EXECUTION COPY
Exhibit 4.2
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of March 5, 2003
(the "EFFECTIVE DATE"), between POLYMER GROUP, INC., a Delaware corporation (the
"BORROWER"), each of the entities identified under the caption "GUARANTORS" on
the signature pages hereto (individually and together with any entity that shall
become a guarantor hereunder pursuant to Section 6.01(h) hereof, a "GUARANTOR",
and, together with the Borrower, the "OBLIGORS") and MATLINPATTERSON GLOBAL
OPPORTUNITIES PARTNERS LP, a Delaware limited partnership ("GOF").
WHEREAS, on May 11, 2002, the Borrower and its domestic subsidiaries
(other than Bonlam (S.C.), Inc., for which the petition date was April 23, 2002)
filed voluntary petitions for reorganization under chapter 11 of title 11 of the
United States Code in the United States Bankruptcy Court for the District of
South Carolina (the "BANKRUPTCY COURT");
WHEREAS, on January 3, 2003, the Bankruptcy Court issued an order
confirming the Borrower's and its domestic subsidiaries' Joint Second Amended
Modified Plan of Reorganization (the "PLAN") and on January 16, 2003 the
Bankruptcy Court entered a supplemental order confirming the Plan;
WHEREAS, (a) the Plan and the Credit Agreement contemplate that GOF
shall issue or cause to be issued a letter of credit in favor of the
Administrative Agent, as beneficiary, in the face amount of $25,000,000, in
substantially the form of EXHIBIT A hereto (the "LETTER OF CREDIT"); and (b)
such Letter of Credit shall, in accordance with the terms thereof and of the
Credit Agreement, support the payments due under the Credit Agreement from the
Borrower to the Administrative Agent on December 31, 2003, June 30, 2004 and
December 31, 2004 to the extent that the Borrower fails to meet such payment
obligations;
WHEREAS, GOF has caused, or, simultaneously with the execution and
delivery of this Agreement, is causing, the Letter of Credit to be issued; and
WHEREAS, the Plan requires (and the Credit Agreement contemplates)
that, upon any drawing under the Letter of Credit, the Borrower shall issue to
GOF senior subordinated promissory notes in the face amount of such drawing,
with such additional terms and conditions as are more fully set forth in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"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 Borrower or any 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 Borrower or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Borrower 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 Borrower
or any Restricted Subsidiary or (ii) any acquisition by the Borrower 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.
"ADMINISTRATIVE AGENT" means JPMorgan Chase Bank, as administrative
agent under the Credit Agreement, together with any successor thereto.
"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. The term "control," "controlling",
"controlled by" or "under common control with" 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 set forth in Section 6.01(b).
"AGREEMENT" means this Senior Subordinated Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified from time to time.
"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 Borrower 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 Borrower or any
Restricted Subsidiary which constitute substantially all of an operating unit or
line of business of the Borrower or any Restricted Subsidiary; or (iii) any
other property or asset of the Borrower or any Restricted
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Subsidiary outside of the ordinary course of business (including the receipt of
proceeds paid on account of the loss of or damage to any property or asset and
awards of compensation for any asset taken by condemnation, eminent domain or
similar proceedings). For the purposes of this definition, the term "Asset Sale"
shall not include (a) any transaction consummated in compliance with SECTION
6.02 and the creation of any Lien not prohibited by SECTION 6.01(g); (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 Borrower or
any Restricted Subsidiary, as the case may be; (c) any transaction consummated
in compliance with SECTION 6.01(d); (d) any transfers of properties and assets
between Wholly Owned Restricted Subsidiaries; (e) any transaction pursuant to
which the Borrower or any Restricted Subsidiary transfers property to a Person
and the Borrower or such Restricted Subsidiary leases such property from such
Person; provided, however, that such transaction complies with SECTIONS 6.01(d)
AND (e); (f) sales of Investments (i) that were originally made pursuant to
clauses (a), (b), (c) or (d) of the definition of Permitted Investments or (ii)
to the extent that such Investments were treated as Restricted Payments; and (g)
any Qualified Securitization Transaction. In addition, solely for purposes of
SECTION 6.01(d), 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
$25,000,000 in any fiscal year shall be deemed not to be an Asset Sale;
provided, further, that any sale, conveyance, transfer, lease or other
disposition of any property or assets, including without limitation the Chicopee
Sale consummated on or prior to the Effective Date shall be excluded in any
determination made pursuant to this sentence.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by GOF or an Eligible Assignee and an Eligible Assignee in substantially
the form of EXHIBIT B hereto.
"BANKRUPTCY CODE" means Title I of the Bankruptcy Reform Act of 1978,
as amended from time to time, as set forth in sections 101 et seq. of Title 11
of the United States Code, and applicable portions of Titles 18 and 28 of the
United States Code.
"BANKRUPTCY COURT" has the meaning set forth in the first whereas
clause.
"BANKRUPTCY LAW" means the Bankruptcy Code or any similar Federal,
state or foreign law for the relief of debtors.
"BONLAM" means Bonlam S.A. de C.V., a corporation duly organized and
validly existing under the laws of Mexico.
"BORROWER" has the meaning set forth in the first introductory
paragraph hereto.
"BORROWING" has the meaning set forth in Section 2.01.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions are not required by law or authorized to close in
New York, New York.
"BYLAWS" means the Bylaws of the Borrower in substantially the form
attached as EXHIBIT C hereto.
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"CAPITAL LEASE OBLIGATIONS" 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.
"CAPITAL STOCK" means any and all shares or other equivalents (however
designated) of capital stock, including all common stock and all preferred
stock, in the case of a corporation, partnership interests or other equivalents
(however designated) in the case of a partnership, membership interests or other
equivalents (however designated) in the case of a limited liability company, or
common shares of beneficial interest or other equivalents (however designated)
in the case of a trust.
"CASH EQUIVALENTS" means: (a) U.S. Dollars; (b) securities issued or
directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500,000,000; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) above entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by ▇▇▇▇▇'▇ or S&P, 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 S&P and ▇▇▇▇▇'▇, 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.
"CERCLA" has the meaning set forth in Section 5.01(m)(iii).
"CERCLIS" has the meaning set forth in Section 5.01(m)(iii).
"CERTIFICATE OF INCORPORATION" means the Borrower's Amended and
Restated Certificate of Incorporation in substantially the form of EXHIBIT D
hereto.
"CHANGE OF CONTROL" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Borrower): (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 50% of the total
voting power of the then outstanding Voting Equity Interests of the Borrower;
(ii) the Borrower consolidates with, or merges with or into, another Person
(other than the Borrower or any Wholly Owned Restricted Subsidiary) or the
Borrower or any Significant Restricted Subsidiary sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of the
assets of
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the Borrower and its Subsidiaries (determined on a consolidated basis) to any
Person (other than the Borrower 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 upon the
happening of an event or otherwise) immediately prior to such transaction,
directly or indirectly, a majority of the total voting power of the then
outstanding Voting Equity Interests of the Borrower, as the case may be,
"beneficially own" (as so determined), directly or indirectly, a majority of the
total voting power of the then outstanding Voting Equity Interests of the
surviving or transferee Person; or (iii) the Borrower is liquidated or dissolved
or adopts a plan of liquidation or dissolution other than in a transaction which
complies with the provisions of Section 6.02.
"CHICOPEE SALE" means the sale of the warehouse in Dayton, New Jersey,
owned by Chicopee, Inc., a Delaware corporation.
"CLASS C DIVIDENDS" means the special annual dividend on the
Borrower's Class C Common Stock, par value $.01 per share, required to be paid
by the Borrower pursuant to its Amended and Restated Certificate of
Incorporation.
"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 Borrower 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 Borrower 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 Borrower or any Restricted Subsidiary repaid, repurchased or otherwise
discharged with respect to the Borrower 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 Borrower and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) if since the beginning of such Four
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Quarter Period the Borrower or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any such 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 Borrower
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 each of the holders of Senior
Subordinated Notes 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 Borrower 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 Borrower 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 Borrower or a Restricted Subsidiary during such Four
Quarter Period, Consolidated EBITDA and Consolidated Fixed Charges for such Four
Quarter Period shall be calculated after giving pro forma effect thereto as if
such Asset Sale, Investment or Acquisition of assets occurred on, with respect
to any Investment or Acquisition, the first day of such Four Quarter Period and,
with respect to any Asset Sale, the day prior to the first day of such Four
Quarter Period. For purposes of this definition, whenever pro forma effect is to
be given to an Acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Fixed Charges associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in accordance with GAAP. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any agreement under which Hedging 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 Borrower
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
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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 CHARGE" 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 Borrower
for any period, the provision for Federal, state, local and foreign income taxes
payable by the Borrower 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 Borrower
for any period, without duplication, the sum of (i) the interest expense of the
Borrower 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 Capital Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Borrower
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 Borrower 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 Borrower 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 Borrower 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
Borrower'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 Borrower or
a Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net income (but not loss) of
any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Borrower to the extent of such restrictions; (iv) any gain or loss realized upon
the sale or other disposition of any asset of the Borrower or the Restricted
Subsidiaries (including pursuant to any sale/leaseback transaction) outside of
the ordinary course of business; (v) any
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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 Effective Date; and (viii) gains and losses resulting
from foreign currency transaction adjustments.
"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).
"CREDIT AGREEMENT" means the Third Amended, Restated and Consolidated
Credit Agreement, dated as of March 5, 2003, as in effect on the date hereof,
between the Borrower, the Subsidiaries of the Borrower identified on the
signature pages thereof and any Subsidiary that is later added thereto, the
lenders named therein, and JPMorgan Chase Bank, as administrative agent, as
further amended, including any deferrals, renewals, extensions, replacements,
refinancings, restructurings 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..
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEBTOR SUBSIDIARY" means a Subsidiary of the Borrower that is subject
to the Plan.
"DEFAULT" means any event that is or with the passage of time or
giving of notice or both, would be an Event of Default.
"DESIGNATED GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any
Guarantor, any Indebtedness of such Guarantor outstanding under the Credit
Agreement.
"DESIGNATED SENIOR INDEBTEDNESS" means (a) any Indebtedness
outstanding under the Credit Agreement, 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 $25,000,000, if the instrument governing such Senior Indebtedness
expressly states that such Indebtedness is "Designated Senior Indebtedness" for
purposes of this Agreement and a resolution of the Borrower's Board of Directors
setting forth such designation by the Borrower has been delivered to each of the
holders of Senior Subordinated Notes.
"DESIGNATION" has the meaning set forth in Section 6.01(i).
"DESIGNATION AMOUNT" has the meaning set forth in Section 6.01(i).
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"DISCLOSURE STATEMENT" means the Amended Modified Disclosure Statement
of the Borrower and its Debtor Subsidiaries.
"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 Termination Date.
"DOMESTIC RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Borrower 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.
"EFFECTIVE DATE" has the meaning set forth in the first introductory
paragraph hereto.
"ELIGIBLE ASSIGNEE" means, (a) any Affiliate of GOF, and (b) any other
Person or Persons approved by GOF, or by an assignee pursuant to this Agreement,
as applicable, and, so long as no Event of Default shall have occurred and be
continuing, approved by the Borrower, which approval shall not be unreasonably
delayed, conditioned or withheld.
"ENVIRONMENTAL CLAIMS" means, with respect to any Person, any written
notice, claim, demand or other written communication (collectively, a "CLAIM")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any Governmental Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, technical standards, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, Release or threatened Release
of any Hazardous Material or to health and safety matters.
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"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 but excluding the Junior
Subordinated Convertible Notes.
"EQUITY RIGHTS" means, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Internal Revenue Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Internal Revenue Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Internal Revenue Code,
described in Section 414(m) or (o) of the Internal Revenue Code of which the
Borrower is a member.
"ERISA PLAN" means an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.
"EVENT OF DEFAULT" has the meaning specified in Section 7.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as the same
may be amended from time to time.
"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 Borrower acting in good faith, and shall be evidenced by
resolutions of the Board of Directors of the Borrower delivered to each of the
holders of Senior Subordinated Notes.
"FOREIGN CORRUPT PRACTICES ACT" means the U.S. Foreign Corrupt
Practices Act of 1977, as amended from time to time.
"FOREIGN RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of the
Borrower 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.
10
"FOUR QUARTER PERIOD" has the meaning set forth in the definition of
Consolidated Coverage Ratio.
"FUNDING GUARANTOR" has the meaning set forth in Section 3.05.
"GAAP" has the meaning specified in Section 1.03.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GOF" has the meaning set forth in the first introductory paragraph
hereto.
"GOF NOMINEE" means any member of the Borrower's Board of Directors
that was nominated or designated by GOF pursuant to the Shareholders Agreement
or otherwise.
"GUARANTEE" has the meaning set forth in Section 3.01.
"GUARANTEE OBLIGATIONS" has the meaning set forth in Section 3.01.
"GURANTOR(S)" has the meaning set forth in the first introductory
paragraph hereto.
"GUARANTOR BLOCKAGE PERIOD" has the meaning set forth in
Section 3.08(a).
"GUARANTOR PAYMENT BLOCKAGE NOTICE" has the meaning set forth in
Section 3.08(a).
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to any Guarantor,
at any date, (a) all Obligations of such Guarantor under the Credit Agreement;
(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
Senior Subordinated 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 this Agreement; (e) Indebtedness
evidenced by such Guarantor's Guarantee of the Senior Subordinated 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
11
constitute Indebtedness, any obligation owing under leases (other than Capital
Lease Obligations) or management agreements; (h) any obligation that by
operation of law is subordinate to any general unsecured obligations of such
Guarantor; and (i) Indebtedness of a Guarantor to the extent such Indebtedness
is owed to and held by any Federal, state, local or other governmental
authority.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENTS" means, with respect to any Person, agreements
with respect to 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.
"HSR ACT" has the meaning set forth in Section 4.01(i).
"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 Borrower 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
Borrower 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 Borrower 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
12
Person; (f) every net obligation under Hedging Agreements of such Person; (g)
every obligation of the type referred to in clauses (a) through (f) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has guaranteed or is responsible or liable for, directly or
indirectly, as obligor, guarantor or otherwise; and (h) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (a) shall never be calculated taking
into account any cash and cash equivalents held by such Person; (b) shall not
include obligations of any Person (x) arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence, (y) 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 Borrower 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 the Indenture, dated as of the date hereof, among
the Borrower, Wilmington Trust Company and the other parties thereto relating to
the Junior Subordinated Convertible Notes.
"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.
"INTERCOMPANY NOTES" means, collectively, the Bonlam Intercompany
Notes (as defined in the Credit Agreement) and the Fabrene Intercompany Notes
(as defined in the Credit Agreement).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"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, 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
13
connection with such Investment or any other amounts received in respect of such
Investment; provided, however, that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Borrower 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 Borrower no longer owns,
directly or indirectly, greater than 50% of the outstanding Voting Equity
Interests of such Restricted Subsidiary, the Borrower shall be deemed to have
made an Investment on the date of any such sale or disposition.
"JUNIOR SUBORDINATED CONVERTIBLE NOTES" means the 10% convertible
subordinated notes due December 2007 to be issued pursuant to the Plan.
"LETTER OF CREDIT" has the meaning set forth in the third whereas
clause.
"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, any any agreement to give any security interest).
"LIMITED ORIGINATOR RECOURSE" means a reimbursement obligation to the
Borrower or a Restricted Subsidiary in connection with a drawing on a letter of
credit, revolving loan commitment, cash collateral account or other such credit
enhancement issued to support Indebtedness of a Securitization Entity under a
facility for the financing of trade receivables; provided that the available
amount of any such form of credit enhancement at any time shall not exceed 15.0%
of the principal amount of such Indebtedness at such time.
"MARGIN STOCK" means "margin stock" within the meaning of Regulations
U and X.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, properties or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole, or (b) the ability of the
Borrower to perform its material obligations hereunder or under the Senior
Subordinated Note or (c) the validity or enforceability of this Agreement or the
Senior Subordinated Notes, including the rights or remedies of GOF hereunder or
thereunder, other than arising solely as a result of any action or inaction of
GOF.
"MATURITY DATE" means December 1, 2007.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc. and its successors.
"MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"NET CASH PROCEEDS" means the aggregate proceeds in the form of cash
or Cash Equivalents received by the Borrower or any Restricted Subsidiary in
respect of any Asset Sale,
14
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
Borrower 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 each of the holders of Senior
Subordinated Notes (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.
"NEW INVESTMENT" means the purchase by certain creditors of the
Borrower and its Debtor Subsidiaries of Junior Subordinated Convertible Notes
for a total purchase price of $50,000,000 pursuant to the terms and conditions
of the Plan.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Borrower nor any Restricted Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Subordinated Notes) of the Borrower or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Borrower or any of its
Restricted Subsidiaries.
"NPL" has the meaning set forth in Section 5.01(m)(iii).
"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.
"OBLIGORS" has the meaning set forth in the first introductory
paragraph hereto.
"OFFICER'S CERTIFICATE" means a certificate signed by the Borrower's
or Guarantor's president, chief executive officer, chief operating officer, or
its chief financial officer (or, if no such officer exists, an officer or
manager with substantially similar authority) on behalf
15
of the Borrower or a Guarantor, as applicable, stating that (i) the officer
signing such certificate has made or has caused to be made such investigations
as are necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) to the best of such officer's
actual knowledge, after making the investigations required by clause (i), does
not misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.
"OPERATING DIVISIONS" means the Nonwovens, Oriented Polymers and
Corporate operating divisions of the Borrower and its Subsidiaries.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to GOF; provided that if GOF shall assign all of its
interest in the Senior Subordinated Note, such counsel shall be reasonably
acceptable to the holders of a majority of the principal amount outstanding
under all Senior Subordinated Notes. The counsel may be an employee of or
counsel to the Borrower, GOF or any other holder of a Senior Subordinated Note.
"ORGANIZATIONAL DOCUMENTS" means the certificate of incorporation,
articles of organization, bylaws, operating agreement, partnership agreement,
and/or other organizational and governing documents (including all those that
govern or impact the appointment, election, and/or removal of directors,
managers, managing partners or persons of equivalent authority), as the case may
be, of a Person (other than an individual).
"OTHER TAXES" has the meaning specified in Section 2.05(b).
"PAYMENT BLOCKAGE NOTICE" has the meaning set forth in
Section 8.02(a).
"PAYMENT BLOCKAGE PERIOD" has the meaning set forth in Section
8.02(a).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED HOLDER" means MatlinPatterson Global Opportunities Partners
L.P. and its Affiliates, The InterTech Group, Inc. and its Affiliates, Golder,
Thoma, ▇▇▇▇▇▇▇ Fund III Limited Partnership and its Affiliates, ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇ and members of either of their immediate families and trusts of
which such persons are the beneficiaries.
"PERMITTED INDEBTEDNESS" has the meaning set forth in Section 6.01(c).
"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 SECTION 6.01(d) not to exceed 35% of the
total consideration for such Asset Sales; (e) Investments in the Borrower 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 Borrower or another Restricted Subsidiary;
(f) Investments existing as of
16
the Effective Date; and (g) any Investment consisting of a guarantee by a
Restricted Subsidiary of Senior Indebtedness or any guarantee of Indebtedness
otherwise permitted by this Agreement.
"PERMITTED JUNIOR SECURITIES" means any securities of the Borrower or
any other Person that are (i) equity securities without special covenants or
(ii) debt securities expressly subordinated in right of payment to the Senior
Subordinated Notes and all Senior Indebtedness that may at the time be
outstanding, to substantially the same extent as, or to a greater extent than,
the Junior Subordinated Convertible Notes are subordinated as provided in the
Indenture, in any event pursuant to a court order so providing as to which (a)
the rate of interest on such securities shall not exceed the effective rate of
interest on the Senior Subordinated Notes on the date of this Agreement, (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 Senior Subordinated Notes on the date of this
Agreement 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
Subordinated Notes and Senior Indebtedness (as modified by the plan of
reorganization 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 Borrower 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 Borrower 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 Effective Date; (d) Liens securing only the Senior Subordinated Notes, the
Guarantees or the Junior Subordinated Convertible Notes or guarantees thereof;
(e) Liens in favor of the Borrower or any Restricted Subsidiary (including any
such Liens securing Indebtedness, to the extent and for so long as such
Indebtedness is pledged to secure Senior Indebtedness); (f) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, however, that any reserve or
other appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (g) easements, reservation of rights of way,
restrictions and other similar easements, licenses, restrictions on the use of
properties, or minor imperfections of title that in the aggregate do not in any
case materially detract from the properties subject thereto or interfere with
the ordinary conduct of the business of the Borrower 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
17
in the business of the Borrower 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 Borrower 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 6.01(c) and (IV) such Liens attach within 90 days of such purchase,
construction, installation, repair, addition or improvement; and (j) Liens to
secure any refinancings, renewals, extensions, modifications or replacements (or
successive refinancings), in whole or in part, of any Indebtedness secured by
Liens referred to in the clauses above so long as such Lien does not extend to
any other property (other than improvements thereto).
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, limited
liability partnership, trust, unincorporated organization, or a government or
any agency or political subdivision thereof.
"PLAN" has the meaning set forth in the second whereas clause.
"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.
"PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Borrower 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 used in the business of the Borrower; provided, however, that the
aggregate principal amount of such Indebtedness does not exceed the lesser of
the Fair Market Value of such property or such purchase price or cost, including
any refinancing of such Indebtedness that does not increase the aggregate
principal amount (or accreted amount, if less) thereof as of the date of
refinancing.
"PURCHASE MONEY NOTE" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Borrower
or any Restricted
18
Subsidiary in connection with a Qualified Securitization Transaction, which note
shall be repaid from cash available to the Securitization Entity, other than
amounts required to be established as reserves pursuant to agreements, amounts
paid to investors in respect of interest, principal and other amounts owning to
such investors and amounts paid in connection with the purchase of newly
generated receivables.
"QUALIFIED EQUITY INTEREST" in any Person means any Equity Interest in
such Person other than any Disqualified Equity Interest.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series
of transactions pursuant to which the Borrower or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by the Borrower or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any receivables
(whether now existing or arising or acquired in the future) of the Borrower or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such receivables, all contracts and
contract rights and all guarantees or other obligations in respect of such
receivables, proceeds of such receivables and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving receivables (collectively, "TRANSFERRED ASSETS");
provided that in the case of any such transfer by the Borrower or any of its
Restricted Subsidiaries, the transferor receives cash or Purchase Money Notes in
an amount which (when aggregated with the cash and Purchase Money Notes received
by the Borrower and its Restricted Subsidiaries upon all other such transfers of
Transferred Assets during the 90 days preceding such transfer) is at least equal
to 75% of the aggregate face amount of all receivables so transferred during
such day and the 90 preceding days.
"REGULATIONS A, D, U AND X" means, respectively, Regulations A, D, U
and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified or supplemented and in effect from time
to time.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"REPLACEMENT ASSETS" has the meaning set forth in Section 6.01(d).
"RESTRICTED PAYMENT" has the meaning set forth in Section 6.01(e).
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower that has
not been designated by the Board of Directors of the Borrower, by a resolution
of the Board of Directors of the Borrower delivered to each of the holders of
Senior Subordinated Notes, as an Unrestricted Subsidiary pursuant to
SECTION 6.01(i). Any such designation may be revoked by a resolution of the
Board of Directors of the Borrower delivered to each of the holders of Senior
Subordinated Notes, subject to the provisions of such covenant.
19
"REVOCATION" has the meaning set forth in Section 6.01(i).
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies; and its successors.
"SECURITIZATION ENTITY" means either a Wholly Owned Restricted
Subsidiary of the Borrower (or another Person in which the Borrower or any
Restricted Subsidiary makes an Investment and to which the Borrower or any
Restricted Subsidiary transfers receivables and related assets) or an
Unrestricted Subsidiary that engages in no activities other than in connection
with the financing of receivables and that is designated by the Board of the
Directors of the Borrower (as provided below) as a Securitization Entity (a) no
portion of the Indebtedness or any other Obligations (contingent or otherwise)
of which (i) is guaranteed by the Borrower or any Restricted Subsidiary other
than pursuant to Standard Securitization Undertakings or Limited Originator
Recourse, (ii) is recourse to or obligates the Borrower or any Restricted
Subsidiary (other than the Securitization Entity) in any way other than pursuant
to Standard Securitization Undertakings or Limited Originator Recourse or (iii)
subjects any property or asset of the Borrower or any Restricted Subsidiary
(other than the Securitization Entity), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings or Limited Originator Recourse, (b) with which
neither the Borrower nor any Restricted Subsidiary has any material contract,
agreement, arrangement or understanding other than on terms no less favorable to
the Borrower or such Restricted Subsidiary than those that might be obtained at
the time from Persons that are not Affiliates of the Borrower, other than fees
payable in the ordinary course of business in connection with servicing
receivables of such entity and (c) to which neither the Borrower nor any
Restricted Subsidiary of the Borrower has any obligation to maintain or preserve
such entity's financial condition or cause such entity to achieve certain levels
of operating results. Any such designation by the Board of Directors of the
Borrower shall be evidenced to each of the holders of Senior Subordinated Notes
by delivery thereto of a certified copy of the resolution of the Board of
Directors of the Borrower giving effect to such designation and an Officer's
Certificate certifying that such designation complied with the foregoing
conditions.
"SENIOR INDEBTEDNESS" means, at any date, (a) all Obligations of the
Borrower under the Credit Agreement; (b) all Hedging Obligations of the
Borrower; (c) all Obligations of the Borrower under stand-by letters of credit;
and (d) all other Indebtedness of the Borrower 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
Borrower for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment to
the Senior Subordinated 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 Borrower and any Subsidiary of the Borrower or
any Affiliate of the Borrower 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;
20
(d) Indebtedness of the Borrower that is PARI PASSU with, or expressly
subordinate or junior in right of payment to, the Senior Subordinated Notes; (e)
to the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capital Lease Obligations) or management agreements; (f) any
obligation that by operation of law is subordinate to any general unsecured
obligations of the Borrower; and (g) Indebtedness of the Borrower to the extent
such Indebtedness is owed to and held by any Federal, state, local or other
governmental authority.
"SENIOR SUBORDINATED NOTE(S)" has the meaning set forth in
Section 2.01.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement dated as of
March 5, 2003, between the Borrower, GOF and the other parties identified
therein.
"SHAREHOLDER RIGHTS PLAN" means the Borrower's shareholder rights plan
or "poison pill" embodied in the Rights Agreement, dated as of April 15, 1996,
by and among the Borrower and First Union Nation Bank of North Carolina.
"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 Borrower accounted for more than 20.0% of the consolidated
revenues of the Borrower and the Restricted Subsidiaries or (ii) as of the end
of such fiscal year, owned more than 20.0% of the consolidated assets of the
Borrower and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Borrower and the Restricted Subsidiaries for such
year prepared in conformity with GAAP and (b) any Restricted Subsidiary which,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h) of Section 7.01 has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower that are reasonably customary in receivables
securitization transactions.
"SUBORDINATED INDEBTEDNESS" means, with respect to the Borrower or any
Guarantor, any Indebtedness of the Borrower or such Guarantor, as the case may
be, which is pari passu with, or expressly subordinated in right of payment to,
the Senior Subordinated Notes or such Guarantor's Guarantee, as the case may be,
including without limitation, the Junior Subordinated Convertible Notes.
"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.
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"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.
"TAXES" has the meaning specified in Section 2.05(a).
"TERMINATION DATE" means the date and time at which each of the
following conditions are satisfied: (a) the passage of the dates December 31,
2003, June 30, 2004 and December 31, 2004, regardless of whether the Borrower
has timely made the payments due to the Administrative Agent under the Credit
Agreement thereon; (b) the payment by the Obligors of all amounts owed to GOF
and any other holders of Senior Subordinated Notes hereunder and under the
Senior Subordinated Notes (including any and all costs and expenses), to the
reasonable satisfaction of GOF, or, if GOF shall have assigned all of its
interest in the Senior Subordinated Note, to the reasonable satisfaction of the
holders of a majority of the principal amount outstanding under all Senior
Subordinated Notes immediately prior to such payment; and (c) the termination of
the Letter of Credit.
"TRANSFERRED ASSETS" has the meaning set forth in the definition of
Qualified Securitization Transaction.
"UNITED STATES" and " U. S. " each means United States of America.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower
designated as such pursuant to SECTION 6.01(i). Any such designation may be
revoked by a resolution of the Board of Directors of the Borrower delivered to
each of the holders of Senior Subordinated Notes, subject to SECTION 6.01(i).
"UNUTILIZED NET CASH PROCEEDS" has the meaning set forth in
Section 6.01(d)(iii).
"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 Borrower and/or one
or more Wholly Owned Restricted Subsidiaries.
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Section 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
Section 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles ("GAAP").
Section 1.04. REFERENCES TO CREDIT AGREEMENT. Wherever this Agreement
defines a term by reference to the Credit Agreement, such term shall have the
definition ascribed to it in the Credit Agreement, and, in the event the Credit
Agreement is terminated, or amended, modified or restated to remove the
definition of such term, then the term so defined shall have the meaning
ascribed thereto in the version of the Credit Agreement existing immediately
prior to such termination, amendment, modification or restatement.
ARTICLE II
AMOUNT AND TERMS OF THE SENIOR SUBORDINATED NOTE
Section 2.01. INITIAL ISSUANCE OF SENIOR SUBORDINATED NOTE; AGGREGATE
PRINCIPAL AMOUNT. Simultaneously with the execution and delivery of this
Agreement, the Borrower is issuing and delivering to GOF a note in substantially
the form of EXHIBIT E hereto (the "SENIOR SUBORDINATED NOTE", and, together with
any additional Senior Subordinated Notes issued pursuant to Section 9.06(d), if
any, the "SENIOR SUBORDINATED NOTES") with a principal amount of TWENTY FIVE
MILLION DOLLARS ($25,000,000.00); PROVIDED, HOWEVER, that in accordance with
Section 2.03 and the terms of the Senior Subordinated Note, the Borrower shall
only be required to pay such amount thereof as equals the sum of each drawing
under the Letter of Credit by the Administrative Agent (each such drawing being
referred to herein as a "BORROWING"), plus accrued interest and any other costs
and expenses due hereunder or under the Senior Subordinated Notes.
Section 2.02. INTEREST.
(a) INTEREST. The Borrower shall pay to GOF and its assigns
interest on the amount of each Borrowing from the date thereof, semi-annually in
arrears on January 1 and July 1 of each year, at a rate of 10% per annum,
subject to adjustment pursuant to Section 2.02(b).
(b) DEFAULT INTEREST. Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay interest on the
aggregate unpaid principal amount of the Borrowings at the rate per annum set
forth in Section 2.02(a) PLUS 2% on demand. The Borrower shall, to the extent
lawful, pay interest on overdue interest at the rate of 12% per annum.
(c) COMPUTATIONS. All computations of interest shall be made on the
basis of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
Section 2.03. REPAYMENT.
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(a) REPAYMENT ON MATURITY. Subject to Article VIII, on the Maturity
Date, the Borrower shall be liable to pay to GOF and its assigns in US Dollars
an amount equal to the sum of each Borrowing, together with all accrued and
unpaid interest and any other amounts then owing to GOF and its assigns in
respect thereof (including for costs and expenses).
(b) MANDATORY PREPAYMENT. Subject to Article VIII and the terms and
provisions of the Credit Agreement, within 1 Business Day of the consummation of
a Change of Control transaction, the Borrower shall prepay in US Dollars the
aggregate principal amount of all Borrowings, together with all accrued and
unpaid interest outstanding under the Senior Subordinated Notes, together with
all other amounts then owing to GOF and its assigns in respect thereof
(including for costs and expenses).
(c) OPTIONAL PREPAYMENT. Subject to Article VIII and the terms and
provisions of the Credit Agreement, the Borrower may, at its option, prepay its
obligations under this Agreement and the Senior Subordinated Notes in whole or
in part at any time, without penalty, upon 3 Business Days prior notice to the
holders of the Senior Subordinated Notes; PROVIDED that all accrued and unpaid
interest and any costs or expenses owing to GOF and its assigns in respect of
the prepaid amount shall be simultaneously paid.
Section 2.04. PROCEEDS OF LETTER OF CREDIT. The Borrower shall have no
direct access to the proceeds of drawings under the Letter of Credit, and such
proceeds shall be received directly by the Administrative Agent and applied in
accordance with the Credit Agreement.
Section 2.05. TAXES.
(a) Any and all payments by the Obligors hereunder or under the
Senior Subordinated Notes shall be made, or applied in accordance with
Section 2.03, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto ("TAXES") excluding Taxes based on the net
income of a Person. Notwithstanding the foregoing, if the Obligors shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Senior Subordinated Notes, (i) the sum payable, or
applied in accordance with Section 2.03, shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.05), GOF receives or is entitled to
receive or have applied under Section 2.03 an amount equal to the sum it would
have received had no such deductions been made, (ii) the Obligors shall make
such deductions and (iii) the Obligors shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Obligors shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Senior
Subordinated Notes or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or the Senior
Subordinated Notes (hereinafter referred to as "OTHER TAXES").
(c) The Obligors shall indemnify GOF and any other holders of
Senior Subordinated Notes for the full amount of Taxes and Other Taxes
(including, without limitation,
24
any Taxes imposed by any jurisdiction on amounts payable under this
Section 2.05) imposed on or paid by GOF and such other holders and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. Any indemnification payment shall be made within 30 days from the date
GOF or such other holders make written demand therefor.
(d) Within 30 days after the date of any payment of Taxes and Other
Taxes, the Obligors shall furnish GOF and any other holders of Senior
Subordinated Notes the original or a certified copy of a receipt evidencing
payment thereof.
Section 2.06. INCREASED COSTS. If, due to either (i) the introduction
of or any change after the date hereof, in or in the interpretation of any law
or regulation or (ii) the compliance with any guideline or request introduced
after the date hereof, from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to GOF and any other holders of Senior Subordinated Notes of making or
keeping the Letter of Credit available or carrying the Senior Subordinated Notes
(excluding for purposes of this Section 2.06 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.05 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States), then the Borrower shall from time to time, upon demand by
GOF or such other holders, pay to GOF and such other holders additional amounts
sufficient to compensate GOF and any such other holders for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
by GOF or any such other holder, shall be conclusive and binding for all
purposes, absent manifest error.
ARTICLE III
GUARANTEE
Section 3.01. UNCONDITIONAL GUARANTEE.
(a) Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "GUARANTEE") to GOF and any other holders of Senior
Subordinated Notes that the principal of, interest on and all other amounts
owing in respect of the Senior Subordinated Notes 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 Senior Subordinated to the extent lawful, and all
other obligations of the Borrower to GOF and its successors and assigns under
the Senior Subordinated Notes will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof (all of the foregoing being
hereinafter called the "GUARANTEE OBLIGATIONS"); subject, however, to the
limitations set forth in SECTION 3.04. Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Senior Subordinated Notes or this Agreement,
the absence of any action to enforce the same, any waiver or consent by GOF or
its successors or assigns with respect to any provisions hereof or thereof, the
recovery of any judgment against the Borrower, 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 Borrower, any right to require a proceeding
first against the Borrower, protest, notice and all demands whatsoever and
covenants that the Guarantee will not be discharged except by complete
performance of the
25
obligations continued in the Senior Subordinated Notes, this Agreement, and this
Guarantee. If GOF or its successors or assigns is required by any court or
otherwise to return to the Borrower, any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Borrower or any
Guarantor, any amount paid by the Borrower or any Guarantor to GOF or such
successor or assign, 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 GOF and its successors and assigns,
on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article VII 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 VII, such
obligations (whether or not due and payable) shall become due and payable by
each Guarantor for the purpose of this Guarantee.
Each Guarantor further agrees that the Guarantee Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
such Guarantor and that such Guarantor will remain bound under this Article III
notwithstanding any extension or renewal of any Guarantee Obligation.
(b) Each Guarantor waives notice of any default under the Senior
Subordinated Notes or the Guarantee Obligations. The obligations of each
Guarantor hereunder shall not be affected by (i) any extension or renewal of any
thereof; (ii) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, the Senior Subordinated Notes or any
other agreement; (iii) the release of any security held by any holder of Senior
Subordinated Notes for the Guarantee Obligations or any of them; (iv) the
failure of any holder of Senior Subordinated Notes to exercise any right or
remedy against any other guarantor of the Guarantee Obligations; or (v) except
as set forth in Section 3.03, any change in ownership of such Guarantor.
(c) Each Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any holder of Senior Subordinated Notes to any security held for payment
of the Guarantee Obligations.
(d) The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Guarantee Obligations in full), including any claim
of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guarantee Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any holder of Senior
Subordinated Notes to assert any claim or demand or to enforce any remedy under
this Agreement, the Senior Subordinated Notes or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, willful
or otherwise, in the performance of the Guarantee Obligations, or by any other
act or thing or omission or delay to do any other act or thing that may or might
in any manner or to any extent
26
vary the risk of such Guarantor or would otherwise operate as a discharge of
such Guarantor as a matter of law or equity.
(e) In furtherance of the foregoing and not in limitation of any
other right that any holder of Senior Subordinated Notes has at law or at equity
against any Guarantor by virtue hereof, upon the failure of the Borrower to pay
the principal of or interest on any Guarantee Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guarantee Obligation, each
Guarantor hereby promises to and shall, upon receipt of written demand by GOF,
forthwith pay, or cause to be paid, in cash, to the holders of Senior
Subordinated Notes Holders an amount equal to the sum of (i) the unpaid amount
of such Guarantee Obligations, (ii) accrued and unpaid interest on such
Guarantee Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Guarantee Obligations of the Borrower to the holders of the
Senior Subordinated Notes.
Section 3.02. 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 3.03. RELEASE OF A GUARANTOR. If the Senior Subordinated Notes
are defeased in accordance with the terms of this Agreement, or if
SECTION 6.02(b) is complied with, or if, subject to the requirements of
SECTION 6.02(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 Borrower in a transaction constituting an Asset Sale and (x)
the Net Cash Proceeds from such Asset Sale are used in accordance with
SECTION 6.01(d) or (y) the Borrower delivers to each holder of Senior
Subordinated Notes an Officer's Certificate to the effect that the Net Cash
Proceeds from such Asset Sale shall be used in accordance with SECTION 6.01(d)
and within the time limits specified by SECTION 6.01(d), then each Guarantor (in
the case of defeasance) or such Guarantor (in the case of compliance with
SECTION 6.02(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 III without any further action required on the part of GOF or
its successors or assigns. GOF or its successors or assigns shall, at the sole
cost and expense of the Borrower and upon receipt at the reasonable request of
GOF of an Opinion of Counsel that the provisions of this SECTION 3.03 have been
complied with, deliver an appropriate instrument evidencing such release upon
receipt of a request by the Borrower accompanied by an Officer's Certificate
certifying as to the compliance with this SECTION 3.03. Any Guarantor not so
released remains liable for the full amount of principal of and interest on the
Senior Subordinated Notes and the other obligations of the Borrower hereunder as
provided in this Article III.
Section 3.04. LIMITATION OF A GUARANTOR'S LIABILITY. Each Guarantor,
and by its acceptance hereof GOF, hereby confirms that it is the intention of
all such parties that the guarantee by such Guarantor pursuant to its Guarantee
not constitute a fraudulent transfer or conveyance for purposes of title 11 of
the United States Code, as amended, the Uniform
27
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, GOF and each Guarantor hereby irrevocably agree that the obligations
of each Guarantor under its Guarantee shall be listed 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 Effective 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 3.05, result in the obligations of
such Guarantor under its Guarantee not constituting such a fraudulent transfer
or conveyance under Federal or state law.
Section 3.05. 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 3.04, for all payments, damages and
expenses incurred by such Funding Guarantor in discharging the Borrower's
obligations with respect to the Senior Subordinated Notes or any other
Guarantor's obligations with respect to the Guarantee.
Section 3.06. SUBORDINATION OF SUBROGATION AND OTHER RIGHTS. Each
Guarantor hereby agrees that any claim against the Borrower that arises from the
payment, performance or enforcement of such Guarantor's obligations under its
Guarantee or this Agreement, 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 the outstanding Senior Subordinated Notes in accordance with the
provisions provided therefor in this Agreement.
Section 3.07. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
INDEBTEDNESS. Each Guarantor covenants and agrees, and GOF by his acceptance
thereof likewise covenants and agrees, that the Guarantee of such Guarantor
shall be issued subject to the provisions of this Article III; and each person
holding any Senior Subordinated Note, whether GOF upon original issue to or upon
transfer, assignment or exchange thereof, accepts and agrees that all payments
of the principal of and interest on the Senior Subordinated Notes, and all other
amounts payable under this Agreement, 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 III, 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 3.08. NO PAYMENT ON GUARANTEES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Guarantees) by or on behalf of any Guarantor of principal of
or interest on the Senior Subordinated Notes pursuant to such Guarantor's
Guarantee, whether pursuant to the terms of the Senior Subordinated Note, upon
acceleration or
28
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 nonpayment 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 nonpayment 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 Senior Subordinated Notes during
a period (a "GUARANTOR BLOCKAGE PERIOD") commencing on the date of receipt of
such notice by GOF and its successors and assigns and ending 179 days
thereafter; provided however, that so long as any Indebtedness remains
outstanding under the Credit Agreement or any replacement, renewal, refinancing
or extension thereof, no Guarantor Payment Blockage Notice may be initiated to
block payment of principal or interest on the Senior Subordinated Notes pursuant
to the terms of this Section 3.08(a) except by the Administrative Agent (or
similar authorized party) under the Credit Agreement or any replacement,
renewal, refinancing or extension thereof.
(b) Notwithstanding anything herein or in the Senior Subordinated
Notes 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 nonpayment 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 Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such nonpayment event of default has been
cured or waived for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment
shall be made directly to the holders of Senior Subordinated Notes when such
payment is prohibited by Section 3.08(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered by the recipient thereof
(if notice of the conditions prohibiting such payment under
29
Section 3.08(a) has been received by the holders of Senior Subordinated Notes)
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 holders of Senior Subordinated Notes 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
holders of Senior Subordinated Notes 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 holders of Senior Subordinated Notes
shall be paid to the holders of such Designated Guarantor Senior Indebtedness.
Section 3.09 PAYMENT OVER 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 Senior
Subordinated Notes shall be entitled to receive any payment by such Guarantor of
the principal of or interest on the Senior Subordinated Notes pursuant to such
Guarantor's Guarantee, or any payment to acquire any of the Senior Subordinated
Notes for cash, property or securities, or any distribution with respect to the
Senior Subordinated Notes 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 Senior Subordinated Notes 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 GOF or its successors or assigns would be entitled in
respect of the Senior Subordinated Notes, but for the subordination provisions
of this Agreement, 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 holders of the Senior
30
Subordinated Notes at a time when such payment or distribution is prohibited by
Section 3.09(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 recipient thereof (if notice of the conditions
prohibiting such payment under Section 3.09(a) has been received thereby) 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.
(c) 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 Section 6.02 shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this Section 3.09
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Section 6.02.
Section 3.10 SUBROGATION.
(a) Upon the payment in full in cash of all Guarantor Senior
Indebtedness of a Guarantor, or provision for payment, GOF and its successors or
assigns 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 Senior Subordinated Notes 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 GOF and its successors and assigns would be
entitled except for the provisions of this Article III, and no payment over
pursuant to the provisions of this Article III to the holders of such Guarantor
Senior Indebtedness by GOF and its successors and assigns, as between such
Guarantor, its creditors other than holders of such Guarantor Senior
Indebtedness, and GOF and its successors and assigns, 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 III are and are intended solely
for the purpose of defining the relative rights of the holders of the Senior
Subordinated Notes solely in their capacity as such, on the one hand, and the
holders of Guarantor Senior Indebtedness of each Guarantor, on the other hand.
(b) If any payment or distribution to which the GOF or its
successors or assigns would otherwise have been entitled but for the provisions
of this Article III shall have been applied, pursuant to the provisions of this
Article III, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, GOF and it successors or assigns shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments
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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 3.11 OBLIGATIONS OF GUARANTORS UNCONDITIONAL.
(a) Nothing contained in this Article III or elsewhere in this
Agreement or in the Senior Subordinated Notes or the Guarantees is intended to
or shall impair, as among each of the Guarantors and GOF or its successors and
assigns, the obligation of each Guarantor, which is absolute and unconditional,
to pay to GOF and/or its successors and assigns the principal of, interest on
the Senior Subordinated Notes 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 GOF and/or its successors and assigns
and creditors of any Guarantor other than the holders of Guarantor Senior
Indebtedness of such Guarantor, nor shall anything herein or therein prevent GOF
and/or its successors and assigns from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Article III 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.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article III shall restrict the right of GOF or its successors
or assigns to take any action to declare the Senior Subordinated Notes to be due
and payable prior to its stated maturity pursuant to SECTIONS 7.01 AND 7.02 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 GOF and/or its successors and assigns are entitled to
receive any direct or indirect payment from such Guarantor of principal of,
interest on the Senior Subordinated Notes pursuant to such Guarantor's
Guarantee.
Section 3.12 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 III, GOF and/or its successors or assigns 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 GOF and/or its successors or assigns 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 III.
Section 3.13 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE GUARANTORS OR HOLDERS OF GUARANTEE 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 Agreement, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with. The
provisions of this
32
Article III are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Guarantor Senior Indebtedness.
Section 3.14 THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of or interest on the Senior
Subordinated Notes by reason of any provision of this Article III shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 7.01.
Section 3.15 NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS. Without
in any way limiting the generality of Section 3.13, the holders of Guarantor
Senior Indebtedness may, at any time and from time to time, without the consent
of or notice to GOF and/or its successors or assigns, without incurring
responsibility to GOF and/or its successors or assigns and without impairing or
releasing the subordination provided in this Article III or the obligations
hereunder of GOF and/or its successors and assigns 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 3.16 PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION. Nothing
contained in this Article III or elsewhere in this Agreement shall prevent a
Guarantor, except under the conditions described in Section 3.08, from making
payments of principal of and interest on the Senior Subordinated Notes unless at
least two Business Days prior to the date upon which such payment becomes due
and payable, the Borrower and such Guarantor shall have received the written
notice provided for in Section 3.08(b). The Guarantors shall give prompt written
notice to GOF and/or its successors and assigns of any dissolution, winding up,
liquidation or reorganization of such Guarantor.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT. The obligation of GOF to cause the
Letter of Credit to be issued is subject to the satisfaction of the following
conditions precedent, each to the reasonable satisfaction of GOF, or the waiver
thereof by GOF in its sole discretion:
(a) BORROWER'S CERTIFICATE OF INCORPORATION. The Certificate
Incorporation shall have been filed with the Secretary of State of the State of
Delaware and, in any event, shall have been amended to satisfy the requirements
of the Plan and the Bankruptcy Code, including, without limitation, to contain
the following terms and provisions, each to the reasonable satisfaction of GOF:
(i) The Borrower's authorized Capital Stock, and the
designated shares in each class or series of Capital
Stock, shall be limited to
33
such number of shares as is necessary for the issuances
contemplated by the Plan, including conversion or
exercise of all convertible or exercisable securities
to be issued thereunder, including applicable
anti-dilution protection;
(ii) The stockholders of the Borrower shall be authorized to
take action by written consent in lieu of a meeting
thereof;
(iii) The Borrower's Board of Directors shall not be
classified;
(iv) The provisions of the Borrower's certificate of
incorporation as of May 11, 2002 that require an
affirmative vote of 80% of the voting Capital Stock for
the taking of certain actions shall be amended to
provide that such actions may be taken with the
affirmative vote of 50% of the voting Capital Stock;
and
(v) The issuance of non-voting capital equity securities
shall be prohibited, but only to the extent required by
Section 1123(a)(6) of the Bankruptcy Code.
(b) BORROWER'S BYLAWS. The Bylaws shall have been adopted by the
Borrower, and, in any event, shall have been amended to satisfy the requirements
of the Plan and the Bankruptcy Code, including, without limitation, to contain
the following terms and provisions, each to the reasonable satisfaction of GOF:
(i) Shareholders holding a minimum of 25% of the Borrower's
Common Stock shall be authorized to call special
meetings of the shareholders;
(ii) The notice requirements for shareholders to place
matters on the ballot for consideration at annual and
special meetings shall not be unduly prohibitive and,
in any event, shall be to GOF's reasonable
satisfaction;
(iii) Shareholders shall be authorized to take action by
written consent in lieu of a meeting thereof; and
(iv) The Borrower's officers shall be prohibited from
exercising voting rights of any securities held by the
Borrower without express authorization from the
Borrower's Board of Directors.
(c) ORGANIZATIONAL DOCUMENTS OF DEBTOR SUBSIDIARIES. The
certificate or articles of incorporation and by-laws of each Debtor Subsidiary
shall be amended as necessary to satisfy the provisions of the Plan and the
Bankruptcy Code, and shall include, among other things, pursuant to
Section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance
of non-voting equity securities, but only to the extent required by
Section 1123(a)(6) of the Bankruptcy Code.
34
35
(d) ORGANIZATION DOCUMENTS OF SUBSIDIARIES AND CERTAIN AFFILIATES.
In addition to the requirements of Section 4.01(c) above, the Organizational
Documents of the Borrower's Subsidiaries and Affiliates (excluding GOF) shall,
to the reasonable satisfaction of GOF:
(i) prohibit their respective officers from exercising
voting rights of any securities by such Subsidiaries
and Affiliates without express authorization from such
Subsidiary's or Affiliate's Board of Directors or other
applicable governing body; and
(ii) provide that the shareholders, members, partners or
other equity holders, as the case may be, of such
Subsidiary or Affiliate shall be permitted to remove as
of the Effective Date, at any time and from time to
time thereafter, any director, manager, managing
partner or person of equivalent authority, with or
without cause at any time, through action by a majority
in interest of such shareholders, members, partners or
other equity holders (which action may, at the option
thereof and to the extent permissible by law, be taken
in writing or pursuant to a meeting thereof).
(e) SHAREHOLDER RIGHTS PLAN. The Shareholder Rights Plan shall have
been rejected by the Bankruptcy Court and terminated.
(f) SHAREHOLDERS AGREEMENT. The Shareholders Agreement shall have
been executed and delivered by each of the parties thereto.
(g) DOCUMENTS TO BE DELIVERED. GOF shall have received the
following documents, each dated the Effective Date (unless otherwise provided
herein or unless previously provided in accordance with this Section 4.01), in
form and substance satisfactory to GOF:
(i) The Senior Subordinated Note to the order of GOF in the
amount of $25,000,000.00, subject to the terms hereof
and thereof;
(ii) Certified copies of all documents and instruments,
including all authorizations, consents and approvals
of, evidence of all other actions by, and notices and
filings with, all governmental authorities and
regulatory bodies or other Persons to whom the Obligors
have contractual obligations as shall be required for
the execution, delivery and performance of this
Agreement by the Obligors, including those consents and
approvals required by Section 4.01(i);
(iii) An Officer's Certificate (the statements made in which
certificate shall be true on and as of the Effective
Date), of
36
each Obligor certifying as to: (A) the truth of the
representations and warranties made by such Obligor in
this Agreement immediately before and immediately after
giving effect to the execution and delivery hereof and
the issuance of the Senior Subordinated Note; and (B)
the satisfaction, as of the Effective Date, of all
conditions precedent set forth in this Section 4.01
that are to be performed or satisfied by such Obligor;
provided that the Borrower's Officer's Certificate
shall certify the satisfaction of all conditions
precedent set forth in this Section 4.01;
(iv) A signed copy of a certificate of the Secretary or an
Assistant Secretary or other appropriate officer of the
Borrower certifying (A) as to true and complete copies
of the Certificate of Incorporation and Bylaws and the
Organizational Documents of each of the Borrower's
Subsidiaries as in effect on the Effective Date and the
absence of any amendments to the charter or by-laws
since such dates; and (B) the names and true signatures
of the officers of the Borrower authorized to sign this
Agreement, and the other documents to be delivered
hereunder; and
(v) A signed copy of a certificate of the Secretary or an
Assistant Secretary or other appropriate officer or
manager of each Obligor (other than the Borrower)
certifying (A) as to true and complete copies of the
Organizational Documents of such Obligor as in effect
on the Effective Date and the absence of any amendments
to the charter or by-laws since such dates; and (B) the
names and true signatures of the officers of such
Obligor authorized to sign this Agreement, and the
other documents to be delivered hereunder.
(h) ENVIRONMENTAL DUE DILIGENCE. GOF shall not have given the
Borrower written notice that GOF, in its sole discretion, has determined that
the results of its environmental diligence review were not reasonably
satisfactory.
(i) CONSENTS AND APPROVALS. The Borrower, its Debtor Subsidiaries
and the other Obligors, if any, shall have obtained all governmental consents
and made all governmental filings required or reasonably advisable in connection
with the transactions contemplated by the Plan (including without limitation,
any consents and filings required or reasonably advisable pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Act (the "HSR ACT"), any applicable foreign
antitrust law or regulation, and the New Jersey Industrial Site Recovery Act)
prior to the applicable deadlines, filing periods or other timeframes associated
with such consents and filings, and the applicable waiting period under the
37
HSR Act or any applicable foreign antitrust law or regulation, if any, shall
have expired or been terminated.
(j) CREDIT AGREEMENT. The closing of the Credit Agreement shall
have occurred, or shall occur substantially simultaneously with the execution
and delivery hereof.
(k) NEW INVESTMENT. The closing of the New Investment shall have
occurred, or shall occur substantially simultaneously with the execution and
delivery hereof.
(l) MANAGEMENT LETTERS. On or before the Confirmation Date, ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ shall have executed and delivered a letter in the form of
Exhibit L and Exhibit M, respectively, to the Disclosure Statement, unless this
condition is waived in writing by GOF.
(m) COMPLIANCE WITH PLAN. The Borrower and its Debtor Subsidiaries
shall be in compliance with the material terms and provisions of the Plan
immediately prior to the execution and delivery of this Agreement.
(n) ADDITIONAL INFORMATION AND DOCUMENTS. Each Obligor shall have
provided GOF with such additional information and shall have executed and
delivered such additional documents as may be reasonably requested by GOF.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower and each Obligor hereby jointly and severally represents and warrants
to GOF as of the Effective Date as follows:
(a) CORPORATE EXISTENCE. The Borrower and each of its Subsidiaries
(a) is a corporation, partnership, limited liability company, or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or other power
and authority, and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
and is in good standing in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify could have a Material Adverse Effect.
(b) FINANCIAL CONDITION. The Borrower has heretofore furnished to
GOF the following financial statements: (i) the audited consolidated balance
sheets of the Borrower and its consolidated Subsidiaries and the related audited
consolidated statements of operations, shareholders' equity (deficit) and cash
flows of the Borrower and its consolidated Subsidiaries for the fiscal year
ended December 29, 2001, reported on by Ernst & Young LLP; (ii) the unaudited
consolidated balance sheets of the Borrower and its consolidated Subsidiaries
and the
38
related unaudited consolidated statements of operations, shareholders' equity
(deficit) and cash flows of the Borrower and its consolidated Subsidiaries for
the nine-month period ended September 28, 2002; and (iii) pro forma consolidated
balance sheets of the Borrower and its consolidated Subsidiaries, and related
consolidated statements of shareholders' equity (deficit) as at December 28,
2002, which balance sheets and statements reflect the consummation of the Plan
as if the same had been consummated on said date.
All such financial statements fairly present the respective actual or pro
forma financial condition, as applicable, of the Borrower and its consolidated
Subsidiaries as at the respective dates, and the respective actual results of
operations for the respective periods ended on said respective dates, all in
accordance with GAAP and practices applied on a consistent basis; provided that,
as to projections, the Borrower and its consolidated Subsidiaries represent only
that such projections have been prepared in good faith based on estimates and
assumptions believed by the Borrower and its consolidated subsidiaries to be
reasonable as of the date such projections were prepared. None of the Borrower
or any of its Subsidiaries has on the date hereof any material contingent
liabilities, material liabilities for Taxes, material unusual forward or
long-term commitments or material unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said respective balance sheets as at said respective dates. Since September 28,
2002, there has been no material adverse change in the financial condition,
operation, business or prospects of the Borrower and its consolidated
Subsidiaries taken as a whole from that set forth in the respective financial
statements as at such date.
(c) LITIGATION. Except as set forth in Schedule 5.01(c) hereto,
there are no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of any Obligor) threatened against the Borrower or any of the Borrower's
Subsidiaries which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
(d) NO BREACH. None of the execution and delivery of this Agreement
and the Senior Subordinated Note, the consummation of the transactions herein
and therein contemplated or compliance with the terms and provisions hereof and
thereof will conflict with or result in a breach of, or require any consent
under, the Organizational Documents of the Borrower, any other Obligor or any of
the Borrower's other Subsidiaries, if any, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or Governmental Authority,
or any agreement or instrument to which the Borrower, any other Obligor or any
of the Borrower's other Subsidiaries, if any, is a party or by which any of them
or any of their Property is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any Property of the Borrower, any other
Obligor, or any of the Borrower's other Subsidiaries, if any, pursuant to the
terms of any such agreement or instrument.
(e) ACTION. Each Obligor has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement and the Senior Subordinated Note, as the case may be; the
execution, delivery and performance by each
39
Obligor of this Agreement and the Senior Subordinated Note, as the case may be,
has been duly authorized by all necessary corporate or other action on the part
of each Obligor (including, without limitation, any required shareholder
approvals); and this Agreement has been duly and validly executed and delivered
by each Obligor and constitutes, and the Senior Subordinated Note, as the case
may be, constitutes, its legal, valid and binding obligation, enforceable
against each Obligor in accordance with the terms hereof and thereof, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general applicability affecting
the enforcement of creditors' rights and (b) the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(f) APPROVALS. No authorizations, approvals (other than the
approval of the Bankruptcy Court, which has previously been obtained) or
consents of (including any exchange control approval), and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
each Obligor of this Agreement or by the Borrower of the Senior Subordinated
Note or for the legality, validity or enforceability hereof or thereof.
(g) USE OF CREDIT. None of the Obligors is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and no part of the proceeds of any extension of credit hereunder will be
used to buy or carry any Margin Stock in violation of the applicable provisions
of Regulations U and X.
(h) ERISA. Each ERISA Plan, and, to the knowledge of each Obligor,
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Internal Revenue Code and any other Federal or state
law, and no event or condition has occurred and is continuing as to which any
Obligor would be under an obligation to furnish a report to GOF under
Section 6.01(a) hereof.
(i) TAXES. The Borrower and its Subsidiaries (other than their
respective Foreign Subsidiaries) are members of an affiliated group of
corporations filing consolidated returns for Federal income tax purposes, of
which the Borrower is the "common parent" (within the meaning of Section 1504 of
the Internal Revenue Code) of such group. There is no tax sharing, tax
allocation or similar agreement currently in effect providing for the manner in
which tax payments owing by the members of such affiliated group (whether in
respect of Federal, state or foreign income or other Taxes) are allocated among
the members of the group. The Borrower and its Subsidiaries have filed (either
directly, or indirectly through the Borrower) all United States Federal, and all
foreign, income tax returns and all other material tax returns that are required
to be filed by them and have paid (either directly, or indirectly through the
Borrower) all Taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries. The charges, accruals and
reserves on the books of the Borrower and the Borrower's Subsidiaries in respect
of Taxes and other governmental charges are, in the opinion of the Borrower,
adequate.
40
(j) INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
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.
(k) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(l) MATERIAL AGREEMENTS AND LIENS.
(i) INDEBTEDNESS. Part A of Schedule 4.01(l) hereto is a
complete and correct list, as of the date of this
Agreement (and after giving effect to the transactions
contemplated to occur on the Effective Date), of each
credit agreement, loan agreement, indenture, purchase
agreement, 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, the Borrower and its Subsidiaries,
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 4.01(l).
(ii) LIENS. Part B of Schedule 4.01(l) hereto is a complete
and correct list, as of the date of this Agreement (and
after giving effect to the transactions contemplated to
occur on the Effective Date), of each Lien securing
Indebtedness of any Person 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 the
Borrower or its Subsidiaries, 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 4.01(l).
(m) ENVIRONMENTAL MATTERS. The Borrower and each of its
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such permit, license or authorization would not have a
Material Adverse Effect. Each of such permits, licenses and authorizations is in
full force and effect and the Borrower and each of its Subsidiaries is in
compliance with the terms and conditions thereof, and is also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained
41
in any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not have a Material Adverse Effect.
In addition, except as set forth in Schedule 4.01(m) hereto:
(i) NO PENDING ENVIRONMENTAL MATTERS. No notice,
notification, demand, request for information,
citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed
and no investigation or review is pending or threatened
by any governmental or other entity with respect to any
alleged failure by the Borrower or any of its
Subsidiaries to have any environmental, health or
safety permit, license or other authorization required
under any Environmental Law in connection with the
conduct of the business of the Borrower or any of its
Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation,
discharge or disposal, or any Release of any Hazardous
Materials generated by the Borrower or any of its
Subsidiaries which alleged failure, generation,
treatment, storage, recycling, transportation,
discharge or disposal or Release would have a Material
Adverse Effect.
(ii) NO TREATMENT FACILITIES OR RELEASES. Except to the
extent the same could not reasonably be expected to
have a Material Adverse Effect: (A) neither the
Borrower nor any of its Subsidiaries owns, operates or
leases a treatment, storage or disposal facility
requiring a permit under the Resource Conservation and
Recovery Act of 1976, as amended, or under any
comparable state or local statute; (B) no
polychlorinated biphenyls (PCB's) is or has been
present at any site or facility now or previously
owned, operated or leased by the Borrower or any of its
Subsidiaries; (C) no asbestos or asbestos-containing
materials is or has been present at any site or
facility now or previously owned, operated or leased by
the Borrower or any of its Subsidiaries; (D) there are
no underground storage tanks or surface impoundments
for Hazardous Materials, active or abandoned, at any
site or facility now or previously owned, operated or
leased by the Borrower or any of its Subsidiaries; (E)
no Hazardous Materials have been Released at, on or
under any site or facility now or previously owned,
operated or leased by the Borrower or any of its
Subsidiaries in a reportable quantity established by
statute, ordinance, rule, regulation or order; and (F)
no Hazardous Materials have been otherwise Released at,
on or under any site or facility now or previously
owned, operated or leased by the Borrower or any of its
Subsidiaries.
42
(iii) NO HAZARDOUS MATERIAL TRANSPORTED TO NPL SITES. Neither
the Borrower nor any of its Subsidiaries has
transported or arranged for the transportation of any
Hazardous Material to any location that is listed on
the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), listed
for possible inclusion on the NPL by the Environmental
Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided
for by 40 C.F.R. Section 300.5 ("CERCLIS"), or on any
similar state, local or foreign list or that is the
subject of Federal, state, local or foreign enforcement
actions or other investigations that may lead to
Environmental Claims against the Borrower or any of its
Subsidiaries, in each case to the extent such
Environmental Claims could reasonably be expected to
have a Material Adverse Effect.
(iv) NO NOTIFICATIONS OR LISTINGS. No oral or written
notification of a Release of a Hazardous Material has
been filed by or on behalf of the Borrower or any of
its Subsidiaries and no site or facility now or
previously owned, operated or leased by the Borrower or
any of its Subsidiaries is listed or proposed for
listing on the NPL, CERCLIS or any similar state or
foreign list of sites requiring investigation or
clean-up.
(v) NO LIENS OR RESTRICTIONS. No Liens have arisen under or
pursuant to any Environmental Laws on any site or
facility owned, operated or leased by the Borrower or
any of its Subsidiaries, and neither the Borrower nor
any of its Subsidiaries has received any notification
(or otherwise has any knowledge) of any government
action that has been taken or is in process that could
subject any such site or facility to such Liens, and
neither the Borrower nor any of its Subsidiaries would
be required to place any notice or restriction relating
to the presence of Hazardous Materials at any site or
facility owned by it in any deed to the real property
on which such site or facility is located.
(vi) FULL DISCLOSURE. There have been no so-called "Phase I"
or "Phase II" environmental investigations or other
analyses conducted by or that are in the possession of
the Borrower or any of its Subsidiaries in relation to
any site or facility now or previously owned, operated
or leased by the Borrower or any of its Subsidiaries
which have not been made available to GOF.
43
(n) CAPITALIZATION.
(i) OUTSTANDING EQUITY. The authorized Capital Stock of the
Borrower and each of the Subsidiaries will consist as
of the Effective Date, after giving effect to the
transactions contemplated to occur on or before the
Effective Date, of the aggregate number of shares of
common and preferred stock, having the respective par
values and series, in each case as listed in Schedule
4.01(n) hereto. On the Effective Date, after giving
effect to the transactions contemplated to occur on or
before the Effective Date, the number of shares of
common stock and each series of preferred stock of the
Borrower and each of its Subsidiaries will be duly and
validly issued and outstanding as listed in said
Schedule 4.01(n) and will be owned beneficially and of
record by the Persons as listed in said Schedule
4.01(n).
(ii) OUTSTANDING EQUITY RIGHTS. As of the Effective Date,
after giving effect to the transactions contemplated to
occur on or before the Effective Date, except as set
forth in Schedule 4.01(n) hereto, (A) there will be no
outstanding Equity Rights with respect to the Borrower
or any of its Subsidiaries and (B) there will be no
outstanding obligations of the Borrower or any of its
Subsidiaries to repurchase, redeem, or otherwise
acquire any shares of Capital Stock of the Borrower or
any of its Subsidiaries nor will there be any
outstanding obligations of the Borrower any of its
Subsidiaries to make payments to any Person, such as
"phantom stock" payments, where the amount thereof is
calculated with reference to the fair market value or
equity value of the Borrower or any of its
Subsidiaries.
(o) SUBSIDIARIES AND INVESTMENTS.
(i) SUBSIDIARIES. Set forth in Part A of Schedule 4.01(o)
hereto is a complete and correct list of all of the
Borrower's Subsidiaries as of the Effective Date after
giving effect to the transactions contemplated to occur
on or before the Effective Date, together with, for
each such Subsidiary, (A) the jurisdiction of
organization of such Subsidiary, (B) each Person
holding ownership interests in such Subsidiary and (C)
the nature of the ownership interests held by each such
Person and the percentage of ownership of such
Subsidiary represented by such ownership interests.
Except as disclosed in Part A of Schedule 4.01(o)
hereto, (x) the Borrower and its Subsidiaries own, or
will own on the Effective Date, free and clear of
Liens, and have the unencumbered right to vote, all
outstanding ownership interests in each Person shown to
be held by
44
them in Part A of Schedule 4.01(o) hereto, (y) all of
the issued and outstanding Capital Stock of each such
Person organized as a corporation is validly issued,
fully paid and nonassessable and (z) (except as
disclosed in Schedule 4.01) there are no outstanding
Equity Rights with respect to such Person.
(ii) INVESTMENTS. Set forth in Part B of Schedule 4.01(o)
hereto is a complete and correct list of all
Investments (other than Investments disclosed in Part A
of said Schedule 4.01(o) hereto and Permitted
Investments) held by the Borrower and its Subsidiaries
in any Person on the date hereof, or that will be held
on the Effective Date after giving effect to the
transactions contemplated to occur on or before the
Effective Date, and, for each such Investment, (x) the
identity of the Person or Persons holding such
Investment and (y) the nature of such Investment.
Except as disclosed in Part B of Schedule 4.01 hereto,
the Borrower and each of its Subsidiaries owns, or will
own, free and clear of all Liens, all such Investments.
(iii) ABSENCE OF CERTAIN RESTRICTIONS. Except as provided for
in the Intercompany Notes Agreements (as defined in the
Credit Agreement), neither the Borrower nor any of its
Subsidiaries is, on the date hereof, subject to any
indenture, agreement, instrument or other arrangement
of the type described in Section 9.16(e) of the Credit
Agreement.
(p) TITLE TO ASSETS. The Borrower and each of its Subsidiaries on
the Effective Date will own and have good and marketable title (subject only to
Permitted Liens) to the material Properties shown to be owned in the most recent
financial statements referred to in Section 5.01(b)(iii) hereof (other than
Properties disposed of in the ordinary course of business or otherwise permitted
to be disposed of pursuant to Section 6.01(d) hereof or in accordance with the
Plan). The Borrower and each of its Subsidiaries on the Effective Date will own
(or have available for use under lease, license or other arrangements entered
into with any other Person) good and marketable title to, and enjoy on the
Effective Date, peaceful and undisturbed possession of, all Properties (subject
only to Permitted Liens) that are necessary for the operation and conduct of
their businesses.
(q) TRUE AND COMPLETE DISCLOSURE. All written information furnished
after the date hereof by the Obligors to GOF, in its capacity as a holder of the
Senior Subordinated Note, in connection with this Agreement and the Senior
Subordinated Note and the transactions contemplated hereby and thereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified.
(s) REAL PROPERTY. Set forth on Schedule 4.01(s) attached hereto is
a list of all of the real property interests of the Borrower and its
Subsidiaries on the Effective Date, after
45
giving effect to the transactions contemplated to occur on or before the
Effective Date, indicating in each case whether the respective Property is owned
or leased, the identity of the owner or lessee and the location of the
respective Property. All such leases necessary for the conduct of the business
of the Borrower or its Subsidiaries are valid and subsisting and are in full
force and effect, except for such failures to be valid, subsisting and in full
force and effect as would not, individually or in the aggregate, have a Material
Adverse Effect. Each of the Borrower and its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases, and each of the Borrower and its
Subsidiaries has complied with all material obligations under all leases to
which it is a party, except where the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.
Section 5.02. REPRESENTATIONS AND WARRANTIES OF GOF. GOF hereby
represents and warrants as of the Effective Date as follows:
(a) DUE ORGANIZATION, ETC. GOF is a limited partnership duly
organized and validly existing under the laws of the State of Delaware.
(b) CORPORATE POWER, ETC. GOF has full power and authority to enter
into, deliver and perform its obligations under this Agreement and the Senior
Subordinated Note and to consummate each of the transactions contemplated hereby
and thereby, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement.
(c) NO CONFLICT. Neither the execution and delivery of this
Agreement, nor the performance by GOF of its obligations hereunder, will
conflict in any material respect with or result in a material breach of, or
constitute a material default under, any applicable laws or any indenture,
mortgage, deed of trust or other material instrument or agreement to which GOF
is a party or is bound.
(d) APPROVALS, ETC. No order, license, consent, authorization or
approval of, or exemption by, or notice to or registration with, any
Governmental Authority or regulatory body, and no filing, recording, publication
or registration in any public office or any other place, is required in
connection with the execution, delivery and performance by GOF of any this
Agreement, or for the legality, validity, binding effect or enforceability
hereof, except such orders, licenses, consents, authorizations and approvals as
have been duly obtained or made and are in full force and effect, or will be
obtained and made after the date hereof, as permitted by the applicable
Governmental Authority or regulatory body.
ARTICLE VI
COVENANTS
Section 6.01. GENERAL COVENANTS. The Borrower and the other Obligors,
as the case may be, covenant and agree as follows:
(a) DELIVERY OF INFORMATION. The Obligors shall deliver to GOF
(PROVIDED, HOWEVER, that GOF may suspend delivery of any of the information set
forth in the following
46
clauses (i) through (xii), or any subset of such information, by delivering
written notice to the Borrower, with such suspension to continue until GOF
delivers written notice to the Borrower directing the resumption of the delivery
thereof):
(i) as soon as available and in any event within (x) 45
days after the end of each monthly accounting period for the fiscal year of the
Borrower ending January 3, 2004 and (y) 30 days after the end of each monthly
accounting period of each fiscal of the Borrower commencing with the fiscal year
ending January 1, 2005 (unless such monthly accounting period ends on the end of
a fiscal quarter or fiscal year, in which case the provisions of paragraph (ii)
and (iii) below shall apply), consolidated statements of income, retained
earnings and cash flows of the Borrower and its Restricted Subsidiaries (and,
separately stated, of the Borrower and its Restricted Subsidiaries, and, with
respect to statements of income, Operating Divisions) for such period and for
the period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheets of the Borrower and its
Restricted Subsidiaries as at the end of such period (and, separately stated, of
the Borrower and its Restricted Subsidiaries, and, with respect to statements of
income, Operating Divisions), setting forth in each case in comparative form the
corresponding consolidated figures for the corresponding period in the preceding
fiscal year, accompanied by a certificate of a senior financial officer of the
Borrower, which certificate shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of the Borrower and its Restricted Subsidiaries (or of the Borrower
and its Restricted Subsidiaries and Operating Divisions, as the case may be), in
each case in accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to the absence of footnote disclosures and to normal
year-end audit adjustments);
(ii) as soon as available and in any event within (x) 60
days after the end of each quarterly fiscal period for the fiscal year ending
January 3, 2004 and (y) 45 days after the end of each quarterly fiscal period of
each fiscal year of the Borrower commencing with the fiscal year ending January
1, 2005 (unless such quarterly fiscal period ends on the end of a fiscal year,
in which case the provisions of paragraph (iii) below shall apply), consolidated
statements of income, retained earnings and cash flows of the Borrower and its
Restricted Subsidiaries (and, separately stated, of the Borrower and its
Restricted Subsidiaries, and, with respect to statements of income, Operating
Divisions) for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
balance sheets of the Borrower and its Restricted Subsidiaries as at the end of
such period (and, separately stated, of the Borrower and its Restricted
Subsidiaries, and, with respect to statements of in come, Operating Divisions),
setting forth in each case in comparative form the corresponding consolidated
figures for the corresponding period in the preceding fiscal year, accompanied
by a certificate of a senior financial officer of the Borrower, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of the
Borrower and its Restricted Subsidiaries (or of the Borrower, its Restricted
Subsidiaries and Operating Divisions, as the case may be), in each case in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to the absence of footnote disclosures and to normal year-end
audit adjustments);
47
(iii) as soon as available and in any event within (x) 120
days after the end of the fiscal year of the Borrower ending January 3, 2004 and
(y) 90 days after the end of each fiscal year of the Borrower commencing with
the fiscal year ending January 1, 2005, consolidated statements of income,
retained earnings and cash flows of the Borrower and its Restricted Subsidiaries
(and, separately stated, of the Borrower and its Restricted Subsidiaries and
Operating Divisions) for such fiscal year and the related consolidated balance
sheets of the Borrower and its Restricted Subsidiaries (and, separately stated,
of the Borrower and its Restricted Subsidiaries and Operating Divisions) as at
the end of such fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Restricted Subsidiaries (or of the
Borrower and its Restricted Subsidiaries and Operating Divisions, as the case
may be) as at the end of, and for, such fiscal year in accordance with GAAP,
consistently applied;
(iv) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which any of the
Borrower or its Subsidiaries shall have filed with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any national
securities exchange;
(v) promptly upon the mailing thereof to the holders of any
publicly-traded debt or equity securities of any of the Borrower or its
Subsidiaries, copies of all financial statements, certificates, reports, proxy
statements and other notices or information so mailed;
(vi) as soon as possible, and in any event within 10 days
after any Obligor knows or has reason to believe that any of the events or
conditions specified below with respect to any ERISA Plan or Multiemployer Plan
has occurred or exists, a statement signed by a senior financial officer of such
Obligor or its Subsidiary setting forth details respecting such event or
condition and the action, if any, that the Obligors and their ERISA Affiliates
propose to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Borrower or an ERISA Affiliate
with respect to such event or condition): (A) any reportable event, as defined
in Section 4043(c) of ERISA and the regulations issued thereunder, with respect
to an ERISA Plan, as to which the PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, including, without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Internal Revenue Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code);
and any request for a waiver under Section 412(d) of the Internal Revenue Code
for any ERISA Plan; (B) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any ERISA Plan or any action taken by the Borrower or an
ERISA Affiliate to terminate any ERISA Plan; (C) the institution by the PBGC of
proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan, or the receipt by
48
the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by the PBGC with respect to such Multiemployer Plan;
(D) the complete or partial withdrawal from a Multiemployer Plan by the Borrower
or any ERISA Affiliate that results in liability under Section 4201 or 4204 of
ERISA (including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by the Borrower or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA; (E) the institution of a proceeding by
a fiduciary of any Multiemployer Plan against the Borrower or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and (F) the adoption of an amendment to any ERISA Plan that,
pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would require security to be provided to the ERISA Plan in accordance
with the provisions of said Sections;
(vii) as soon as available and in any event within 30 days
after the beginning of each fiscal year of the Borrower, (A) a projection
(setting forth an itemization of the principal assumptions relating thereto) for
such fiscal year of the Borrower of the anticipated income statement, cash flow
statement and changes in financial position of the Borrower, and the related
balance sheets and (B) promptly after any material change in such projections
(either positive or negative) becomes known, notice of such change;
(viii) promptly after any Obligor has reason to believe that
any Default has occurred under this Agreement or the Senior Subordinated Notes,
a notice of such Default describing the same in reasonable detail and, together
with such notice or as soon thereafter as possible, a description of the action
that such Obligor has taken or proposes to take with respect thereto;
(ix) promptly after the Borrower has reason to believe that
any default has occurred under the Credit Agreement, and in any event no later
than notice thereof is delivered to the Administrative Agent, a notice of such
default describing the same in reasonable detail and, together with such notice
or as soon thereafter as possible, a description of the action that the Borrower
has taken or proposes to take with respect thereto;
(x) immediately after the Borrower or any of its
Subsidiaries has reason to believe that it may not timely make any of the
payments due under the Credit Agreement from the Borrower to the Administrative
Agent on December 31, 2003, June 30, 2004 and December 31, 2004, a notice of
such fact, describing the reason for such determination in reasonable detail
and, together with such notice or as soon thereafter as possible, a description
of the action that the Borrower has taken or proposes to take to remedy such
situation;
(xi) immediately upon the addition of any guarantor under
the Credit Agreement pursuant to Section 9.16(b) thereof or otherwise, notice of
such addition, copies of the Guaranty Agreement executed by such additional
guarantor and a statement of the basis for such addition;
49
(xii) from time to time such other information regarding the
financial condition, operations, business or prospects of the Borrower or any of
its Subsidiaries (including, without limitation, any ERISA Plan or Multiemployer
Plan and any reports or other information required to be filed under ERISA) as
GOF may reasonably request; and
(xiii) the Borrower shall deliver to GOF, 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 Borrower 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 Borrower 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 Borrower is taking or proposes to take with respect thereto. The
first certificate to be delivered by the Borrower pursuant to this
SECTION 6.01(a) shall be for the fiscal year ending January 3, 2004.
(b) TRANSACTIONS WITH AFFILIATES. The Borrower 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 Borrower or any Restricted Subsidiary
(each an "AFFILIATE TRANSACTION"), unless (i) such Affiliate Transaction is on
terms which are no less favorable to the Borrower 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 Borrower and an Affiliate of the Borrower
having a Fair Market Value in excess of $25,000,000, such Affiliate Transaction
is in writing and the Borrower delivers an Officer's Certificate to each holder
of Senior Subordinated Notes 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
Borrower and an Affiliate of the Borrower having a Fair Market Value in excess
of $25,000,000, such Affiliate Transaction is in writing and a majority of the
disinterested members of the Board of Directors of the Borrower shall have
approved such Affiliate Transaction and determined that such Affiliate
Transaction complies with the foregoing provisions.
Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions with or among the Borrower 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 Borrower or any Subsidiary as determined in good faith by the Borrower's
Board of Directors; (iii) any transactions undertaken pursuant to any
contractual obligations or rights in existence on the Effective Date (as in
effect on the Effective Date), including without limitation redemption features
in any outstanding securities or the issuance of, or the payment of the
principal, interest or any other amounts due on, the Junior Subordinated
Convertible Notes; (iv) any Restricted Payments made in compliance with
SECTION 6.01(e);
50
(v) loans and advances to officers, directors and employees of the Borrower or
any Restricted Subsidiary for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business for bona fide
business purposes of the Borrower or a Restricted Subsidiary; (v) entering into
by the Borrower and any of its consolidated Restricted Subsidiaries of a tax
sharing or similar arrangement; and (vii) entering into by the Borrower and any
Restricted Subsidiary a Qualified Securitization Transaction.
(c) LIMITATION ON INDEBTEDNESS. The Borrower 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 Borrower 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 1.0 to 1.0.
The foregoing limitations will not apply to the Incurrence by the
Borrower or any Restricted Subsidiary of any of the following (collectively,
"PERMITTED INDEBTEDNESS"), each of which shall be given independent effect: (A)
Indebtedness under the Senior Subordinated Notes, the Junior Subordinated
Convertible Notes and other indebtedness outstanding on the Effective Date; (B)
Indebtedness Incurred pursuant to (i) the Credit Agreement 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 $800,000,000 at any
one time outstanding; provided, however, that such $800,000,000 shall be reduced
(without duplication) by the amount of any repayment of Indebtedness under the
Credit Agreement pursuant to SECTION 5.01(g) and any drawing under the Letter of
Credit; (C) Indebtedness of any Subsidiary of the Borrower owed to and held by
the Borrower or any Guarantor, other Indebtedness of the Borrower owed to and
held by any Guarantor which is unsecured and subordinated in right of payment to
the payment and performance of the Borrower's obligations under any Senior
Indebtedness and the Senior Subordinated Notes and Indebtedness of a Foreign
Restricted Subsidiary that is not a Guarantor owed to and held by any other
Restricted Subsidiary that is not a Guarantor; provided, however, that an
Incurrence of Indebtedness that is not permitted by this clause (C) shall be
deemed to have occurred upon (i) any sale or other disposition of any
Indebtedness of the Borrower or any Restricted Subsidiary referred to in this
clause (C) to a Person (other than the Borrower or a Guarantor), (ii) any sale
or other disposition of Equity Interests of any Guarantor which holds
Indebtedness of the Borrower or another Subsidiary of the Borrower 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
Borrower or any other Restricted Subsidiary as an Unrestricted Subsidiary; (D)
the Guarantees and guarantees by any Guarantor of Indebtedness of the Borrower
permitted under this Section 6.01(c); 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 Borrower or any Guarantor entered into in the ordinary course
of business; (F) Purchase Money Indebtedness and Capital Lease Obligations which
do not exceed $50,000,000 in the aggregate at any one time outstanding; (G)
Indebtedness to the extent representing a replacement, renewal, refinancing or
extension (collectively for purposes of this Section 6.01(c), a "REFINANCING")
of outstanding Indebtedness Incurred in compliance with the Consolidated
Coverage Ratio of the
51
first paragraph of this Section 6.01(c) or clause (B) of this paragraph of this
Section 6.01(c); 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 Senior Subordinated Notes may only be
refinanced with Indebtedness that is made pari passu with or subordinate in
right of payment to the Senior Subordinated 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 Borrower or any Guarantor and (v) Indebtedness of the
Borrower may only be refinanced by Indebtedness of the Borrower and Indebtedness
of a Restricted Subsidiary may only be refinanced by Indebtedness of such
Restricted Subsidiary or by the Borrower; (H) in addition to the items referred
to in clauses (A) through (G) above, Indebtedness of the Borrower (including any
Indebtedness under the Credit Agreement that utilizes this subparagraph (H))
having an aggregate principal amount not to exceed $200,000,000 at any one time
outstanding; and (I) Indebtedness of a Securitization Entity in a Qualified
Securitization Transaction that is Non-Recourse Debt with respect to the
Borrower and its other Restricted Subsidiaries (except for Standard
Securitization Undertakings and Limited Originator Recourse).
(d) DISPOSITION OF PROCEEDS OF ASSET SALES.
(i) The Borrower shall not, and shall not cause or permit
any Restricted Subsidiary to, directly or indirectly, make any Asset Sale,
unless (A) the Borrower or such Restricted Subsidiary, as the case may be,
receives consideration for such Asset Sale at least equal to the Fair Market
Value of the assets sold or otherwise disposed of and (B) at least 65% of such
consideration consists of (I) cash or Cash Equivalents, or (II) properties,
capital assets and interests in joint ventures (however structured) that replace
the properties and assets that were the subject of such Asset Sale or in
properties and capital assets that will be used in the business of the Borrower
and its Restricted Subsidiaries as existing at such time or in businesses
reasonably related thereto (as determined in good faith by the Borrower's Board
of Directors) ("Replacement Assets"). The amount of any Indebtedness (other than
any Subordinated Indebtedness) of the Borrower or any Restricted Subsidiary that
is actually assumed by the transferee in such Asset Sale and from which the
Borrower 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 Borrower or the Restricted Subsidiaries.
(ii) The Borrower or such Restricted Subsidiary, as the case
may be, may (A) apply the Net Cash Proceeds of any Asset Sale to repay Senior
Indebtedness and permanently reduce any related commitment, or (B) make an
Investment in Replacement Assets, in each case, within 270 days of receipt
thereof.
52
(iii) 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 (A) or (B) of the immediately preceding paragraph (such Net Cash
Proceeds, the "UNUTILIZED NET CASH PROCEEDS"), the Borrower shall, within 45
days after such 270th day, prepay the Senior Subordinated Notes up to a maximum
principal amount equal to the amount of such Unutilized Net Cash Proceeds in
accordance with Section 2.02(c) irrespective of whether or not an Event of
Default has occurred and is continuing.
(iv) In the event GOF has assigned any portion of the Senior
Subordinated Note in accordance with the provisions hereof, any prepayment
effected pursuant to this covenant, to the extent the aggregate principal amount
outstanding under the Senior Subordinated Notes and accrued and unpaid interest
and other amounts owing in respect thereof exceeds the Unutilized Net Cash
Proceeds to be applied to the prepayment thereof, the prepayment shall be made
pro rata based on the aggregate principal amount of the Senior Subordinated
Notes held by GOF and any assignees. To the extent the Unutilized Net Cash
Proceeds exceed the aggregate principal amount outstanding under the Senior
Subordinated Notes and accrued and unpaid interest and other amounts owing in
respect thereof, the Borrower may retain and utilize any portion of the
Unutilized Net Cash Proceeds not applied to prepay Senior Subordinated Notes for
any purpose consistent with the other terms hereof.
(e) LIMITATION ON RESTRICTED PAYMENTS. The Borrower shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or indirectly,
to:
(i) declare or pay any dividend or any other distribution
on any Equity Interests of the Borrower 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 Borrower or any Restricted Subsidiary (other
than Class C Dividends and any dividends, distributions and payments made to the
Borrower or any Restricted Subsidiary and dividends or distributions payable to
any Person solely in Qualified Equity Interests of the Borrower or in options,
warrants or other rights to purchase Qualified Equity Interests of the
Borrower);
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Borrower or any Restricted Subsidiary (other
than the Senior Subordinated Notes, Junior Subordinated Convertible Notes and
any Equity Interests owned by the Borrower 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; 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:
53
(i) no Default or Event of Default shall have occurred and
be continuing at the time or immediately after giving effect to such Restricted
Payment;
(ii) immediately after giving effect to such Restricted
Payment, the Borrower 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 6.01(c); and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or made on or
after the Effective Date does not exceed an amount equal to the sum of (A) 50%
of cumulative Consolidated Net Income determined for the period (taken as one
period) from the Effective Date and ending on the last day of the most recent
fiscal quarter immediately preceding the date of such Restricted Payment for
which consolidated financial information of the Borrower is available (or if
such cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss), plus (B) the aggregate net cash proceeds received by the Borrower either
(x) as capital contributions to the Borrower after the Effective Date or (y)
from the issue and sale (other than to a Restricted Subsidiary) of its Qualified
Equity Interests after the Effective Date (excluding the net proceeds from any
issuance and sale of Qualified Equity Interests financed, directly or
indirectly, using funds borrowed from the Borrower or any Restricted Subsidiary
until and to the extent such borrowing is repaid), plus (C) the principal amount
(or accreted amount (determined in accordance with GAAP), if less) of any
Indebtedness of the Borrower or any Restricted Subsidiary Incurred after the
Effective Date which has been converted into or exchanged for Qualified Equity
Interests of the Borrower, plus (D) without duplication of any amounts included
in clause (i) above, in the case of the disposition or repayment of, or the
receipt by the Borrower or any Restricted Subsidiary of any dividends or
distributions from, any Investment constituting a Restricted Payment made after
the Effective Date, an amount equal to the lesser of the amount of such
Investment and the amount received by the Borrower or any Restricted Subsidiary
upon such disposition, repayment, dividend or distribution, plus (E) in the
event the Borrower 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 Borrower's or any Restricted Subsidiary's
existing Investment in such Person that was previously treated as a Restricted
Payment, plus (F) $100,000,000.
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 hereof; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Borrower 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 Borrower;
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 (iii)(B) of the preceding paragraph (and were not
included therein at any time) and are not used to prepay the Senior Subordinated
Notes; (iii) the purchase, redemption, retirement, defeasance or
54
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 Borrower; 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 (iii)(B) and (iii)(C) of
the preceding paragraph (and were not included therein at any time) and are not
used to prepay the Senior Subordinated Notes or (y) Subordinated Indebtedness
permitted to be Incurred pursuant to clause (G) of the second paragraph of
SECTION 6.01(c); (iv) the making of loans or advances to officers and directors
of the Borrower or any Restricted Subsidiary entered into in the ordinary course
of business in an amount not to exceed $5,000,000 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 110% of the principal amount of such
Subordinated Indebtedness in the event of a Change of Control; and (vi)
Investments in joint ventures (however structured) not to exceed $100.0 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 6.01(e), amounts expended pursuant to clauses (i) and (iv) of the
immediately preceding paragraph shall be included as Restricted Payments. The
amount of any noncash Restricted Payment shall be deemed to be equal to the Fair
Market Value thereof at the date of the making of such Restricted Payment.
(f) CORPORATE EXISTENCE. Subject to Section 6.02, the Borrower
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 Borrower and the
Restricted Subsidiary, provided, however, that the Borrower 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 Borrower shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower and the Restricted Subsidiaries, taken as a whole
and the loss thereof is not materially adverse to the Borrower and the
Restricted Subsidiaries, taken as a whole; provided, further, however, that a
determination of the Board of Directors of the Borrower shall not be required in
the event of a merger of one or more Wholly Owned Restricted Subsidiaries with
or into another Wholly Owned Restricted Subsidiary or another Person, if the
surviving Person is a Wholly Owned Restricted Subsidiary 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 6.01(f) shall not prohibit the Borrower from taking any other action
otherwise permitted by, and made in accordance with, the provisions hereof.
(g) LIMITATION ON LIENS. The Borrower shall not, and shall not
cause or permit any of its Restricted Subsidiaries 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
55
contemporaneously therewith effective provision is made, (i) in the case of the
Borrower, to secure the Senior Subordinated Notes and all other amounts due
hereunder, and (ii) in the case of a Restricted Subsidiary which is a Guarantor,
to secure such Restricted Subsidiary's Guarantee of the Senior Subordinated
Notes and all other amounts due under hereunder, in each case, equally and
ratably with such Indebtedness (or, in the event that such Indebtedness is
subordinated in right of payment to the Senior Subordinated Notes or such
Restricted Subsidiary's Guarantee, prior to such Indebtedness) with a Lien on
the same properties and assets securing such Indebtedness for so long as such
Indebtedness is secured by such Lien, except for (A) Liens securing Senior
Indebtedness (including, without limitation, Indebtedness incurred under the
Credit Agreement); (ii) Liens securing Indebtedness Incurred in a Qualified
Securitization Transaction by the Borrower and its Restricted Subsidiaries;
(iii) Permitted Liens and (iv) Liens under Hedging Agreements.
(h) FUTURE DOMESTIC RESTRICTED SUBSIDIARY GUARANTORS. In the event
that the Borrower causes or permits any Domestic Restricted Subsidiary that is
not a Guarantor to, directly or indirectly, guarantee the payment of any
Indebtedness of the Borrower under the Credit Agreement then the Borrower shall
cause such Domestic Restricted Subsidiary to simultaneously execute and deliver
a guarantee, substantially in form and substance as the guarantee executed
thereby with respect to its guarantee of indebtedness under the Credit
Agreement, pursuant to which it will become a Guarantor under this Agreement.
(i) DESIGNATION OF UNRESTRICTED SUBSIDIARIES.
(i) The Borrower may designate after the Effective Date any
Subsidiary of the Borrower as an Unrestricted Subsidiary under this Agreement (a
"DESIGNATION") only if: (A) no Default or Event of Default shall have occurred
and be continuing at the time of or after giving effect to such Designation; (B)
at the time of and after giving effect to such Designation, the Borrower could
Incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) under
the Consolidated Coverage Ratio of the first paragraph of Section 6.01(c); and
(C) the Borrower 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 6.01(e) in an
amount (the "DESIGNATION AMOUNT") equal to the amount of the Borrower's
Investment in such Subsidiary on such date.
(ii) Neither the Borrower 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 nonrecourse guarantee given solely to support the pledge by the
Borrower or any Restricted Subsidiary of the capital stock of any Unrestricted
Subsidiary. For purposes of the
56
foregoing, the Designation of a Subsidiary of the Borrower as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary.
(iii) The Borrower may revoke any Designation of a Subsidiary
as an Unrestricted Subsidiary (a "REVOCATION") only if: (A) no Default or Event
of Default shall have occurred and be continuing at the time of and after giving
effect to such Revocation; and (B) 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 Agreement.
(iv) All Designations and Revocations must be evidenced by
Board Resolutions of the Borrower, delivered to each holder of Senior
Subordinated Notes, certifying compliance with the foregoing provisions.
Section 6.02 MERGERS; SUCCESSOR CORPORATION.
(a) MERGERS, SALE OF ASSETS, ETC. The Borrower shall not
consolidate with or merge with or into any other entity and the Borrower 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
Borrower's and the Restricted Subsidiaries properties and assets (determined on
a consolidated basis for the Borrower and the Restricted Subsidiaries) to any
entity in a single transaction or series of related transactions, unless: either
(i) the Borrower shall be the Surviving Person or (ii) the Surviving Person (if
other than the Borrower) 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 supplemental agreement, the due and punctual payment of the
principal of and interest on the Senior Subordinated Notes and the performance
and observance of every covenant in this Agreement to be performed or observed
on the part of the Borrower; provided, however, that if such transaction results
in a Change of Control, the Senior Subordinated Notes shall be prepaid if
required pursuant to Section 2.02(b).
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 Borrower shall be deemed to be the transfer of
all or substantially all the properties and assets of the Borrower.
(b) GUARANTORS. No Guarantor (other than a Guarantor whose
Guarantee is to be released in accordance with the terms of Section 3.03) shall
consolidate with or merge with or into another Person, whether or not such
Person is affiliated with such Guarantor and whether or not such Guarantor is
the Surviving Person, unless (i) the Surviving Person (if other than such
Guarantor) is a corporation organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia or, if any such
Guarantor was a Foreign Restricted Subsidiary, under the laws of the United
States of America or any state thereof or the
57
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 supplemental indenture all the obligations of
such Guarantor under its Guarantees of the Senior Subordinated Notes and the
performance and observance of every covenant of the Indenture 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
Borrower could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning the latest fiscal quarter for
which consolidated financial statements of the Borrower are available, at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) under the
Consolidated Coverage Ratio of the first paragraph of Section 6.01(c); 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
Borrower 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.
(c) SUCCESSOR CORPORATION SUBSTITUTED. In the event of any
transaction (other than a lease) described in and complying with the conditions
listed in SECTION 6.02(a) AND (b) in which the Borrower 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 Borrower under the Senior Subordinated Notes, this
Agreement or of such Guarantor under its Guarantee and this Agreement, as the
case may be, pursuant to supplemental agreements, such Surviving Person shall
succeed to, and be substituted for, and may exercise every right and power of,
the Borrower or such Guarantor, as the case may be, and the Borrower shall be
discharged from its Obligations under this Agreement and the Senior Subordinated
Notes or such Guarantor shall be discharged from its Obligations under this
Agreement and its Guarantee, as the case may be.
Section 6.03. TERMINATION OF COVENANTS. The covenants set forth in
this Article VI shall terminate and be of not further force or effect upon the
Termination Date.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. EVENTS OF DEFAULT. Each of the following shall be an
"Event of Default" for purposes of this Indenture:
(a) failure to pay principal of the Senior Subordinated Notes when
due (whether or not prohibited by the provisions of Article VIII);
(b) failure to pay any interest on any Senior Subordinated Notes
when due, continued for 30 days or more (whether or not prohibited by the
provisions of Article VIII);
58
(c) default in the payment of principal of, or interest on, any
Senior Subordinated Notes required to be prepaid by this Agreement (whether or
not prohibited by the provisions of Article VIII);
(d) failure to perform or comply with any of the provisions of
Section 6.02;
(e) failure to perform any other covenant or agreement of the
Borrower under this Agreement or in the Senior Subordinated Note or of the
Guarantors under this Agreement for 30 days or more after written notice to the
Borrower by GOF;
(f) Default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Borrower or any of its Restricted
Subsidiaries having an outstanding principal amount of $50,000,00 or more
individually or in the aggregate that has resulted in the acceleration of the
payment of such Indebtedness or failure by the Borrower or any of its Restricted
Subsidiaries to pay principal of at least $50,000,000 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 Borrower or any of its Restricted Subsidiaries in an amount
of $50,000,000 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 Borrower or any Significant Restricted Subsidiary 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 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 Borrower or any
Significant Restricted Subsidiary in an involuntary case or proceeding or (ii)
appoints a Custodian of the Borrower or any Significant Restricted Subsidiary of
the Borrower for all or substantially all of its properties, or orders the
liquidation of the Borrower or any Significant Restricted Subsidiary, and, in
each case the order or decree remains unstayed and in effect for 60 days; or
(j) other than as provided in or pursuant to any Guarantee or this
Agreement, 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
59
(other than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of the Indenture and such Guarantee).
Section 7.02 ACCELERATION. If an Event of Default with respect to the
Senior Subordinated Notes (other than an Event of Default with respect to the
Borrower described in clause (h) of SECTION 7.01) occurs and is continuing, GOF
by notice in writing to the Borrower may declare the unpaid principal of,
accrued interest to the date of acceleration on all outstanding Senior
Subordinated Notes to be due and payable immediately and, upon any such
declaration, such principal amount, accrued interest, notwithstanding anything
contained in this Agreement or the Senior Subordinated Notes to the contrary,
shall become immediately due and payable; provided, however, that so long as the
Credit Agreement shall be in full force and effect, if an Event of Default shall
have occurred and be continuing (other than an Event of Default with respect to
the Borrower described in clause (h) of SECTION 7.01), the Senior Subordinated
Notes shall not become due and payable until the earlier to occur of (x) five
Business Days following delivery of a written notice of such acceleration of the
Senior Subordinated Notes to the agent under the Credit Agreement and (y) the
acceleration (IPSO FACTO or otherwise) of any Indebtedness under the Credit
Agreement. If an Event of Default specified in clause (h) of SECTION 7.01 with
respect to the Borrower occurs, the Senior Subordinated Notes will IPSO FACTO
become immediately due and payable without any declaration or other act on the
part of GOF.
After a declaration of acceleration, but before a judgment or decree
of the money due in respect of the Senior Subordinated Notes has been obtained,
GOF by written notice to the Borrower may rescind an acceleration and its
consequences if all existing Events of Default (other than the, nonpayment of
principal of and interest on the Senior Subordinated Notes 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 7.03 OTHER REMEDIES. If an Event of Default occurs and is
continuing, GOF may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of or and interest on the Senior
Subordinated Notes or to enforce the performance of any provision of the Senior
Subordinated Notes or this Agreement. No remedy is exclusive of any other
remedy. All available remedies are cumulative to the extent permitted by law.
Section 7.04 UNDERTAKING FOR COSTS. In any suit for the enforcement of
any right or remedy under this Agreement, 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 7.04 shall not apply to a suit
instituted by GOF for the enforcement or the payment of the principal or
interest on any Senior Subordinated Notes on or after the respective due dates
expressed in the Senior Subordinated Note.
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ARTICLE VIII
SUBORDINATION
Section 8.01 SENIOR SUBORDINATED NOTES SUBORDINATED TO SENIOR
INDEBTEDNESS. The Borrower covenants and agrees, and GOF by its acceptance
thereof likewise covenants and agrees, that the Senior Subordinated Notes shall
be issued subject to the provisions of this Article VIII; and each person
holding any Senior Subordinated Notes, whether GOF upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that all payments
of the principal of and interest on the Senior Subordinated Notes, and all other
amounts payable under this Agreement, by the Borrower shall, to the extent and
in the manner set forth in this Article VIII, be subordinated and junior in
right of payment to the prior payment in full in cash of all amounts payable
under Senior Indebtedness.
Section 8.02 NO PAYMENT ON SENIOR SUBORDINATED NOTES IN CERTAIN
CIRCUMSTANCES.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Senior Subordinated Notes) by or on behalf of the Borrower
of principal of or interest on the Senior Subordinated Notes, whether pursuant
to the terms of the Senior Subordinated Notes, upon acceleration, pursuant to an
obligation under Article II to prepay 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 holders
of Senior Subordinated Notes 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 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) shall be made by or on
behalf of the Borrower of principal of or interest on the Senior Subordinated
Notes during a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of
receipt of such notice by the holders of Senior Subordinated Notes and ending
179 days thereafter; provided however, that so long as any Indebtedness remains
outstanding under the Credit Agreement or any replacement, renewal, refinancing
or extension thereof, no Payment Blockage Notice may be initiated to block
payment of principal or interest on the Senior Subordinated Notes pursuant to
the terms of this Section 8.02(a) except by the Administrative Agent (or similar
authorized party) under the Credit Agreement or any replacement, renewal,
refinancing or extension thereof.
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(b) Notwithstanding anything herein or in the Senior Subordinated
Notes 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 Senior
Subordinated Notes during any period of 360 consecutive days. No event of
default that existed or was continuing on the date of commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period (to the extent the holder of Designated
Senior Indebtedness, or trustee or agent, giving notice commencing such Payment
Blockage Period had knowledge of such existing or continuing event of default)
may be, or be made, the basis for the commencement of any other Payment Blockage
Period by the holder or holders of such Designated Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such event of
default has been cured or waived for a period of not less than 90 consecutive
days.
(c) In the event that, notwithstanding the foregoing, the Borrower
shall have made payment to the holders of Senior Subordinated Notes 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 recipient of such
payment (if notice of the conditions prohibiting such payment under
Section 8.02(a) has been received by the holders of Senior Subordinated Notes)
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 holders of Senior Subordinated Notes 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 each of the holders of Senior Subordinated Notes 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 each of the holders of
Senior Subordinated Notes shall be paid to the holders of Designated Senior
Indebtedness.
Section 8.03 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities of the
Borrower 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 the
Borrower, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness shall first be paid
in full in cash before any payment is made in respect of the Senior Subordinated
Notes (excluding any payment or distribution of Permitted Junior Securities).
Before any payment may be made by, or on behalf of, the Borrower of the
principal of or interest on the Senior Subordinated Notes upon any such
dissolution or winding-up or total liquidation or reorganization, any payment or
distribution of assets or securities of the Borrower of any kind or character,
whether in cash, property or securities (excluding any payment or distribution
of Permitted Junior Securities) payment shall be made by the Borrower or by any
receiver, trustee in bankruptcy, liquidation
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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 Borrower of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be paid by the Borrower to the holders of Senior
Subordinated Notes 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 recipient
of such payment (if notice of the conditions prohibiting such payment under
Section 8.03(a) has been received by the holders of Senior Subordinated Notes)
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.
(c) The consolidation of the Borrower with, or the merger of the
Borrower with or into, another corporation or the liquidation or dissolution of
the Borrower 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 Section 6.02 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 Section 6.02.
Section 8.04 SUBROGATION.
(a) Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the holders of the Senior Subordinated Notes shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Borrower made
on such Senior Indebtedness until the principal of and interest on the Senior
Subordinated Notes 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 such holders of the
Senior Subordinated Notes would be entitled except for the provisions of this
Article VIII, and no payment over pursuant to the provisions of this Article
VIII to the holders of Senior Indebtedness by holders of the Senior Subordinated
Notes, as between the Borrower, its creditors other than holders of Senior
Indebtedness, and such
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holders of the Senior Subordinated Notes, be deemed to be a payment by the
Borrower to or on account of the Senior Indebtedness. It is understood that the
provisions of this Article VIII are and are intended solely for the purpose of
defining the relative rights of such holders of the Senior Subordinated Notes,
on the one hand, and the holders of the Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the holders of the
Senior Subordinated Notes would otherwise have been entitled but for the
provisions of this Article VIII shall have been applied, pursuant to the
provisions of this Article VIII, to the payment of all amounts payable under
Senior Indebtedness, then and in such case, the holders of the Senior
Subordinated Notes 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 BORROWER UNCONDITIONAL.
(a) Nothing contained in this Article VIII or elsewhere in this
Agreement or in the Senior Subordinated Notes is intended to or shall impair, as
among the Borrower and GOF, the obligation of the Borrower, which is absolute
and unconditional, to pay to GOF and its successors and assigns the principal of
and interest on the Senior Subordinated Notes 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 Senior Subordinated Notes and
creditors of the Borrower other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent GOF and its successors or assigns from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under this Article VIII of the
holders of the Senior Indebtedness in respect of cash, property or securities of
the Borrower received upon the exercise of any such remedy.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article VIII shall restrict the right of GOF and its
successors and assigns to take any action to declare the Senior Subordinated
Notes to be due and payable prior to its stated maturity pursuant to
SECTIONS 7.01 AND 7.02 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 GOF or its successors and assigns are entitled to receive
any direct or indirect payment from the Borrower of principal of or interest on
the Senior Subordinated Notes.
Section 8.06 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets or securities referred to in
this Article VIII, the holders of the Senior Subordinated Notes 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 holders of the Senior Subordinated
Notes for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Borrower, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article VIII.
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Section 8.07 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE BORROWER 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 Borrower or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Borrower with the
terms of this Agreement, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with. The provisions of this Article
VIII are intended to be for the benefit of, and shall be enforceable directly
by, the holders of Senior Indebtedness.
Section 8.08 THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of, interest on or other
amounts owing in respect of the Senior Subordinated Notes by reason of any
provision of this Article VIII shall not be construed as preventing the
occurrence of an Event of Default specified in clauses (a), (b) or (c) of
SECTION 7.01.
Section 8.09 NO WAIVER OF SUBORDINATION PROVISIONS. Without in any way
limiting the generality of SECTION 8.07, the holders of Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to the
holders of the Senior Subordinated Notes, without incurring responsibility to
the holders of the Senior Subordinated Notes and without impairing or releasing
the subordination provided in this Article VIII or the obligations hereunder of
the holders of the Senior Subordinated Notes 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 Borrower and any other Person.
Section 8.10 ACCELERATION OF THE SENIOR SUBORDINATED NOTES. If payment
of the Senior Subordinated Notes is accelerated because of an Event of Default,
the Borrower shall promptly notify holders of the Senior Indebtedness of the
acceleration.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or the Senior Subordinated Notes, nor consent to any departure
by any party therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Borrower and GOF, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
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Section 9.02. NOTICES, ETC.
(a) Any notice or demand authorized or required by this Agreement
to be given or made shall be sufficiently given or made when and if delivered in
person, by telecopier with a confirmation of good transmission, by FedEx or
United Parcel Service or by registered or certified U.S. mail, addressed to the
office of the party expressly designated by such party as its office for
purposes of this Agreement (until otherwise notified in accordance with this
Section), as follows:
To the Borrower or any Guarantor, to it at:
Polymer Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel and Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: H. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To GOF:
MatlinPatterson Global Opportunities Partners LP
C/O: MatlinPatterson Global Advisers LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel and ▇▇▇▇▇ Betolaza
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇;
(b) Unless otherwise specified herein, such notices or other
communications shall be deemed effective (a) on the date delivered, if delivered
personally, (b) one Business Day after being delivered, if delivered by
telecopier with confirmation of good transmission, (c) one
66
Business Day after being sent by Federal Express or United Parcel Service, if
sent by Federal Express or United Parcel Service and delivered thereto prior to
their deadline for next-day delivery, or (d) seven Business Days after being
sent, if sent by registered or certified mail. Each of the parties hereto shall
be entitled to specify a different address by giving notice as aforesaid to each
of the other parties hereto.
Section 9.03. NO WAIVER; REMEDIES. No failure on the part of any party
to exercise, and no delay in exercising, any right hereunder or under the Senior
Subordinated Notes shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 9.04. COSTS AND EXPENSES. The Obligors jointly and severally
agree to pay on demand all reasonable costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), of GOF and its
successors and assigns in connection with the enforcement (whether through
negotiations or in any action, suit or litigation, any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally or otherwise) of
this Agreement or the Senior Subordinated Notes, including, without limitation,
reasonable counsel fees and expenses in connection, with the enforcement of
rights under this Section 9.04.
Section 9.05. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Obligors and GOF and thereafter shall be
binding upon and inure to the benefit of the Obligors and GOF and their
respective successors and assigns, except that the Borrower shall not have the
right to assign or otherwise transfer all or any part of its rights or
obligations hereunder or any interest herein, whether by agreement, merger,
change of control, by operation of law or otherwise, without the prior written
consent of GOF.
Section 9.06. ASSIGNMENTS. (a) GOF, and any assignee permitted
pursuant to this Agreement, may assign to one or more Persons all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Senior Subordinated Note held by it),
PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee, and (ii) the parties to each such assignment shall execute and deliver
to the Borrower an Assignment and Acceptance, together with any Senior
Subordinated Note subject to such assignment. Upon such execution and delivery,
from and after the effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of the assignor
hereunder and (y) the assignor shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of the assignor's rights and obligations under this Agreement, the
assignor shall cease to be a party hereto).
(b) Any Assignment and Acceptance shall contain the provisions set
out in Exhibit B of this Agreement, including without limitation the following:
(i) other than as provided in such Assignment and Acceptance, the assignor makes
no representation or warranty
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and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the Senior
Subordinated Note or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the Senior Subordinated
Note; (ii) the assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or the Senior Subordinated Note; (iii) such assignee confirms that it
has received a copy of this Agreement and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the assignor and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee confirms that it is an Eligible Assignee; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it. If GOF or any Assignee wishes to assign the right to repayment arising out
of any future drawing under the Letter of Credit, the Assignment and Assumption
will so state and will further state the percentage of such rights to repayment
that are being assigned and all other agreements and information reasonably
required in connection therewith. The parties hereto hereby agree to be bound
by, and give full recognition to, such Assignment and Acceptance.
(c) The assignor may, in connection with any assignment or proposed
assignment pursuant to this Section 9.06, disclose to the assignee or proposed
assignee, any information relating to the Borrower furnished to such assignor by
or on behalf of the Borrower provided such proposed assignee agrees in writing
to be bound by Section 9.12 as if it were such assignor.
(d) Upon any assignment of all of a Senior Subordinated Note, upon
surrender of such Senior Subordinated Note to the Borrower, the Borrower
promptly shall issue, at is sole expense, a new Senior Subordinated Note payable
to the assignee. Upon any assignment of a portion of a Senior Subordinated Note,
upon surrender of such Senior Subordinated Note to the Borrower, the Borrower
promptly shall issue, at its sole expense, one or more new Senior Subordinated
Notes in accordance with the instructions of the assignor. Proper provision
shall be made in any new Senior Subordinated Notes for the apportionment of the
right to repayment arising out of any future drawing under the Letter of Credit,
in accordance with the terms of the Assignment and Assumption; provided that in
no event shall the aggregate face amount under all notes issued pursuant to this
Section 9.06(d) exceed $25,000,000, and, in no event, shall the actual principal
amount outstanding under any such notes exceed the aggregate principal amount
outstanding immediately prior to such surrender.
Section 9.07. GOVERNING LAW. This Agreement and the Senior
Subordinated Notes shall be governed by, and construed in accordance with, the
laws of the State of New York.
Section 9.08. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties thereto in
separate counterparts, each of
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which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 9.09. CONSENT TO JURISDICTION. (a) The Obligors hereby
irrevocably submit to the jurisdiction of any New York State or Federal court
sitting in the City of New York, New York County and any court with jurisdiction
to hear appeals from decisions of such courts, in any action or proceeding
arising out of or relating to this Agreement or the Senior Subordinated Notes,
and the Obligors hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such court. The Obligors
hereby irrevocably waive, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The Obligors hereby irrevocably consent to the service of copies of
any summons and complaint and any other process which may be served in any such
action or proceeding by certified mail, return receipt requested, or by
delivering a copy of such process to any Obligor, at its address specified in
Section 9.02 or by any other method permitted by law. The Obligors agree that a
final judgment in any such action or proceeding may be enforced in other
jurisdictions by suit on the judgment or by any other manner provided by law.
(b) Nothing in this Section 9.09 shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against the Borrower or
their property in the courts of other jurisdictions.
Section 9.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, AND GOF
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE SENIOR SUBORDINATED NOTES, ANY DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER, OR THE ACTIONS OF THE OBLIGORS AND GOF IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Section 9.11. PUBLICITY AND CONFIDENTIALITY.
(a) PUBLICITY. The Obligors agree that none of them will make any
press release or statement regarding the transactions contemplated hereby
without the consent of GOF. Additionally, the Obligors shall not make any
statement which is inconsistent with any press release agreed to by GOF.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with any regulatory body, make such statements with
respect to the transactions contemplated hereby as each may be advised is
legally necessary upon advice of its counsel.
(b) CONFIDENTIALITY. Except as otherwise required by law or
judicial order or decree or by any governmental regulatory agency or authority,
or any self-regulatory organization, GOF will use its best efforts to maintain
the confidentiality of all nonpublic information obtained by it hereunder, such
efforts being no less than GOF employs with respect to maintaining the
confidentiality of similar non-public information about GOF.
69
Section 9.12. TERMINATION. Subject to the repayment by the Borrower of
all outstanding amounts, whether in the form of principal, interest or any costs
and expenses payable under this agreement and other than Sections 1 (to the
extent a definition is used in another section referred to in this
Section 9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, the
provisions of this Agreement shall terminate on the Termination Date. Sections 1
(to the extent a definition is used in another section referred to in this
Section 9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, shall
survive the Termination Date.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWER
POLYMER GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: /s/▇▇▇▇▇ ▇. ▇▇▇▇
Title: Ex. VP, Treasurer and CFO
GOF
MATLINPATTERSON GLOBAL OPPORTUNITIES
PARTNERS LP
By: MatlinPatterson Global Opportunities Advisers
LLC, its Investment Advisor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
[Execution Page to Senior Subordinated Note Purchase Agreement]
THE GUARANTORS
PGI POLYMER, INC.
PGI EUROPE, INC.
PNA CORP.
FNA POLYMER CORP.
FABRENE CORP.
FABRENE GROUP, L.L.C.
FIBERTECH GROUP, INC.
TECHNETICS GROUP, INC.
FIBERGOL CORPORATION
CHICOPEE, INC.
DOMINION TEXTILE (USA) INC.
POLY-BOND INC.
LORETEX CORPORATION
FNA ACQUISITION, INC.
FABPRO ORIENTED POLYMERS, INC.
PGI ASSET MANAGEMENT COMPANY
PGI SERVICING COMPANY
PRISTINE BRANDS CORPORATION
POLYIONIX SEPARATION TECHNOLOGIES, INC.
BONLAM (S.C.), INC.
as Guarantors
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Ex. VP, Treasurer and CFO
[Execution Page to Senior Subordinated Note Purchase Agreement]
EXHIBIT A
LETTER OF CREDIT
EXHIBIT B
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Subordinated Note Purchase Agreement
dated as of March 5, 2003 (as amended or modified from time to time, the
"AGREEMENT") among POLYMER GROUP, INC., a Delaware corporation (the "BORROWER"),
each of the entities identified under the caption "GUARANTORS" on the signature
pages thereto (individually, a "GUARANTOR", and, together with the Borrower, the
"OBLIGORS") and MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS LP, a Delaware
limited partnership ("GOF"). Capitalized terms used herein and not defined shall
have the meanings ascribed thereto in the Agreement.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Agreement as of the date hereof
equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Agreement. After giving effect to
such sale and assignment, the Assignee's pro rata share of the outstanding
Borrowings owing to the Assignee will be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the Senior Subordinated Note or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Agreement or the Senior
Subordinated Note, or any other instrument or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under the Agreement or the
Senior Subordinated Note or any other instrument or document furnished pursuant
thereto; and (iv) attaches the Senior Subordinated Note held by the Assignor and
requests that the Borrower exchange such Senior Subordinated Note for a new
Senior Subordinated Note payable to the order of the Assignee in an amount equal
to the amount of the Assignee's pro rata share of the outstanding Borrowings
owing to the Assignee pursuant hereto or new Senior Subordinated Notes payable
to the order of the Assignee in an amount equal to the amount of the Assignee's
pro rata share owing to the Assignee pursuant hereto and the Assignor in an
amount equal to the amount of the Assignor's pro rata share of the outstanding
Borrowings owing to the Assignor under the Agreement, respectively, as specified
on Schedule 1 hereto.
3. The Assignee (i) confirms that it has received a copy of the
Agreement thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Assignor and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement; (iii)
confirms that it is an Eligible Assignee; (iv) agrees that it will perform in
accordance with their terms all of the obligations that by the terms of the
Agreement are required to be performed by the Assignor; and (vi) attaches any
U.S. Internal Revenue Service forms required under Section 2.05 of the
Agreement.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Borrower. The effective date for this Assignment and
Acceptance (the "ASSIGNMENT EFFECTIVE DATE") shall be the date of receipt by the
Borrower, unless otherwise specified on Schedule 1 hereto.
5. Upon such receipt by the Borrower, as of the Assignment
Effective Date, (i) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of the Assignor thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement.
6. From and after the Assignment Effective Date, the Borrower
shall make all payments under the Agreement and the Senior Subordinated Note in
respect of the interest assigned hereby (including, without limitation, all
payments of principal and interest with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Agreement and the Senior Subordinated Note for periods prior to the
Assignment Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to the principals of conflicts of law thereof.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different 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. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
Schedule 1
to
Assignment and Acceptance
Percentage interest assigned: _________%
Aggregate outstanding principal amount of outstanding Borrowings assigned: $__________
Principal amount of Senior Subordinated Note payable to Assignee: $__________
Principal amount of Senior Subordinated Note payable to Assignor: $__________
Assignment Effective Date*: ___________________, 200__
[NAME OF ASSIGNOR], as Assignor
By
----------------------------------
Title:
Dated: ____________________, 200__
[NAME OF ASSIGNEE], as Assignee
By
----------------------------------
Title:
----------
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to GOF.
EXHIBIT C
BYLAWS
EXHIBIT D
CERTIFICATE OF INCORPORATION
EXHIBIT E
SENIOR SUBORDINATED PROMISSORY NOTE
$25,000,000.00 MARCH 5, 2003
FOR VALUE RECEIVED, POLYMER GROUP, INC., a Delaware corporation (the
"MAKER"), hereby promises to pay to the order of MATLINPATTERSON GLOBAL
OPPORTUNITIES PARTNERS LP, a Delaware corporation (the "PAYEE"), on the terms
set forth below, the sum of TWENTY FIVE MILLION UNITED STATES DOLLARS (U.S.
$25,000,000.00), or such lesser amount as equals the sum of all Borrowings,
together with interest on the unpaid principal balance of each Borrowing from
the date thereof at 10% per annum, payable in cash, semi-annually on January 1
and July 1 of each year. All capitalized terms in this Senior Subordinated
Promissory Note (this "Senior Subordinated Note") shall have the same meaning as
in the
Senior Subordinated Note Purchase Agreement dated as of March 5, 2003
between the Maker and the Payee (the "AGREEMENT").
The unpaid principal balance of, and any and all accrued and unpaid
interest on, this Senior Subordinated Note (the "AGGREGATE AMOUNT") shall be
payable in cash, subject to any repayment made by the Maker in accordance with
Section 2.03 of the Agreement, at the Maturity Date.
If the Events of Default specified in Section 7.01(e) of the Agreement or a
Change of Control occurs, the unpaid principal and interest of this Senior
Subordinated Note, and all other amounts due hereunder, shall, at the option of
the ▇▇▇▇▇, ▇▇▇▇ FACTO become and be immediately due and payable in cash without
any declaration or other act on the part of the Payee. Upon the occurrence of
any other Event of Default set forth in Section 7.01, the unpaid principal and
interest of this Senior Subordinated Note, and all other amounts due hereunder,
shall, at the option of the Payee upon notice to the Borrower, become and be
immediately due and payable in cash. During the period following the occurrence
of an Event of Default until either (a) such Event of Default is remedied to the
satisfaction of the Payee, or (b) the principal and interest of this Senior
Subordinated Note is paid, default interest at a rate of 2% per annum will be
payable on the principal amount in addition to the existing 10% rate. The
Borrower shall, to the extent lawful, pay interest on overdue interest at the
rate of 12% per annum.
The Maker agrees to pay on demand all reasonable costs and expenses,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel to the Payee in connection with the enforcement, collection, protection
or preservation (whether through negotiations, legal proceedings or otherwise)
of any of its rights under this Senior Subordinated Note.
The Maker hereby waives demand, presentment for payment, notice of
extensions, nonpayment and protest, and agrees that any extensions or renewals
hereof shall not affect its
liability, whether has notice of such extensions or renewals or not, and waives
any and all defenses and counterclaims with respect to this Note Senior
Subordinated.
No waiver of any right granted hereunder or amendment hereto shall be
effective unless expressly waived or agreed to in writing by the party whose
waiver or agreement to such amendment is alleged.
This Senior Subordinated Note and the Agreement constitute the entire
agreement of the parties with respect to the matters contained herein and
therein.
The provisions hereof shall bind and inure to the benefit of the respective
successors and assigns of the Maker and the Payee.
THIS SENIOR SUBORDINATED NOTE SHALL BE GOVERNED BY, AND INTERPRETED UNDER,
THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICT OF LAWS.
IN WITNESS WHEREOF, the Maker has caused this instrument to be duly
executed as of the date first written above.
POLYMER GROUP, INC.
By:
Name:
Title: