Effect of Consents................64
SECTION 10.05. Notation on or Exchange of Securities..........................65
SECTION 10.06. Trustee To Sign Amendments, etc................................65
-iii-
<PAGE>
ARTICLE ELEVEN
GUARANTEE
SECTION 11.01. Unconditional Guarantee.......................................65
SECTION 11.02. Severability..................................................66
SECTION 11.03. Release of a Guarantor........................................66
SECTION 11.04. Limitation of Guarantor's Liability...........................66
SECTION 11.05. Contribution..................................................67
SECTION 11.06. Execution of Security Guarantee...............................67
SECTION 11.07. Subordination of Subrogation and Other Rights.................67
ARTICLE TWELVE
SUBORDINATION OF GUARANTEE
SECTION 12.01. Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness..................................................68
SECTION 12.02. No Payment on Guarantees in Certain Circumstances.............68
SECTION 12.03. Payment Over of Proceeds upon Dissolution, etc................69
SECTION 12.04. Subrogation...................................................70
SECTION 12.05. Obligations of Guarantors Unconditional.......................70
SECTION 12.06. Notice to Trustee.............................................71
SECTION 12.07. Reliance on Judicial Order or Certificate of Liquidating
Agent.........................................................72
SECTION 12.08. Trustee's Relation to Guarantor Senior Indebtedness...........72
SECTION 12.09. Subordination Rights Not Impaired by Acts or Omissions
of the Guarantors or Holders of Guarantor Senior
Indebtedness..................................................72
SECTION 12.10. Holders Authorize Trustee To Effectuate Subordination of
Guarantee.....................................................72
SECTION 12.11. This Article Not To Prevent Events of Default.................73
SECTION 12.12. Trustee's Compensation Not Prejudiced.........................73
SECTION 12.13. No Waiver of Guarantee Subordination Provisions...............73
SECTION 12.14. Payments May Be Paid Prior to Dissolution.....................73
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. Trust Indenture Act Controls..................................73
SECTION 13.02. Notices.......................................................74
SECTION 13.03. Communications by Holders with Other Holders..................75
SECTION 13.04. Certificate and Opinion as to Conditions Precedent............75
SECTION 13.05. Statements Required in Certificate............................75
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.....................76
SECTION 13.07. Governing Law.................................................76
SECTION 13.08. No Recourse Against Others....................................76
SECTION 13.09. Successors....................................................76
SECTION 13.10. Counterpart Originals.........................................76
SECTION 13.11. Severability..................................................76
SECTION 13.12. No Adverse Interpretation of Other Agreements.................76
SECTION 13.13. Legal Holidays................................................76
-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
EXHIBIT F Form of Transfer Certificate for Regulation S Transfers..........F-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 March 1, 1998, 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, as amended as of July
3, 1997, and January 29, 1998, by and among the
<PAGE>
-2-
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
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.
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"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 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, (B) with respect to foreign joint ventures, to the extent that
cash is available for distribution (without restriction and not committed for
other purposes) during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution, but is not distributed due to adverse tax or
other business reasons, such cash shall be included and (C) 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
<PAGE>
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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).
"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 Indebt-
<PAGE>
-7-
edness 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.
"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 8 3/4% Senior Subordinated Notes due
2008, 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 March 1, 2008.
<PAGE>
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"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.
"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 144A Global Securities,
Regulation S Global Securities or IAI 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
<PAGE>
-9-
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 9% 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 Securities.
"IAI Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities transferred after
the Issue Date 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
<PAGE>
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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.
"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 8 3/4% Senior Subordinated Notes due
2008, 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
March 1 and September 1 of each year, commencing September 1, 1998.
"Interest Record Date" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the
February 15 or August 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
<PAGE>
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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 Securities, March 5,
1998.
"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.
"9% Notes" means the 9% Senior Subordinated Notes due 2007, Series B,
of the Company.
"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
<PAGE>
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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;
(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
<PAGE>
-13-
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.
"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 Subsidi-
<PAGE>
-14-
ary; (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 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 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
Section 4.04, and (IV) such Liens attach within 90 days of such purchase,
construction, installa-
<PAGE>
-15-
tion, 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.
"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 February
27, 1998 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
<PAGE>
-16-
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.
"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 March 5, 1998 by and among the Company, the Guarantors and
the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.
"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.
<PAGE>
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"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.
"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 9% 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, the 9% 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
<PAGE>
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"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.
"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 9% 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, the 9% 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
<PAGE>
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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.
"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.
<PAGE>
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"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.
"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;
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(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.
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 in reliance on Regulation S 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. Securities issued in exchange for interests in a Global
Security pursuant to Section 2.16 may be issued in the form of Physical
Securities in substantially the form set forth in Exhibit A.
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.
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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 $200,000,000, (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
$200,000,000, except as provided in Sections 2.07 and 2.08.
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
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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 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,
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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 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.
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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.
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,
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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.
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 De-
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fault has occurred and is continuing and the Registrar has received a request
from the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.
(d) 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.
(e) 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.
(f) 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
(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:
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(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
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and a transferor
certificate for Regulation S transfers substantially in the form
of Exhibit F 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
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
(F) 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:
(A) certification, substantially in the form of Exhibit D hereto,
that such Physical Security is being transferred (I) to a QIB,
(II) to an Accredited Investor or (III) in an offshore
transaction in reliance on Regulation S and, with respect to (II)
or (III), 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
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(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, IAI
Global Security or Regulation S 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, an IAI Global Security or Regulation S
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) Any Person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Physical Security;
provided, however, that prior to the Registration, a transferee that is a
QIB or Institutional Accredited Investor may not exchange a beneficial
interest in a Global Security for a Physical Security. 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:
(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
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(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.
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
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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.
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.
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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 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.
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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
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 Transac-
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tion 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 $40.0 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 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, the 9% Notes, and other
Indebtedness outstanding on the Issue Date;
(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 $450.0 million at any one time outstanding; provided,
however, that such $450.0 million shall be reduced (without duplication) by
the amount of any repayment of Indebtedness under the Amended Credit
Facility pursuant to Section 4.05;
(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
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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.
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
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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 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
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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;
(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) beginning October 1, 1997 and ending on the last day of the most
recent fiscal quarter imme-
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diately 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 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) 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
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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 $75.0 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.
(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.
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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 26, 1998.
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 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 un-
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der 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, 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
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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:
(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
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(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: (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. Notwith-
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standing 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.
(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,
un-
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less (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 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.
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);
(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);
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(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 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
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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.
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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
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(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;
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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:
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(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.
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(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
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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
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 be 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.
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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;
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(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
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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
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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,
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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
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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.
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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 Guarantor
Senior Indebtedness or the trustee or agent acting on behalf of such Designated
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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
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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>
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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.
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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.
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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-
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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>
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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.
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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 and 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.,
DOMINION TEXTILE (USA) INC.
POLY-BOND INC.
DOMTEX INDUSTRIES INC.
LORETEX CORPORATION
as Guarantors
By: /s/ Jerry Zucker
--------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
HARRIS TRUST AND SAVINGS BANK, as Trustee
By:
--------------------------------------
Name:
Title:
<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:
------------------------------------
Name:
Title:
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.,
DOMINION TEXTILE (USA) INC.
POLY-BOND INC.
DOMTEX INDUSTRIES INC.
LORETEX CORPORATION
as Guarantors
By:
----------------------------------
Name:
Title:
HARRIS TRUST AND SAVINGS BANK, as Trustee
By: /s/ J. Bartolini
----------------------------------
Name: J. Bartolini
Title: 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) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) 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 (F) 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), (E) OR (F) 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 CLAUSE (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.
8 3/4% Senior Subordinated Note
due March 1, 2008, 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 March 1, 2008.
Interest Payment Dates: March 1 and September 1, commencing on
September 1, 1998.
Interest Record Dates: February 15 and August 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 8 3/4% Senior Subordinated Notes due March 1, 2008,
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.
8 3/4% Senior Subordinated Note
due March 1, 2008, 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
March 5, 1998. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing September 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
March 1, 1998 (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 8 3/4% Senior Subordinated
Notes due 2008, Series A (the "Initial Securities"), limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
A-4
<PAGE>
$200,000,000, 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 March 1, 2003, 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 March 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003 104.375%
2004 102.917%
2005 101.458%
2006 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 March 1,
2001, 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 108.75% 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 8 3/4% Senior Subordinated Note due 2008, 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.
8 3/4% Senior Subordinated Note
due March 1, 2008, 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 March 1, 2008.
Interest Payment Dates: March 1 and September 1, commencing on
September 1, 1998.
Interest Record Dates: February 15 and August 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 8 3/4% Senior Subordinated Notes due March 1, 2008,
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.
8 3/4% Senior Subordinated Note
due March 1, 2008, 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
March 5, 1998. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing September 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
March 1, 1998 (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 8 3/4% Senior Subordinated
Notes due 2008, Series B (the "Unrestricted Securities"), limited (except as
otherwise provided in the Indenture) in aggregate principal
B-3
<PAGE>
amount to $200,000,000, which may be issued under the Indenture. The Securities
include the 8 3/4% Senior Subordinated Notes due 2008, 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 March 1, 2003, 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 March 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
--- ----------
<S> <C>
2003 104.375%
2004 102.917%
2005 101.458%
2006 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 March 1,
2001, 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 108.75% 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.,
DOMINION TEXTILE (USA) INC.
Poly-Bond Inc.
DOMTEX INDUSTRIES INC.
LORETEX CORPORATION
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: 8 3/4% Senior Subordinated Notes due 2008
(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 8 3/4% Senior Subordinated Notes due 2008 (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, (e) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act or (f) pursuant to
any other available ex-
E-1
<PAGE>
emption from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of 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 letter 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), (e) or (f) 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 F
---------
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
Polymer Group, Inc.
c/o Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administrator
Re: POLYMER GROUP, INC.. (the "Company")
8 3/4% Senior Subordinated Notes due 2008, Series A and
8 3/4% Senior Subordinated Notes due 2008, Series B (the "Securities")
- ----------------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $____________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
F-1
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
--------------------------
[Authorized Signatory]
F-2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
among
POLYMER GROUP, INC.,
THE GUARANTORS NAMED HEREIN
and
CHASE SECURITIES INC.
Dated March 5, 1998
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
March 5, 1998, 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, Chicopee, Inc., a Delaware corporation, Dominion Textile
(USA) Inc., a Delaware corporation, Poly-Bond Inc., a Delaware corporation,
DomTex Industries Inc., a New York corporation, and Loretex Industries, a New
York 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 February 27, 1998, by and among the Issuers and the
Initial Purchaser (the "Purchase Agreement") relating to the sale by the Issuers
to the Initial Purchaser of $200,000,000 aggregate principal amount of the
Company's 8 3/4% Senior Subordinated Notes due 2008 (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 210th 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 90 days prior to the 210th day
after the Closing Date, then the Effectiveness Date in respect thereof shall be
the 90th 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 90th day after such Filing
Date.
Effectiveness Period: See Section 3.
<PAGE>
-2-
Event Date: See Section 4.
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 90th 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 90th 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 holder of 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 March 1, 1998, 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.
<PAGE>
-3-
Participant: See the first paragraph of Section 7.
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>
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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 35 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>
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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>
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(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>
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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>
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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>
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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>
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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>
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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>
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(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 circumstances
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>
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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>
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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>
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(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/ 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>
-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
CHICOPEE HOLDINGS, INC.
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
<PAGE>
-3-
CHICOPEE, INC.
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
DOMINION TEXTILE (USA) INC.
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
POLY-BOND INC.
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
DOMTEX INDUSTRIES INC.
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
LORETEX CORPORATION
By: /S/ JERRY ZUCKER
----------------------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
CHASE SECURITIES INC.
By: /S/ DAVID FASS
----------------------------------------
Name: David Fass
Title:
<PAGE>
POLYMER GROUP, INC.
$200,000,000
8 3/4% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
------------------
February 27, 1998
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
$200,000,000 aggregate principal amount of its 8 3/4% Senior Subordinated Notes
due 2008 (the "Notes"). The Notes will be issued pursuant to an Indenture to be
dated as of March 1, 1998 (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 nonresident organization,
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, Chicopee Holdings, B.V., a Delaware Corporation, Dominion
Textile (USA) Inc., a Delaware corporation, Poly-Bond Inc., a Delaware
corporation, DomTex Industries Inc., a New York corporation and Loretex
Corporation, a New York 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 memoran-
<PAGE>
-2-
dum dated February 19, 1998 (the "Preliminary Offering Memorandum") and an
offering 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
the documents incorporated therein by reference and 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
(the "Refinancing") of approximately $150.9 million of the outstanding
indebtedness under the Company's existing credit facility, as amended on January
29, 1998 (the "Amended Credit Facility") and the acquisition of certain assets
and assumption of certain liabilities described in the Final Offering Memorandum
as the "Oriented Polymer Acquisition". The consummation of the Refinancing and
the Oriented Polymer Acquisition are referred to herein collectively as the
"Transaction." The net proceeds from the Offering will be used by the Company to
effect the Transaction and to pay related fees and expenses. If the Oriented
Polymer Acquisition is not consummated, the Company will apply the entire amount
of net proceeds from the Offering toward the Refinancing and general corporate
purposes.
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)
(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) Each of Ernst & Young LLP and Deloitte & Touche, LLP, S.E.N.C. 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
<PAGE>
-8-
and data included in the Final Offering Memorandum fairly presents, in all
material respects, the information purported to be shown thereby.
(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, Argentine, German, Dutch, French 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
<PAGE>
-11-
forth therein, none of the Issuers nor any of their respective affiliates
(as defined in 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, (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
or (iii) with respect to Securities sold outside the United States to non-
U.S. persons (as defined in Rule 902 under the Securities Act), engaged in
any "directed selling efforts" within the meaning of Rule 902 under the
Securities Act and the Issuers, their affiliates and any person acting on
their behalf has complied with and will implement the "offering
restriction" within the meaning of such Rule 902.
(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).
<PAGE>
-12-
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 97.5% of the principal 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 (A) within the United States 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 and (B) outside the United States
to persons other than U.S. persons in reliance on Regulation S under the
Securities Act ("Regulation S").
(c) In connection with the offer and sale of Securities in reliance on
Regulation S, the Initial Purchaser represents, warrants and agrees that:
(i) The Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act.
(ii) Such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and
<PAGE>
-13-
the Closing Date, only in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act.
(iii) Neither the Initial Purchaser nor any of its affiliates or any
other person acting on its behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S.
(iv) at or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, it will have sent to each distributor, dealer or
other person receiving a selling concession, fee or other remuneration that
purchase Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date of
original issuance of the Securities, except in accordance with
Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) The Initial Purchaser represents, warrants and agrees that (i) it
has not offered or sold and prior to the date six months after the Closing Date
will not offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 and the
Public Offers of Securities Regulations 1995 with respect to anything done by it
in relation to the Securities in, from or otherwise involving the United
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by
<PAGE>
-14-
it in connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(e) 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.
(f) 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 Cahill Gordon &
Reindel, 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
March 5, 1998, or at such 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.
<PAGE>
-15-
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;
(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
<PAGE>
-16-
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 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
<PAGE>
-17-
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;
(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;
<PAGE>
-18-
(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:
(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) The Initial Purchaser shall not 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.
<PAGE>
-19-
(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 letters
(the "Initial Letters") of Ernst & Young LLP and Deloitte & Touche, LLP,
S.E.N.C., 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.
(g) The Company shall have furnished to the Initial Purchaser letters
(the "Bring-Down Letters") of Ernst & Young LLP and Deloitte & Touche, LLP,
S.E.N.C., 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
<PAGE>
-20-
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 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
<PAGE>
-21-
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 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).
<PAGE>
-22-
(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.
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
<PAGE>
-23-
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 such
documents 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 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
<PAGE>
-24-
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 indemnifying party,
(2) the indemnified party 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
<PAGE>
-25-
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.
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
<PAGE>
-26-
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 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 sev-
<PAGE>
-27-
erally, 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
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).
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);
<PAGE>
-28-
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."
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 PRINCIPLES 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
DOMINION TEXTILE (USA) INC.
By: /s/ Jerry Zucker
-----------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
POLY-BOND INC.
By: /s/ Jerry Zucker
-----------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
DOMTEX INDUSTRIES INC.
By: /s/ Jerry Zucker
-----------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
LORETEX CORPORATION
By: /s/ Jerry Zucker
-----------------------------
Name: Jerry Zucker
Title: Chairman, President and CEO
<PAGE>
S-4
Accepted:
CHASE SECURITIES INC.
By: /s/ David Fass
-----------------------------
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
------------
Albuma S.A.
Bonlam, S.A. de C.V.
Chicopee Holdings, B.V.
Chicopee Holdings, Inc.
Chicopee, Inc.
Chicopee, B.V.
DIFCO Inc. (formerly 3427790 Canada Limited)
Dominion Textile France S.A.R.L.
Dominion Textile Mauritius Inc.
Dominion Textile (USA) Inc.
DomTex Industries Inc.
DT Acquisition Inc.
Fabrene Corp.
Fabrene Group, Inc.
Fabrene, Inc.
Fabrene Group, L.L.C.
FiberGol Corporation
FiberTech Group, Inc.
FNA Polymer Corp.
Geca Tapes B.V.
Nordlys S.A.
Nordlys UK Ltd.
PGI Polymer, Inc.
Poly-Bond Inc.
PNA Corp.
Technetics Group, Inc.
<PAGE>
ANNEX A
-------
[Form of Registration Rights Agreement]
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as of
March , 1998, 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, Chicopee, Inc., a Delaware corporation, Dominion Textile
(USA) Inc., a Delaware corporation, Poly-Bond Inc., a Delaware corporation,
DomTex Industries Inc., a New York corporation, and Loretex Industries, a New
York 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 February 27, 1998, by and among the Issuers and the
Initial Purchaser (the "Purchase Agreement") relating to the sale by the Issuers
to the Initial Purchaser of $200,000,000 aggregate principal amount of the
Company's 8 3/4% Senior Subordinated Notes due 2008 (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 210th 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 90 days prior to the 210th day
after the Closing Date, then the Effectiveness Date in respect thereof shall be
the 90th 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 90th day after such Filing
Date.
Effectiveness Period: See Section 3.
<PAGE>
-2-
Event Date: See Section 4.
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 90th 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 90th 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 holder of 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 March 1, 1998, 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.
<PAGE>
-3-
Participant: See the first paragraph of Section 7.
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 35 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>
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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>
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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 circumstances
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: _____________________________________
Name:
Title:
PGI POLYMER, INC.
By: _____________________________________
Name:
Title:
PNA CORP.
By: _____________________________________
Name:
Title:
FNA POLYMER CORP.
By: _____________________________________
Name:
Title:
FABRENE GROUP, INC.
By: _____________________________________
Name:
Title:
<PAGE>
-2-
FABRENE CORP.
By: _____________________________________
Name:
Title:
FABRENE GROUP, L.L.C.
By: _____________________________________
Name:
Title:
FIBERTECH GROUP, INC.
By: _____________________________________
Name:
Title:
TECHNETICS GROUP, INC.
By: _____________________________________
Name:
Title:
FIBERGOL CORPORATION
By: _____________________________________
Name:
Title:
CHICOPEE HOLDINGS, INC.
By: _____________________________________
Name:
Title:
<PAGE>
-3-
CHICOPEE, INC.
By: _____________________________________
Name:
Title:
DOMINION TEXTILE (USA) INC.
By: _____________________________________
Name:
Title:
POLY-BOND INC.
By: _____________________________________
Name:
Title:
DOMTEX INDUSTRIES INC.
By: _____________________________________
Name:
Title:
LORETEX CORPORATION
By: _____________________________________
Name:
Title:
CHASE SECURITIES INC.
By: _____________________________________
Name:
Title:
<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 September 27, 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 and the
Registration Rights Agreement 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>
[Execution Copy]
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of January 29, 1998, between Polymer Group,
Inc. ("PGI"); each of the other "Borrowers" identified under the caption
---
"BORROWERS" on the signature pages hereto, each of the Domestic Non-Borrower
Guarantors identified under the caption "DOMESTIC NON-BORROWER GUARANTORS" on
the signature pages hereto; each of the lenders that is a signatory hereto
identified under the caption "LENDERS" on the signature pages hereto; and THE
CHASE MANHATTAN BANK, as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
--------------------
PGI, the other Borrowers, the Domestic Non-Borrower Guarantors, the
Lenders referred to therein and the Administrative Agent are parties to a Second
Amended, Restated and Consolidated Credit Agreement dated as of July 3, 1997 (as
heretofore amended, the "Credit Agreement"), providing for the Lenders to extend
----------------
credit (by way of revolving credit loans and letters of credit) to the Borrowers
in U.S. Dollars and in certain Alternative Currencies in an amount at any time
not exceeding U.S. $325,000,000. PGI has now requested that the Lenders extend
additional credit to PGI by way of a single-draw term loan facility in U.S.
Dollars in the amount of U.S. $125,000,000 to be used by PGI to partially
finance the acquisition of assets related to the nonwovens fabric business of
Dominion Textile Inc. following consummation of the Tender Offer referred to
below. PGI, the other Borrowers, the Domestic Non-Borrower Guarantors, the
Lenders and the Administrative Agent wish to amend the Credit Agreement in order
to provide for such additional credit and in certain other respects, and,
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
-----------
Amendment No. 2, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendments. Subject to the satisfaction of the condition
----------
precedent specified in Section 5 below, but effective as of the date hereof, the
Credit Agreement shall be amended as follows:
A. Preamble. The fourth paragraph in the preamble to the Credit
--------
Agreement shall be amended by replacing the amount "U.S. $325,000,000" with the
amount "U.S. $450,000,000".
B. New Definitions. Section 1.01 of the Credit Agreement shall be
---------------
amended by inserting in their entireties the following definitions in the
appropriate alphabetical order:
"Administrative Questionnaire" means, with respect to each Lender, an
----------------------------
administrative questionnaire in the form prepared by the Administrative
Agent and
Amendment No. 2
---------------
<PAGE>
-2-
submitted to the Administrative Agent (with a copy to the Borrowers) duly
completed by such Lender.
"Applicable Revolving Credit Commitment Amount" shall mean, initially,
---------------------------------------------
U.S. $325,000,000, and thereafter, on any date, the aggregate amount to
which the Revolving Credit Commitments have been reduced hereunder pursuant
to Section 2.04 or 2.10 hereof.
"Apparel Business" shall have the meaning assigned to the term
----------------
"Apparel Fabrics Business" in the Master Separation Agreement.
"BidCo" shall mean DT Acquisition Inc., a corporation incorporated
-----
under the Canada Business Corporations Act and a Subsidiary of PGI.
"BidCo Credit Agreement" shall mean the U.S. $600,000,000 Credit
----------------------
Agreement dated as of December 17, 1997 between BidCo, the other
"Borrowers" named therein, the lenders named therein, The Chase Manhattan
Bank, as Administrative Agent, and First Union National Bank, as
Documentation Agent.
"DIFCO Business" shall have the meaning assigned to such term in the
--------------
Master Separation Agreement.
"DomTex" shall mean Dominion Textile Inc., a corporation incorporated
------
under the Canada Business Corporations Act.
"Majority Term B Loan Lenders" shall mean Term B Loan Lenders holding
----------------------------
at least 51% of the aggregate outstanding principal amount of the Term B
Loans or, prior to the Term B Loan Closing Date, at least 51% of the Term B
Loan Commitments.
"Master Separation Agreement" shall mean the Master Separation
---------------------------
Agreement dated as of January 29, 1998 among PGI, Galey & Lord
Incorporated, BidCo, DomTex, Dominion Textile International (Asia) Pte.,
Ltd., Dominion Textile International B.V. and Dominion Textile (USA) Inc.,
in substantially the form of the draft dated January 23, 1998, as the same
shall, subject to Section 9.14 hereof, be modified and supplemented and in
effect from time to time.
"Nonwovens Acquisition" shall mean the purchase or acquisition by PGI
---------------------
of the Nonwovens Business and the DIFCO Business of DomTex, which may be
effected through a purchase of assets, one or more mergers involving DomTex
or its Subsidiaries, or through the designation of DomTex and its
Subsidiaries, after the sale of the Apparel Business, as "Restricted
Subsidiaries" hereunder and under the Senior Subordinated
Amendment No. 2
---------------
<PAGE>
-3-
Notes, together with, in each case, the satisfaction of the conditions
precedent set forth in Section 7.03 hereof.
"Nonwovens Business" shall have the meaning assigned to such term in
------------------
the Master Separation Agreement.
"Principal Payment Date" shall mean each day set forth in Section 3.01
----------------------
hereof, provided, that if any such day is not a Business Day, then such
--------
Principal Payment Date shall be the next preceding Business Day.
"Reduction Date" shall mean each of the following dates: (i) the
--------------
Quarterly Date falling on or nearest to December 20, 2001, (ii) the
Quarterly Date falling on or nearest to June 20, 2002, and (iii) the
Quarterly Date falling on or nearest to December 20, 2002.
"Resulting Nonwovens Entity" shall have the meaning assigned to such
--------------------------
term in Section 7.03(a) hereof.
"Revolving Credit Commitments" shall mean, collectively, the Facility
----------------------------
A Revolving Credit Commitments and the Facility B Revolving Credit
Commitments.
"Revolving Credit Loans" shall mean, collectively, the Facility A
----------------------
Revolving Credit Loans and the Facility B Revolving Credit Loans.
"Tender Offer" shall mean the offer made by BidCo for all of the
------------
issued and outstanding shares of DomTex pursuant to an Offering Circular
sponsored by BidCo on October 29, 1997, a Notice of Extension and Variation
on November 18, 1997, a Notice of Extension and Variation on December 2,
1997, and a Notice of Extension and Variation on December 8, 1997.
"Term B Loans" shall mean the loans provided for by Section 2.01(c)
------------
hereof, which may be Base Rate Loans and/or Eurocurrency Loans.
"Term B Loans (Base Rate)" shall mean Term B Loans that are Base Rate
------------------------
Loans.
"Term B Loan Closing Date" shall mean the date on which the Term B
------------------------
Loans are made to PGI hereunder, which date may be no earlier than the Term
B Loan Effective Date and no later than the Term B Loan Commitment
Termination Date.
"Term B Loan Commitment" shall mean, for each Term B Loan Lender, the
----------------------
obligation of such Lender to make a Term B Loan to PGI on the Term B Loan
Closing Date in U.S. Dollars in an amount up to but not exceeding the
amount set opposite the
Amendment No. 2
---------------
<PAGE>
-4-
name of such Lender on Schedule XI hereof or, in the case of any Person
that becomes a Term B Loan 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 Term B Loan Commitments is U.S.
$125,000,000.
"Term B Loan Commitment Termination Date" shall mean the earlier of
---------------------------------------
(a) the date 364 days after the Tender Loan Closing Date under and as
defined in the BidCo Credit Agreement and (b) the date 180 days after the
date the Amalgamation Closing Date under and as defined in the BidCo Credit
Agreement.
"Term B Loan Effective Date" shall mean the date on which each of the
--------------------------
conditions precedent to the making of the Term B Loans specified in
Sections 7.02 and 7.03 hereof shall have been satisfied or waived.
"Term B Loans (Eurocurrency)" shall mean Term B Loans that are
---------------------------
Eurocurrency Loans.
"Term B Loan Lenders" shall mean (a) on the date hereof, the Lenders
-------------------
having Term B Loan Commitments on Schedule XI hereof and (b) thereafter,
the Lenders from time to time holding Term B Loans and Term B Loan
Commitments after giving effect to any assignments thereof permitted by
Section 12.06 hereof.
"Term B Loan Notes" shall mean the promissory notes provided for by
-----------------
Section 2.08(c) 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.
C. Revisions to Existing Definitions. Section 1.01 of the Credit
---------------------------------
Agreement shall be amended by amending the following definitions as follows:
(i) The definition of "Applicable Lending Office" shall be
-------------------------
deleted in its entirety and replaced with the following:
"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 Lender) designated in the Administrative
Questionnaire for such Type and Currency of Loan 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
Amendment No. 2
---------------
<PAGE>
-5-
Administrative Agent and the Borrowers as the office by which Loans of
such Type and Currency are to be made and maintained.
(ii) The definition of "Applicable Margin" shall be amended by
-----------------
deleting the first sentence (including the grid) in its entirety and
replacing it with the following:
"Applicable Margin" shall mean with respect to Eurocurrency Loans
-----------------
(except for Term B Loans (Eurocurrency)), Base Rate Loans (except for
Term B Loans (Base Rate)), Canadian Base Rate Loans, letter of credit
fees (as such term is used in Section 2.03(g) hereof), commitment fees
(as such term is used in Section 2.05 hereof), Term B Loans
(Eurocurrency) and Term B Loans (Base Rate) 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 Letter of
Leverage Eurocurrency Canadian Base Credit Commitment Term B Loans Term B Loans
Ratio Loans Rate Loans Fees Fees (Eurocurrency) (Base Rate)
- --------- ------------- -------------- --------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Greater than
or equal to
4.50 2.25% 1.00% 2.25% .50% 2.50% 1.25%
Greater than
or equal to
4.25 but less
than 4.50 1.75% .50% 1.75% .375% 2.25% 1.00%
Greater than
or equal to
3.75 but less
than 4.25 1.50% .25% 1.50% .375% 2.00% .75%
Greater than
or equal to
3.00 but less
than 3.75 1.25% 0% 1.25% .30% 2.00% .75%
Greater than
or equal to
2.50 but less
than 3.00 1.00% 0% 1.00% .25% 2.00% .75%
Less than
2.50 .75% 0% .75% .20% 2.00% .75%
</TABLE>
Amendment No. 2
---------------
<PAGE>
-6-
(iii) The definition of "Applicable Margin" shall be further amended
-----------------
by deleting the last paragraph in its entirety and replacing it with the
following:
"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 (except for Term B Loans
(Eurocurrency)), 1.00% for Base Rate Loans (except for Term B Loans
(Base Rate)) and Canadian Base Rate Loans, 2.25% for letter of credit
fees, .50% for commitment fees, 2.50% for Term B Loans (Eurocurrency)
and 1.25% for Term B Loans (Base Rate)) (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)".
(iv) The definition of "Commitments" shall be deleted in its
-----------
entirety and replaced with the following:
"Commitments" shall mean the Facility A Revolving Credit
-----------
Commitments, the Facility B Revolving Credit Commitments and the Term
B Loan Commitments.
(v) The definition of "Fixed Charges Ratio" shall be deleted in
-------------------
its entirety and replaced with the following:
"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 year
ending on or nearest to December 31, 1998, only the portion of Capital
Expenditures for the relevant period in excess of U.S. $40,000,000
shall be so subtracted) to (b) Debt Service for such period.
(vi) The definition of "Facility A Revolving Credit Commitment"
--------------------------------------
shall be deleted in its entirety and replaced with the following:
"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 (or,
from and after the Term B Loan Closing Date, on Schedule IX
Amendment No. 2
---------------
<PAGE>
-7-
hereto) 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 the Applicable Revolving Credit Commitment Amount.
(vii) The definition of "Facility A Revolving Credit Lenders" shall
-----------------------------------
be deleted in its entirety and replaced with the following:
"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 (or, from and after the Term B Loan Closing
Date, on Schedule IX hereto) 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.
(viii) The definition of "Facility B Revolving Credit Commitment"
--------------------------------------
shall be deleted in its entirety and replaced with the following:
"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 (or, from and after the Term B Loan Closing
Date, on Schedule X hereto) 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
Amendment No. 2
---------------
<PAGE>
-8-
be performed on such Test Date in accordance with Section 2.10(g)
hereof) the aggregate Revolving Credit Exposure shall not exceed the
Applicable Revolving Credit Commitment Amount.
(ix) The definition of "Facility B Revolving Credit Lenders" shall
-----------------------------------
be deleted in its entirety and replaced with the following:
"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 (or, from and after the Term B Loan Closing
Date, on Schedule X hereto) 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.
(x) The definition of "Interest Period" shall be deleted in its
---------------
entirety and replaced with the following:
"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 month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the
foregoing:
(i) if any Interest Period for any Revolving Credit
Loan would otherwise end after the Revolving Credit Termination
Date, such Interest Period shall end on the Revolving Credit
Termination Date;
(ii) no Interest Period for any Facility A Revolving
Credit Loan may commence before and end after any Reduction Date
unless, after giving effect thereto, the aggregate principal
amount of the Facility A Revolving Credit Loans having Interest
Periods that end after such Reduction Date shall be equal to or
less than the aggregate amount of the Facility A Revolving Credit
Commitments on such Reduction Date;
Amendment No. 2
---------------
<PAGE>
-9-
(iii) no Interest Period for any Term B Loan may commence
before and end after any Principal Payment Date applicable
thereto unless, after giving effect thereto, the aggregate
principal amount of the Term B Loans having Interest Periods that
end after such Principal Payment Date shall be equal to or less
than the aggregate principal amount of the Term B Loans scheduled
to be outstanding after giving effect to the payments of
principal required to be made on such Principal Payment Date;
(iv) 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
(v) notwithstanding clauses (i), (ii) and (iii) 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.
(xi) The definition of "Lenders" shall be deleted in its entirety
-------
and replaced with the following:
"Lenders" shall mean, collectively, the Facility A Revolving
-------
Credit Lenders, the Facility B Revolving Credit Lenders and the Term B
Loan Lenders.
(xii) The definition of "Loans" shall be deleted in its entirety
-----
and replaced with the following:
"Loans" shall mean, collectively, the Facility A Revolving Credit
-----
Loans, the Facility B Revolving Credit Loans and the Term B Loans.
(xiii) The definition of "Notes" shall be deleted in its entirety and
-----
replaced with the following:
"Notes" shall mean, collectively, the Facility A Revolving Credit
-----
Notes, the Facility B Revolving Credit Notes and the Term B Loan
Notes.
(ix) The definition of "Revolving Credit Exposure" shall be deleted
-------------------------
in its entirety and replaced with the following:
"Revolving Credit Exposure" shall mean, on any date, the sum of
-------------------------
(a) the aggregate principal amount of all Revolving Credit Loans
denominated in U.S.
Amendment No. 2
---------------
<PAGE>
-10-
Dollars outstanding on such date plus (b) the aggregate U.S. Dollar
----
Equivalent of the principal amount of all Revolving Credit Loans
denominated in Alternative Currencies outstanding on such date plus
----
(c) the aggregate amount of Letter of Credit Liabilities outstanding
on such date.
D. Classes of Loans. Section 1.03 of the Credit Agreement shall be
----------------
deleted in its entirety and replaced with the following:
"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 or a Term B
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 Eurodollar 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."
E. Loans. Section 2.01 of the Credit Agreement shall be amended as
-----
follows:
(i) Clause (A) of Section 2.01(c) of the Credit Agreement shall be
amended by deleting the reference therein to "U.S. $325,000,000" and
inserting "Applicable Revolving Credit Commitment Amount" in lieu thereof.
(ii) Section 2.01 of the Credit Agreement shall be further amended
by relettering paragraphs (c) and (d) thereof, as paragraph (d) and (e),
respectively, and inserting a new paragraph (c) as follows:
"(c) Term B Loans. Each Term B Loan Lender severally agrees, on
------------
the terms and conditions of this Agreement, to make loans to PGI on
the Term B Loan Closing Date in U.S. Dollars in an aggregate principal
amount up to but not exceeding such Lender's Term B Loan Commitment as
then in effect. After the Term B Loan Closing Date, and subject to
the terms and conditions of this Agreement, PGI may Convert Term B
Loans of one Type into Term B Loans of another Type (as provided in
Section 2.09 hereof) or Continue Term B Loans of one Type as Term B
Loans of the same Type (as provided in Section 2.09 hereof). Proceeds
of Term B Loans shall be available for any use permitted under Section
9.13 hereof."
Amendment No. 2
---------------
<PAGE>
-11-
(iii) Section 2.01 of the Credit Agreement shall be further amended
by adding the following new paragraph (f):
"(f) Treatment of Loans Outstanding under Credit Agreement. In
-----------------------------------------------------
the event that any loans under the Credit Agreement shall remain
outstanding on the Term B Loan Closing Date, then such loans shall be
continued (with new Interest Periods) as Facility A Revolving Credit
or Facility B Revolving Credit Loans (as applicable) hereunder after
such date, in the corresponding currency in which outstanding under
the Credit Agreement prior to such date and the Lenders hereunder
shall, on the Term B Loan Closing Date, take such actions, and make
such adjustments among 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, as such Commitments are set forth
on Schedules IX and X hereto, respectively. On the Term B Loan
Closing Date, PGI shall cause to be paid to each Lender party to the
Credit Agreement, all amounts that would be owing to such Lender under
Section 5.05 of the Credit Agreement as if the "Loans" of such Lender
under the Credit Agreement were being repaid on the Term B Loan
Closing Date, whether or not any such loans are actually repaid on
such date."
F. Borrowings. Section 2.02 of the Credit Agreement shall be amended
----------
by adding after the words "Facility B Revolving Credit Lender" in the second
sentence thereof the following: "or Term B Loan Lender".
G. Reduction of Commitments. Section 2.04 of the Credit Agreement
------------------------
shall be amended by deleting Section 2.04(a) of the Credit Agreement in its
entirety and replacing it with the following:
"(a) The aggregate amount of the Facility A and Facility B
Revolving Credit Commitments shall be automatically reduced to zero on
the Revolving Credit Termination Date. The Term B Loan Commitments
shall be automatically terminated on the earlier of (i) the Term B
Loan Closing Date (following the making of the loans under Section
2.01(c) hereof to be made on such Date) and (ii) the Term B Loan
Commitment Termination Date.
The aggregate amount of the Facility A Revolving Credit
Commitments (to the extent not previously reduced) shall be
automatically reduced on each Reduction Date set forth below to the
amount set forth opposite the Reduction Date set forth below:
Amendment No. 2
---------------
<PAGE>
-12-
<TABLE>
<CAPTION>
Facility A
Reduction Date Reduced Amount
-------------- --------------
<S> <C>
December 20, 2001 U.S. $270,000,000
June 20, 2002 U.S. $245,000,000
December 20, 2002 U.S. $220,000,000
</TABLE>
Upon any such reduction, PGI shall make any necessary prepayments in
order that the aggregate outstanding principal amount of the Facility
A Revolving Credit Loans shall not exceed the then-outstanding amount
of the Facility A Revolving Credit Commitments, such prepayments to be
applied first to Facility A Revolving Credit Loans denominated in U.S.
-----
Dollars, and second to Facility A Revolving Credit Loans denominated
------
in Dutch Guilders."
H. Commitment Fee. (i) Section 2.05 of the Credit Agreement shall
--------------
be amended by adding the following after the words "Effective Date" in the first
sentence thereof: "(and the Term B Loan Closing Date)"
(ii) Section 2.05 of the Credit Agreement shall be further amended by
adding the following at the end thereof:
"Notwithstanding anything herein to the contrary, PGI shall pay to the
Administrative Agent for account of each Term B Loan Lender, a commitment
fee on the daily average unused amount of such Lender's Term B Loan
Commitment for the period from and including the date of Amendment No. 2
hereto to but not including the earlier of the Term B Loan Closing Date and
the Term B Loan Commitment Termination Date at a rate per annum equal to
.50%. Such fees shall be payable in arrears in U.S. Dollars on each
Quarterly Date and on the earlier of the Term B Loan Closing Date and the
Term B Loan Commitment Termination Date".
I. Notes. (i) Section 2.08 of the Credit Agreement shall be amended
-----
by deleting paragraphs (a) and (b) in their entireties and replacing them with
the following:
"(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, (i) from the date hereof until the Term B Loan Closing Date,
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, and
(ii) from and after the Term B Loan Closing Date, by a single promissory
note of each Facility A Revolving Credit Borrower substantially in the form
of Exhibit A-1 hereto, dated the Term B Loan Closing Date, in each case
payable to such
Amendment No. 2
---------------
<PAGE>
-13-
Lender in a principal amount equal (x) in the case of notes issued pursuant
to clause (i) above, to the amount of its Facility A Revolving Credit
Commitment as originally in effect on the date hereof (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 and (y) in the case of notes
issued pursuant to clause (ii) above, to the amount of its Facility A
Revolving Credit Commitment as originally in effect on the Term B Loan
Closing Date (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, (i) from the date
hereof until the Term B Loan Closing Date, by a single promissory note of
Fabrene substantially in the form of Exhibit A-2 hereto, dated the date
hereof, and (ii) from and after the Term B Loan Closing Date, by a single
promissory note of Fabrene substantially in the form of Exhibit A-2 hereto,
dated the Term B Loan Closing Date, in each case 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."
(ii) Section 2.08 of the Credit Agreement shall be further amended
by relettering paragraphs (c) and (d) thereof, as paragraph (d) and (e),
respectively, and inserting a new paragraph (c) as follows:
"(c) The Term B Loan made by each Term B Loan Lender to PGI shall be
evidenced by a single promissory note of PGI, substantially in the form of
Exhibit A-3 hereto, dated the date hereof, payable to such Lender in a
principal amount equal to the amount of its Term B Loan Commitment as
originally in effect, and otherwise duly completed."
J. Prepayments. Section 2.10 of the Credit Agreement shall be
-----------
amended by deleting paragraph (e) in its entirety and replacing it with the
following:
(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 required prepayment and reduction shall be apportioned
between the Term B Loans and the Revolving Credit Loans (and Letter of
Credit Liabilities) ratably in accordance with the respective then-
outstanding aggregate principal amounts of the Term B Loans and the
Revolving Credit Commitments with the amounts so apportioned to be
applied to the prepayment of the respective Loans of each such Class
(and to provide cover for Letter of Credit Liabilities and to the
reduction of
Amendment No. 2
---------------
<PAGE>
-14-
Revolving Credit Commitments), such reductions of Revolving Credit
Commitments, and prepayments of the Revolving Credit Loans, to be
applied first to the reduction of Facility A Revolving Credit
-----
Commitments (and to the prepayment first of Facility A Revolving
Credit Loans denominated in U.S. Dollars, second to the prepayment of
Facility A Revolving Credit Loans denominated in Dutch Guilders and
third to provide cover for Letter of Credit Liabilities), and second,
------
after all outstanding Facility A Revolving Credit Commitments have
been reduced to zero (and all Facility A Revolving Credit Loans paid
in full and cover for all Letter of Credit Liabilities provided), to
the reduction of Facility B Revolving Credit Commitments (and to the
prepayment of Facility B Revolving Credit Loans), provided that to the
--------
extent any such required reduction of Revolving Credit Commitments
shall exceed the then-outstanding aggregate principal amount of
Revolving Credit Loans (and Letter of Credit Liabilities), such excess
shall be applied to the prepayment of Term B Loans, and
(ii) in the case of paragraph (b) above, the amount of the
required prepayment and reduction shall be apportioned between the
Term B Loans and the Revolving Credit Loans (and Letter of Credit
Liabilities) ratably in accordance with the respective then-
outstanding aggregate principal amounts of the Term B Loans and the
Revolving Credit Commitments with the amounts so apportioned to be
applied to the prepayment of the Term B Loans and to the prepayment of
the Revolving Credit Loans (to provide cover for Letter of Credit
Liabilities), but not to the reduction of the Revolving Credit
Commitments, such prepayments to the Revolving Credit Loans 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, third to the provision of cover for Letter of Credit
-----
Liabilities and fourth to Facility B Revolving Credit Loans.
------
Notwithstanding anything herein to the contrary, any Term B Loan Lender
shall have the option to forego a prepayment of any Term B Loan at its sole
discretion, and in any such case, the amount of any such foregone
prepayment will be applied pro rata to the outstanding Term B Loans of the
Term B Loan Lenders who have not foregone such prepayment; provided, in the
--------
event that, with respect to any such prepayment, each Term B Loan Lender
shall forego such prepayment, the amount of such foregone prepayment will
be applied pro rata to the outstanding Revolving Credit Loans (and Letter
of Credit Liabilities) of the Revolving Credit Lenders (and, in the case of
any such prepayment contemplated by paragraphs (a), (c) or (d) above, to
the reduction of the Revolving Credit Commitments), all in accordance with
and subject to the priorities set forth in clauses (i) and (ii) above."
Amendment No. 2
---------------
<PAGE>
-15-
K. Amortization of Term B Loans. Section 3.01 of the Credit
----------------------------
Agreement shall be amended by adding the following new paragraph (c):
"(c) PGI hereby promises to pay to the Administrative Agent in U.S.
Dollars for account of the Term B Loan Lenders the following aggregate
principal amounts on the following Principal Payment Dates:
<TABLE>
<CAPTION>
Principal Payment Date Amount of Payment
---------------------- -----------------
<S> <C>
June 20, 1998 U.S. $ 500,000
December 20, 1998 U.S. $ 500,000
June 20, 1999 U.S. $ 500,000
December 20, 1999 U.S. $ 500,000
June 20, 2000 U.S. $ 500,000
December 20, 2000 U.S. $ 500,000
June 20, 2001 U.S. $ 500,000
December 20, 2001 U.S. $ 500,000
June 20, 2002 U.S. $ 500,000
December 20, 2002 U.S. $ 500,000
June 20, 2003 U.S. $ 500,000
December 20, 2003 U.S. $ 500,000
June 20, 2004 U.S. $29,750,000
December 20, 2004 U.S. $29,750,000
June 20, 2005 U.S. $29,750,000
December 20, 2005 U.S. $29,750,000"
</TABLE>
L. Limitation of Eurodollar Loans. Section 5.02 of the Credit
------------------------------
Agreement shall be amended by deleting Section 5.02(b) in its entirety and
replacing it with the following:
"(b) if the related Loans are Facility A Revolving Credit Loans, the
Majority Facility A Revolving Credit Lenders determine or, if the related
Loans are Term B Loans, the Majority Term B Loan Lenders determine (in each
case, 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
Amendment No. 2
---------------
<PAGE>
-16-
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;"
M. Conditions. Section 7.02 of the Credit Agreement shall be deleted
----------
in its entirety and replaced with the following:
"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 and the
borrowing to be made on the Term B Loan Closing Date) 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).
Notwithstanding anything herein to the contrary, for purposes of Loans
to be made on the Term B Loan Closing Date, any determination to be made
that 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 financial statements referred
to in Section 8.02 hereof shall be made only by the Administrative Agent."
Amendment No. 2
---------------
<PAGE>
-17-
N. Additional Conditions. Section 7 of the Credit agreement shall be
---------------------
amended by adding the following new Section 7.03:
"7.03 Term B Loan Closing Date. Without in any way limiting the
------------------------
applicability of Section 7.02 hereof, the obligation of each Term B Loan
Lender to make its Term B Loan on the Term B Loan Closing Date is subject
to the satisfaction of the following conditions precedent or, as
applicable, to the receipt by the Administrative Agent of the following
documents, in each case in a manner in form and substance satisfactory to
the Administrative Agent:
(a) Consents. All consents necessary for DomTex and each of
--------
its Subsidiaries (or, in the event that the Nonwovens Acquisition is
to be consummated in a manner which involves the assets constituting
the Nonwovens Business or the DIFCO Business of DomTex being owned or
held by one or more entities other than DomTex or any of its
Subsidiaries (each such other entity, a "Resulting Nonwovens Entity"),
--------------------------
all consents necessary for the Resulting Nonwovens Entities and each
of their Subsidiaries) to become "Restricted Subsidiaries" under the
Senior Subordinated Notes Indenture and the Credit Agreement shall
have been obtained.
(b) Guarantees; Restricted Subsidiaries. Domestic Non-Borrower
-----------------------------------
Guaranty Agreements shall have been obtained from DomTex and each of
its Subsidiaries, or, as applicable, from the Resulting Nonwovens
Entities and each of their Subsidiaries; provided, that the foregoing
--------
shall only apply in the case of any such entity that is not
incorporated or otherwise formed under the laws of the United States
of America or any of its states if the Majority Lenders reasonably
determine (in consultation with PGI) that such entity may Guarantee
the obligations hereunder without adverse tax consequences under
Section 956 of the Code. DomTex and each of its Subsidiaries, or, as
applicable, the Resulting Nonwovens Entities and each of their
Subsidiaries, shall be "Restricted Subsidiaries" under the Senior
Subordinated Notes Indenture and the Credit Agreement.
(c) Corporate Documents. Certified copies of the charter and
-------------------
by-laws (or equivalent documents) of each Group Member (including
DomTex, or, as applicable, the Resulting Nonwovens Entities) 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
Amendment No. 2
---------------
<PAGE>
-18-
Group Member from time to time in connection with the transactions
contemplated by the Tender Offer and the Nonwovens Acquisition (and
the Administrative Agent and each Lender may conclusively rely on such
certificate until it receives notice in writing from such Group
Member).
(d) Officer's Certificate. A certificate of a senior financial
---------------------
officer of PGI, dated the Term B Loan Closing Date, to the effect set
forth in paragraphs (a) and (b) of the first sentence of Section 7.02
hereof.
(e) Opinions of Counsel to the Group Members. Opinions, dated
----------------------------------------
the Term B Loan Closing Date, of Kirkland & Ellis, special New York
counsel to the Group Members, covering matters covered by the opinions
of Kirkland & Ellis delivered in connection with the Credit Agreement
(including, without limitation, with respect to the new Group
Members), and in each case covering such other matters as the
Administrative Agent or any Lender may reasonably request, including,
without limitation, matters related to the Security Documents (and
each Obligor hereby instructs such counsel to deliver each such
opinion to the Lenders and to the Administrative Agent).
(f) Additional Security Documents. The Administrative Agent
-----------------------------
shall have received the following:
(i) subject to the exclusions set forth in Section
9.16 hereof, appropriate security agreements, pledge agreements,
mortgages and other instruments duly executed and delivered by
whichever of DomTex, the Resulting Nonwovens Entities or any of
their Subsidiaries that is an Obligor hereunder, such that the
Administrative Agent shall have a lien or mortgage on all of the
Property of each such entity for the benefit of the Lenders
hereunder as collateral security for the obligations of the
Obligors hereunder, in each case covering such matters as shall
be requested by the Administrative Agent and in each case in form
and substance satisfactory to the Administrative Agent;
(ii) all necessary modifications or confirmations to
the Security Documents in effect on the Term B Loan Closing Date
duly executed and delivered so as to ensure the continued
effectiveness of the security interests created thereby and the
spreading of the liens created thereby to cover the additional
obligations to be incurred by the Obligors on the Term B Loan
Closing Date, in each case covering such matters as shall be
requested by the Administrative Agent and in each case in form
and substance satisfactory to the Administrative Agent; and
Amendment No. 2
---------------
<PAGE>
-19-
(iii) evidence that such other action (including
opinions of counsel and, in the case of real property, obtaining
appropriate mortgagee title insurance policies) as shall be
necessary to perfect or record the Liens contemplated by the
foregoing clauses (i) and (ii) under applicable law shall have
been taken.
Without limiting the generality of the foregoing, the Resulting
Nonwovens Entity that owns the DIFCO Business shall, on the Term B
Loan Closing Date, execute and deliver to the Administrative Agent an
intercompany note of the kind contemplated by Section 9.08(e) hereof
in an amount and in form and substance satisfactory to the
Administrative Agent and such Resulting Nonwovens Entity shall, within
60 days following the Term B Loan Closing Date, grant to the
Administrative Agent security in substantially all of its assets to
secure such intercompany note and (within such 60 day period) execute
and deliver to the Administrative Agent all security and other
agreements and documents necessary to effect such grant.
(g) Notes. The Facility A Revolving Credit Notes described in
-----
clause (ii) of Section 2.08(a) hereof, the Facility B Revolving Credit
Notes described in clause (ii) of Section 2.08(b) hereof and the Term
B Loan Notes shall have been duly completed and executed.
(h) Nonwovens Acquisition. The Nonwovens Acquisition shall be
---------------------
consummated (concurrently with the borrowing to be made on the Term B
Loan Closing Date) in a manner that is in form and substance
satisfactory to the Majority Lenders and as contemplated by the Master
Separation Agreement and any merger, asset purchase or other agreement
to be executed in connection with the Nonwovens Acquisition shall be
in form and substance satisfactory to the Majority Lenders. The
foregoing shall include, without limitation, the tender and retirement
of all (other than up to U.S. $6,000,0000 thereof) of (i) the 9-1/4%
Guaranteed Senior Notes due April 1, 2006 issued by Dominion Textile
(USA) Inc. and (ii) the 8-7/8% Guaranteed Senior Notes due November 1,
2003 issued by Dominion Textile (USA) Inc and the acquisition by BidCo
of all equity interests of DomTex (including options and shares of
preferred stock of any class) not acquired in the Tender Offer.
(i) Payment of Certain Fees and Expenses. All amounts owing to
------------------------------------
Lenders under the Credit Agreement as in effect immediately prior to
the Term B Loan Closing Date (including, without limitation, all
amounts owing in respect of principal, accrued and unpaid interest and
fees and amounts owing pursuant to
Amendment No. 2
---------------
<PAGE>
-20-
Section 5.05 hereof) shall have been paid to such Lenders in full in
the manner contemplated by Section 2.01(d) hereof.
(j) Schedule of Liabilities. A schedule of liabilities (as
-----------------------
contemplated by Section 8.12 hereof) being assumed by PGI or any of
its Subsidiaries in connection with the Nonwovens Acquisition (or of
liabilities that are on the books of any Subsidiaries being acquired
by PGI or any of its Subsidiaries in such connection) shall have been
attached hereto as Schedule XII and such Schedule XII shall be in form
and substance satisfactory to the Administrative Agent.
(k) Other Documents. Such other documents as the Administrative
---------------
Agent, any Lender or special New York counsel to Chase may reasonably
request."
O. Material Agreements and Liens. Section 8.12 of the Credit
-----------------------------
Agreement shall be deleted in its entirety and replaced with the following:
"8.12 Material Agreements and Liens.
(a) (i) 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) and (ii) Part A
of Schedule XII hereto is a complete and correct list, as of the Term B
Loan Closing Date (immediately after giving effect to the transactions
contemplated to occur on the Term B Loan Closing Date), of each credit
agreement, loan agreement, indenture, purchase agreement, 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 (or, in the case of clause (ii) above, any Resulting Nonwovens
Entity), 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 or
Schedule XII (as applicable).
(b) (i) 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) and (ii) Part B
of Schedule XII hereto is a complete and correct list, as of the Term B
Loan Closing Date (immediately after giving effect to the transactions
contemplated to occur on the Term B Loan Closing 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 (or,
in the case of clause (ii) above, any
Amendment No. 2
---------------
<PAGE>
-21-
Resulting Nonwovens Entity), 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 or Schedule
XII (as applicable)."
P. Prohibition of Fundamental Changes. Section 9.05(d)(ii) of the
----------------------------------
Credit Agreement shall be deleted in its entirety and replaced with the
following:
"(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; provided, however, that no transfer of shares of stock
--------
of any Resulting Nonwovens Entity that is not incorporated or otherwise
formed under the laws of the United States of America or any of its states
shall be permitted if any such transfer has the result that the shares of
any such Resulting Nonwovens Entity can not be pledged to the
Administrative Agent under the Security Documents and hereunder (by reason
of the adverse tax consequences contemplated by Section 9.16(b) hereof);"
Q. Limitation on Liens. Sections 9.06(a) and 9.06(b) of the Credit
-------------------
Agreement shall be deleted in their entireties and replaced with the following:
"(a) Liens created pursuant to the Security Documents and Liens
contemplated by Section 9.08(e)(z) hereof;
(b) Liens in existence on the date hereof and listed in Part B of
Schedule II hereto and Liens in existence on the Term B Loan Closing Date
(immediately after giving effect to the transactions contemplated to occur
on the Term B Loan Closing Date) and listed in Part B of Schedule XII
hereto;"
R. Indebtedness. Section 9.07(b) of the Credit Agreement shall be
------------
deleted in its entirety and replaced with the following:
"(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) and Indebtedness in existence on the Term B
Loan Closing Date (immediately after giving effect to the transactions
contemplated to occur on the Term B Loan Closing Date) and listed in Part A
of Schedule XII hereto;"
S. Investments. Sections 9.08(d) and 9.08(e) of the Credit Agreement
-----------
shall be deleted in their entireties and replaced with the following:
Amendment No. 2
---------------
<PAGE>
-22-
"(d) Investments by any Group Member in any Wholly Owned Restricted
Subsidiary (other than in Bonlam, Fabrene or their respective Subsidiaries
and other than any Resulting Nonwovens Entity that is not incorporated or
otherwise formed under the laws of the United States of America or any of
its states, 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, (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 and (z) in the case of any Resulting
Nonwovens Entity that is not incorporated or otherwise formed under the
laws of the United States of America or any of its states, evidenced by an
intercompany note (and secured by substantially all of the assets of such
Resulting Nonwovens Entity) in form and substance satisfactory to the
Administrative Agent and constituting Indebtedness of such Resulting
Nonwovens Entity to PGI or one of its U.S. Restricted Subsidiaries, so long
as in the case of all of the foregoing clauses (x), (y) and (z) such
Intercompany Notes or 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 or notes executed and
delivered after the Effective Date, promptly following such execution and
delivery);"
T. Restricted Payments. Section 9.09 of the Credit Agreement shall
-------------------
be deleted in its entirety and replaced with the following:
"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 28, 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 plus (z)
----
Amendment No. 2
---------------
<PAGE>
-23-
the aggregate amount of dividends, distributions or other payments
received by PGI or any of its Restricted Subsidiaries in cash in
respect of any Investment constituting a Restricted Payment hereunder,
and the aggregate amount received in cash in respect of the sale or
other disposition or any Investments constituting a Restricted Payment
hereunder (but shall not in any event be reduced by reason of any
write-off of any such Investment).
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 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)."
U. Leverage Ratio. Section 9.10 of the Credit Agreement shall be
--------------
deleted in its entirety and replaced with the following:
"(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 the first fiscal quarter in 1999 5.85 to 1
From the last day of the first fiscal
quarter in 1999 through but excluding the
last day of the first fiscal quarter in 2000 5.45 to 1
</TABLE>
Amendment No. 2
---------------
<PAGE>
-24-
From the last day of the first fiscal
quarter in 2000 through but excluding the
last day of the first fiscal quarter in 2001 5.00 to 1
From the last day of the first fiscal
quarter in 2001 through but excluding the
last day of the first fiscal quarter in 2002 4.75 to 1
From the last day of the first fiscal
quarter in 2002 through but excluding the
last day of the first fiscal quarter in 2003 4.50 to 1
From the last day of the first fiscal
quarter in 2003 and at all times thereafter 4.25 to 1
(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:
Period Ratio
------ -----
From the Effective Date through
but excluding the last day
of the first fiscal quarter in 1999 3.50 to 1
From the last day of the first fiscal
quarter in 1999 through but excluding the
last day of the first fiscal quarter in 2001 3.25 to 1
From the last day of the first fiscal
quarter in 2001 and at all times thereafter 3.00 to 1
(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:
Amendment No. 2
---------------
<PAGE>
-25-
Period Ratio
------ -----
From the Effective Date through
but excluding the last day
of the first fiscal quarter in 1999 1.15 to 1
From the last day of the first fiscal
quarter in 1999 through but excluding the
last day of the first fiscal quarter in 2000 1.30 to 1
From the last day of the first fiscal
quarter in 2000 and at all times thereafter 1.40 to 1
(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:
Period Amount
------ -------
From the Effective Date through
but excluding the last day
of the first fiscal quarter in 1998 U.S. $156,000,000
From the last day of the first fiscal
quarter in 1998 through but excluding the
last day of the first fiscal quarter in 1999 U.S. $170,500,000
From the last day of the first fiscal
quarter in 1999 through but excluding the
last day of the first fiscal quarter in 2000 U.S. $186,500,000
From the last day of the first fiscal
quarter in 2000 through but excluding the
last day of the first fiscal quarter in 2001 U.S. $203,500,000
From the last day of the first fiscal
quarter in 2001 through but excluding the
last day of the first fiscal quarter in 2002 U.S. $222,500,000
Amendment No. 2
---------------
<PAGE>
-26-
From the last day of the first fiscal
quarter in 2002 through but excluding the
last day of the first fiscal
quarter in 2003 U.S. $243,000,000
From the last day of the first fiscal
quarter in 2003 and at all
times thereafter U.S. $251,000,000
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."
V. Modification of Certain Documents. (i) Section 9.14 of the
---------------------------------
Credit Agreement shall be amended by inserting the following after the words
"Subordinated Acquisition Debt Documents": "or the Master Separation
Agreement".
(ii) Section 9.14 of the Credit Agreement shall be further amended by
adding the following sentence at the end thereof: "Additionally, the Obligors
will not, and will not permit their Subsidiaries to, execute and deliver any of
the 'Ancillary Separation Agreements' under and as defined in the Master
Separation Agreement, unless and until the Administrative Agent shall first have
reviewed the form thereof and consented thereto."
W. Certain Agency Provisions. Sections 11.02 and 11.03 of the Credit
-------------------------
Agreement shall be amended by adding after the words "the Majority Facility B
Revolving Credit Lenders" the following wherever such words appear: "or the
Majority Term B Loan Lenders".
X. Amendments. Section 12.04 of the Credit Agreement shall be
----------
amended as follows:
(i) The first paragraph of Section 12.04 of the Credit Agreement
shall be amended by adding after the words "the Majority Facility B
Revolving Credit Lenders" the following: "or the Majority Term B Loan
Lenders".
(ii) The second paragraph of Section 12.04 of the Credit Agreement
shall be amended by deleting the "and" following clause (A) therein and
substituting a comma in lieu thereof, and then by adding the following
after clause (B):
Amendment No. 2
---------------
<PAGE>
-27-
"and (C) 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 Term
B Loan shall be effective against the Term B Loan Lenders for the
purposes of the Term B Loan Commitments unless the Majority Term B
Loan Lenders shall have concurred with such waiver or modification".
Y. Treatment of Confidential Information. Section 12.16(b) of the
-------------------------------------
Credit Agreement shall be deleted in its entirety and replaced with the
following:
"(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 Lender, assignee or participant (or prospective assignee or
participant) or to direct or indirect contractual counterparties to swap
agreements or such contractual counterparties' professional advisers so
long as such assignee or participant (or prospective assignee or
participant) or contractual counterparty or professional adviser to such
contractual counterparty 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."
Z. Certain Tax Considerations. The following new Section 12.19
--------------------------
shall be added to the Credit Agreement:
"(a) Any Term B Loan Lender (i) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity
created or organized in or
Amendment No. 2
---------------
<PAGE>
-28-
under any laws of the United States of America, a trust subject to the
control of a U.S. person and the primary supervision of a U.S. court, or
any estate that is subject to Federal income taxation regardless of the
source of its income and (ii) that is not a "bank" within the meaning of
section 881 (c)(3)(A) of the U.S. Internal Revenue Code and (iii) that
could become completely exempt from withholding of any tax, assessment or
other charge or levy imposed by or on behalf of the United States of
America or any taxing authority thereof ("U.S. Taxes") in respect of
----------
payment of any obligations due to such Lender under this Agreement
("Obligations") if the Obligations were in registered form for U.S. Federal
-----------
income tax purposes (a "Non-U.S. Lender") may request PGI (through the
---------------
Administrative Agent), and PGI agrees thereupon, to record on the Register
to which paragraph (d) below refers any Obligations held by such Non-U.S.
Lender.
(b) Obligations recorded on the Register ("Registered Obligations")
----------------------
may not be evidenced by promissory notes other than Registered Notes as
defined below and, upon the registration of any Obligation, any promissory
note (other than a Registered Note) evidencing the same shall be null and
void and shall be returned to PGI. PGI agrees, at the request of any Non-
U.S. Lender holding any Registered Obligation(s), to issue promissory
note(s) registered as provided in paragraph (d) below (each, a "Registered
----------
Note") to evidence such Registered Obligation(s). An Obligation once
----
recorded on the Register may not be removed from the Register as long as it
remains outstanding and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note. Registered Notes may be
surrendered to PGI for cancellation so that the Registered Obligations that
were evidenced thereby are no longer evidenced by any promissory notes.
(c) Each Non-U.S. Lender holding Registered Obligations (a
"Registered Holder") (or, if such Registered Holder is not the beneficial
-----------------
owner thereof, such beneficial owner) (i) shall, if legally entitled to do
so, deliver to PGI prior to or at the time such Non-U.S. Lender becomes a
Registered Holder a Form W-8 (Certificate of Foreign Status of the U.S.
Department of Treasury) (or any successor or related form adopted by the
U.S. taxing authorities), together with an annual certificate stating that
such Registered Holder (or beneficial owner, as the case may be) is not a
"bank" within the meaning of section 881 (c)(3)(A) of the U.S. Internal
Revenue Code and (ii) shall promptly notify PGI if at any time such
Registered Holder (or beneficial owner, as the case may be) determines that
it is no longer in a position to provide such certification to PGI (or any
other form of certification adopted by the U.S. taxing authorities for such
purposes). Any Registered Holder that fails to deliver Form W-8 and such
certificate when it is entitled to do so shall not be entitled to the
additional amounts or the indemnity (if any) provided in this Agreement for
or in respect of the withholding of U.S. Taxes.
Amendment No. 2
---------------
<PAGE>
-29-
(d) At the request of any Non-U.S. Lender PGI shall maintain, or
cause to be maintained, a register (the "Register") (which, at the request
--------
of PGI, shall be kept by the Administrative Agent on behalf of PGI at no
extra charge to PGI at the address to which notices to the Administrative
Agent are to be sent under this Agreement) on which it enters the name of
the Registered Holder of Registered Obligation(s) (and any Registered Note
evidencing the same). A Registered Obligation (and any Registered Note
evidencing the same) may be assigned or otherwise transferred in whole or
in part only by registration of the assignment or transfer of such
Registered Obligation (and any Registered Note evidencing the same) on the
Register (and each Registered Note shall expressly so provide). Any
assignment or transfer of all or part of such Registered Obligation (and
any Registered Note evidencing the same) shall be registered on the
Register only upon presentment for registration of a written instrument of
assignment or transfer of such Registered Obligation duly executed by the
Registered Holder (together with surrender of any Registered Note
evidencing such Registered Obligation, duly endorsed by (or accompanied by
a written instrument of assignment or transfer duly executed by) the
Registered Holder thereof, and thereupon, at the request of the designated
assignee(s) or transferee(s), one or more new Registered Note(s) in the
same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to such due presentment for
registration of assignment or transfer, PGI and the Administrative Agent
shall treat the Person in whose name such Registered Obligation (and any
Registered Note evidencing the same) is registered as the owner thereof for
the purpose of receiving all payment thereon and for all other purposes,
notwithstanding any notice to the contrary.
(e) The Register shall be available for inspection by PGI and any
Lender at any reasonable time upon reasonable prior notice."
AA. Additional Schedules; Additional Exhibit. The Credit Agreement
----------------------------------------
shall be amended by attaching thereto and making a part thereof Schedules IX, X,
XI and XII attached hereto and Exhibit A-3 attached hereto.
Section 3. Security Agreement. Effective as of the Term B Loan
------------------
Closing Date, PGI, the Domestic Non-Borrower Guarantors and the Administrative
Agent agree that the Security Agreement shall be amended by replacing the amount
"U.S. $325,000,000" in the third paragraph thereof with the amount "U.S.
$450,000,000" and, for avoidance of doubt, that the "Credit Agreement" referred
to in the Security Agreement shall mean the Credit Agreement as amended hereby.
Section 4. Representations and Warranties. Each Obligor represents
------------------------------
and warrants to the Lenders and the Administrative Agent that the
representations and warranties set forth in Section 8 of the Credit Agreement as
amended hereby are true and complete on the date
Amendment No. 2
---------------
<PAGE>
-30-
hereof as if made on and as of the date hereof and as if each reference in said
Section 8 to "this Agreement" include reference to this Amendment No. 2.
Section 5. Conditions Precedent. As provided in Section 2 above, the
--------------------
amendments to the Credit Agreement set forth in said Section 2 shall become
effective, as of the date hereof, when each Obligor, each Lender and the
Administrative Agent shall have executed and delivered a counterpart of this
Amendment No. 2 to the Administrative Agent.
Section 6. Miscellaneous. Except as herein provided, the Credit
-------------
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 2 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such counterpart. This
Amendment No. 2 shall be governed by, and construed in accordance with, the law
of the State of New York.
Amendment No. 2
---------------
<PAGE>
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed and delivered as of the day and year first above written.
THE BORROWERS
-------------
POLYMER GROUP, INC. PGI NONWOVENS B.V.
By:_____________________ By:_____________________
Name: Name:
Title: Title:
CHICOPEE HOLDINGS B.V. FABRENE INC.
(incorporated in the State
of Delaware under the name
Chicopee Holdings (Netherlands)
B.V. Corporation)
By:_____________________ By:_____________________
Name: Name:
Title: Title:
Amendment No. 2
---------------
<PAGE>
-32-
DOMESTIC NON-BORROWER GUARANTORS
--------------------------------
FIBERTECH GROUP, INC. CHICOPEE, INC.
By___________________ By_____________________
Name: Name:
Title: Title:
PGI POLYMER, INC. CHICOPEE HOLDINGS, INC.
By___________________ By_____________________
Name: Name:
Title: Title:
TECHNETICS GROUP, INC. FABRENE GROUP, L.L.C.
By___________________ By_____________________
Name: Name:
Title: Title:
FABRENE CORP. FIBERGOL CORPORATION
By___________________ By_____________________
Name: Name:
Title: Title:
Amendment No. 2
---------------
<PAGE>
-33-
FABRENE GROUP, INC. PNA CORP.
By___________________ By_____________________
Name: Name:
Title: Title:
FNA POLYMER CORP.
By___________________
Name:
Title:
Amendment No. 2
---------------
<PAGE>
-34-
LENDERS
-------
THE CHASE MANHATTAN BANK THE CHASE MANHATTAN
BANK OF CANADA
By___________________ By_____________________
Name: Name:
Title: Title:
THE BANK OF NOVA SCOTIA THE BANK OF NOVA SCOTIA,
as Canadian Dollar Lender
By___________________ By_____________________
Name: Name:
Title: Title:
BHF-BANK AKTIENGESELLSCHAFT CORESTATES BANK, N.A.
By___________________ By_____________________
Name: Name:
Title: Title:
By___________________
Name:
Title:
CIBC INC.
By___________________
Name:
Title:
Amendment No. 2
---------------
<PAGE>
-35-
CANADIAN IMPERIAL BANK COMPAGNIE FINANCIERE DE
OF COMMERCE CIC ET DE L'UNION
EUROPEENNE
By___________________ By_____________________
Name: Name:
Title: Title:
By_____________________
Name:
Title:
CREDIT LYONNAIS ATLANTA CREDIT LYONNAIS CANADA
AGENCY
By___________________ By_____________________
Name: Name:
Title: Title:
By_____________________
Name:
Title:
COOPERATIEVE CENTRALE THE ROYAL BANK OF
RAIFFEISEN-BOERENLEENBANK SCOTLAND PLC
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By___________________ By_____________________
Name: Name:
Title: Title:
By___________________
Name:
Title:
Amendment No. 2
---------------
<PAGE>
-36-
WACHOVIA BANK, N.A. BANK OF SCOTLAND
By___________________ By_____________________
Name: Name:
Title: Title:
CREDITANSTALT AG DG BANK, NEW YORK
BRANCH
By___________________ By_____________________
Name: Name:
Title: Title:
By___________________
Name:
Title:
MERITA BANK LTD, NATIONAL CITY BANK
NEW YORK BRANCH
By___________________ By_____________________
Name: Name:
Title: Title:
Amendment No. 2
---------------
<PAGE>
-37-
ERSTE BANK THE DAI-ICHI KANGYO
BANK, LIMITED,
ATLANTA AGENCY
By___________________ By_____________________
Name: Name:
Title: Title:
THE FIRST NATIONAL ROYAL BANK OF CANADA
BANK OF CHICAGO
By___________________ By_____________________
Name: Name:
Title: Title:
ING HIGH INCOME PRINCIPAL ROYAL BANK OF CANADA,
PRESERVATION FUND HOLDINGS, LDC as Canadian Dollar Lender
ING Capital Advisors Inc., as
Investment Advisors
By___________________ By_____________________
Name: Name:
Title: Title:
OAK HILL SECURITIES FUND, L.P.,
By: Oak Hill Securities GenPar, L.P.,
its General Partner
By: Oak Hill Securities MPG, Inc.,
its General Partner
By___________________
Name:
Title:
Amendment No. 2
---------------
<PAGE>
-38-
KZH-CRESCENT CORPORATION KZH-CRESCENT-2
CORPORATION
By___________________ By_____________________
Name: Name:
Title: Title:
PRIME INCOME TRUST DEEPROCK & COMPANY,
By: Eaton Vance Management,
as Investment Adviser
By___________________ By_____________________
Name: Name:
Title: Title:
PILGRIM AMERICA PRIME RATE TRUST
By___________________
Name:
Title:
KZH-ING-2 CORPORATION KZH HOLDING
CORPORATION III
By___________________ By_____________________
Name: Name:
Title: Title:
Amendment No. 2
---------------
<PAGE>
-39-
CYPRESS TREE INVESTMENT MANAGEMENT
COMPANY, INC.,
As Attorney-in-Fact and on behalf of
First Allamerica Financial Life Insurance Company,
As Portfolio Manager
By____________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By___________________
Name:
Title:
Amendment No. 2
---------------
<PAGE>
SCHEDULE IX
FACILITY A REVOLVING CREDIT COMMITMENTS
---------------------------------------
<TABLE>
<CAPTION>
Lender Facility A Revolving Credit Commitment
- ------ --------------------------------------
<S> <C>
BHF-Bank Aktiengesellschaft U.S. $ 20,750,000
Corestates Bank, N.A. U.S. $ 20,750,000
Compagnie Financiere de CIC
et de l'union Europeenne U.S. $ 18,750,000
Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank
Nederland", New York Branch U.S. $ 18,750,000
The Royal Bank of Scotland PLC U.S. $ 18,750,000
Wachovia Bank, N.A. U.S. $ 18,750,000
ING High Income Principal Preservation
Fund Holdings, LDC U.S. $ 14,750,000
The First National Bank of
Chicago U.S. $ 14,750,000
CIBC Inc. U.S. $ 13,750,000
Credit Lyonnais Atlanta Agency U.S. $ 13,750,000
Creditanstalt AG U.S. $ 13,750,000
DG Bank, New York Branch U.S. $ 13,750,000
Merita Bank Ltd, New York
Branch U.S. $ 13,750,000
National City Bank U.S. $ 13,750,000
The Chase Manhattan Bank U.S. $ 13,500,000
The Bank of Nova Scotia U.S. $ 13,250,000
Bank of Scotland U.S. $ 10,000,000
</TABLE>
Amendment No. 2
---------------
<PAGE>
-2-
<TABLE>
<S> <C>
The Dai-Ichi Kangyo Bank, Limited
Atlanta Agency U.S. $ 10,000,000
Erste Bank U.S. $ 10,000,000
Royal Bank of Canada U.S. $ 9,750,000
_________________
U.S. $295,000,000
</TABLE>
Amendment No. 2
---------------
<PAGE>
SCHEDULE X
FACILITY B REVOLVING CREDIT COMMITMENTS
---------------------------------------
<TABLE>
<CAPTION>
Lender Facility A Revolving Credit Commitment
- ------ --------------------------------------
<S> <C>
The Chase Manhattan Bank of Canada U.S. $ 7,500,000
The Bank of Nova Scotia,
as Canadian Dollar Lender U.S. $ 7,500,000
Canadian Imperial Bank of Commerce U.S. $ 5,000,000
Credit Lyonnais Canada U.S. $ 5,000,000
Royal Bank of Canada,
as Canadian Dollar Lender U.S. $ 5,000,000
________________
U.S. $30,000,000
</TABLE>
Amendment No. 2
---------------
<PAGE>
SCHEDULE XI
TERM B LOAN COMMITMENTS
-----------------------
<TABLE>
<CAPTION>
Lender Term B Loan Commitment
- ------ ----------------------
<S> <C>
The Chase Manhattan Bank U.S. $ 41,000,000
KZH Holding Corporation III U.S. $ 28,000,000
Oak Hill Securities Fund, L.P. U.S. $ 11,000,000
Pilgrim America Prime Rate Trust U.S. $ 10,000,000
Prime Income Trust U.S. $ 7,000,000
Cypress Tree Investment
Management Company, Inc. U.S. $ 7,000,000
KZH-Crescent-2 Corporation U.S. $ 6,000,000
ING High Income Principal
Preservation Fund Holdings, LDC U.S. $ 5,000,000
KZH-ING-2 Corporation U.S. $ 5,000,000
KZH-Crescent Corporation U.S. $ 4,000,000
Deeprock & Company U.S. $ 1,000,000
_________________
U.S. $125,000,000
</TABLE>
Amendment No. 2
---------------
<PAGE>
SCHEDULE XII
MATERIAL AGREEMENTS AND LIENS
-----------------------------
[See Section 8.12]
Amendment No. 2
---------------
<PAGE>
EXHIBIT A-3
[Form of Term B Loan Note]
PROMISSORY NOTE
(Term B Loans)
U.S. $___________ _______, 1998
New York, New York
FOR VALUE RECEIVED, POLYMER GROUP, INC., a corporation duly organized
and validly existing under the laws of the State of Delaware (the "Maker"),
-----
hereby promises to pay to __________________ (the "Lender") [or registered
------
assigns]/1/, for account of its respective Applicable Lending Offices provided
for by the Credit Agreement referred to below, at the principal office of The
Chase Manhattan Bank at 270 Park Avenue, New York, New York 10017, the principal
sum of _______________ U.S. Dollars (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Term B Loans made by the Lender to the
Maker under the Credit Agreement), in lawful money of the United States of
America and in immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Term B Loan, at such office, in like money and
funds, for the period commencing on the date of such Term B Loan until such Term
B Loan shall be paid in full, at the rates per annum and on the dates provided
in the Credit Agreement.
[This Note and the Loans evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the register maintained for
such purpose by or on behalf of PGI as provided by the Credit Agreement.]
The date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each Term B Loan made by the Lender to the Maker, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached hereto or any continuation thereof (and the
Maker hereby authorizes the Lender to endorse such recording on the schedule
attached hereto), provided that the failure of the Lender to make any such
--------
recordation or endorsement shall not affect the obligations of the Maker to make
a payment when due of any amount owing under the Credit Agreement or hereunder
in respect of the Term B Loans made by the Lender.
This Note is one of the Term B Loan Notes [(constituting a Registered
Note)] referred to in the Second Amended, Restated and Consolidated Credit
Agreement dated as of July 3, 1996 (as modified and supplemented and in effect
from time to time, the "Credit Agreement") between the Maker, the other
----------------
"Borrowers" named therein, the Domestic Non-
__________________
/1/ Bracketed language to be inserted into Registered Notes
Amendment No. 2
---------------
<PAGE>
-7-
Borrower Guarantors named therein, the lenders named therein (including the
Lender), and The Chase Manhattan Bank, as Administrative Agent, and evidences
Term B Loans made by the Lender to the Maker thereunder. Terms used but not
defined in this Note have the respective meanings assigned to them in the Credit
Agreement.
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of Loans
upon the terms and conditions specified therein.
Except as permitted by Section 12.06(b) of the Credit Agreement, this
Note may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
The Maker hereby waives presentment, demand, notice of protest or
notice of any other kind with respect to this Note.
POLYMER GROUP, INC.
By_________________________
Title:
Amendment No. 2
---------------
<PAGE>
SCHEDULE OF TERM B LOANS
This Note evidences Term B Loans made to the Maker, or Continued or
Converted, under the within-described Credit Agreement, on the dates, in the
principal amounts, of the Types, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the payments, Continuations, Conversions and prepayments of principal set forth
below:
<TABLE>
<CAPTION>
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
- ------------ --------- -------- --------- ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Amendment No. 2
---------------
<PAGE>
EXHIBIT 11
POLYMER GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
------------------
APRIL MARCH 29,
4, 1998 1997
------- ---------
<S> <C> <C>
Basic:
Net income (loss) applicable to common stock............... $ (433) $ 4,962
Weighted average shares outstanding........................ 32,000 32,000
Net income (loss) per common share--basic.................. $ (0.02) $ 0.16
Diluted:
Net income (loss) applicable to common stock............... $ (433) $ 4,962
Weighted average shares outstanding........................ 32,000 32,000
Net income (loss) per common share--diluted................ $ (0.02) $ 0.16
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Polymer Group, Inc.'s Form 10-Q for the quarter ended April 4, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-START> JAN-04-1998
<PERIOD-END> APR-04-1998
<CASH> 64,339
<SECURITIES> 8,167
<RECEIVABLES> 121,952
<ALLOWANCES> 6,152
<INVENTORY> 106,379
<CURRENT-ASSETS> 321,605
<PP&E> 742,421
<DEPRECIATION> 101,266
<TOTAL-ASSETS> 1,271,906
<CURRENT-LIABILITIES> 134,342
<BONDS> 848,552
0
0
<COMMON> 320
<OTHER-SE> 191,889
<TOTAL-LIABILITY-AND-EQUITY> 1,271,906
<SALES> 193,336
<TOTAL-REVENUES> 193,336
<CGS> 147,058
<TOTAL-COSTS> 147,058
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,980
<INCOME-PRETAX> 3,597
<INCOME-TAX> 1,302
<INCOME-CONTINUING> 2,295
<DISCONTINUED> 0
<EXTRAORDINARY> 2,728
<CHANGES> 0
<NET-INCOME> (433)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
