AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
UNIFI, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 11-2165495
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7201 WEST FRIENDLY AVENUE
GREENSBORO, NORTH CAROLINA 27410
(336) 294-4410
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
WILLIS C. MOORE, III COPIES TO:
SENIOR VICE PRESIDENT R. DOUGLAS HARMON
UNIFI, INC. SMITH HELMS MULLISS & MOORE, L.L.P.
7201 WEST FRIENDLY AVENUE 201 NORTH TRYON STREET
GREENSBORO, NORTH CAROLINA 27410 CHARLOTTE, NORTH CAROLINA 28202
(336) 316-5664 (704) 343-2029
FAX (336) 294-4751 FAX (704) 334-8467
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
==========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED UNIT(1) PRICE(1)
- ----------------------------------------------------------------------------------------------------------
6 1/2% Notes due 2008,
Series B $250,000,000 98.532% $246,330,000
==========================================================================================================
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
6 1/2% Notes due 2008,
Series B $72,668
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) promulgated under the Securities Act of 1933, as
amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 2, 1998
PROSPECTUS
(Unifi logo appears here.)
OFFER TO EXCHANGE 6 1/2% NOTES DUE 2008, SERIES B
FOR ANY AND ALL EXISTING NOTES (AS DEFINED BELOW)
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED. AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH
RESPECT TO THE EXCHANGE OFFER ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE
EXCHANGE OFFER.
Unifi, Inc., a New York corporation ("Unifi" or the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange up to $250,000,000
aggregate principal amount of its 6 1/2% Notes due 2008, Series B (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement of which this
Prospectus is a part, for a like principal amount of its issued and outstanding
6 1/2% Notes due 2008 (the "Existing Notes"). The New Notes and the Existing
Notes, as the case may be, are referred to herein as the "Notes." The Existing
Notes were originally issued and sold in a transaction that was exempt from
registration under the Securities Act and resold to certain qualified
institutional buyers in reliance on, and subject to the restrictions imposed
pursuant to, Rule 144A under the Securities Act ("Rule 144A"). The terms of the
New Notes are identical in all material respects to the terms of the Existing
Notes except that the New Notes do not contain terms with respect to interest
rate step-ups and the New Notes have been registered under the Securities Act
and will not bear legends restricting the transferability thereof. See
"Description of Notes."
The Notes are redeemable in whole or in part at any time at the option of
the Company at a redemption price, plus accrued interest to the date of
redemption, equal to the greater of (i) 100% of the principal amount of such
Notes or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the applicable Treasury Yield (as defined herein) plus 20 basis points. See
"Description of Notes."
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered. The Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1998, unless extended (the "Expiration Date"). Subject to
the terms and conditions of the Exchange Offer, including the reservation of
certain rights by Unifi and the right of holders of Existing Notes to withdraw
tenders at any time prior to the acceptance thereof, any and all Existing Notes
validly tendered prior to the Expiration Date will be accepted on or promptly
after the Expiration Date. In the event Unifi terminates the Exchange Offer and
does not accept for exchange any Existing Notes, Unifi will promptly return the
Existing Notes to the holders thereof. See "The Exchange Offer."
New Notes to be issued in exchange for properly tendered Existing Notes
will be delivered through the facilities of The Depository Trust Company
("DTC"), which will act as depositary, by the Exchange Agent (as defined herein)
promptly after the acceptance thereof. The New Notes will be represented by
Global Securities (as defined herein) registered in the name of a nominee of
DTC. Interests in Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by DTC and its participants. Except
as provided herein, New Notes in definitive form will not be issued. Settlement
for the New Notes will be made in immediately available funds. The New Notes
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity in the New Notes will therefore settle in immediately available
funds. See "Description of Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
(COVER PAGE CONTINUED)
Based on interpretations by the Staff of the Securities and Exchange
Commission (the "Commission") as set forth in no-action letters issued to third
parties, Unifi believes the New Notes issued pursuant to the Exchange Offer may
be offered for resale, resold and otherwise transferred by any holder thereof
(other than any such holder that is a broker-dealer or an "affiliate" of Unifi
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that (i) such New Notes are acquired in the ordinary course of
business, (ii) at the time of the commencement of the Exchange Offer such holder
has no arrangement or understanding with any person to participate in a
distribution of the New Notes and (iii) such holder is not engaged in, and does
not intend to engage in, a distribution of the New Notes. However, the
Commission has not considered the Exchange Offer in the context of a no-action
letter, and therefore, there can be no assurance that the Staff of the
Commission would make a similar determination with respect to the Exchange Offer
as in such other circumstances. Each holder of Existing Notes that desires to
participate in the Exchange Offer will be required to make certain
representations described in "The Exchange Offer -- Terms of the Exchange
Offer." If a holder of the New Notes is an affiliate of Unifi, is participating
in a distribution of the New Notes, is a broker-dealer, or is not acquiring the
New Notes in the ordinary course of its business, such holder may not rely on
the staff's interpretations as set forth in the aforementioned no-action letters
and is subject to the registration and prospectus delivery requirements of the
Securities Act.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
where such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. As described more fully
herein, for a period of 90 days after the Expiration Date (as defined herein),
Unifi will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "The Exchange Offer" and "Plan of
Distribution."
There has not previously been any public market for the New Notes. Unifi
does not intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system. There can be no
assurance that an active market for the New Notes will develop. Moreover, to the
extent that Existing Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for untendered and tendered but unaccepted Existing
Notes could be adversely affected.
Unifi will not receive any proceeds from the Exchange Offer. The Company
has agreed to pay the expenses of the Exchange Offer. No dealer manager is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
------------------------
2
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file periodic reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Northeast Regional Office of the Commission located at 7 World Trade Center,
Suite 1300, New York, New York 10048 and at its Midwest Regional Office located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The Commission maintains an Internet Web site that contains reports,
proxy and information statements and other information regarding the Company and
the registrants that file electronically with the Commission. The address of
such site is http://www.sec.gov. Copies of all or any part of such materials may
be obtained from any such office upon payment of the fees prescribed by the
Commission. Such information may also be inspected and copied at the offices of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005. The
Company's common stock, $.10 par value per share, is traded on the New York
Stock Exchange under the symbol "UFI."
Unifi has filed with the Commission a Registration Statement under the
Securities Act with respect to the New Notes offered hereby (the "Registration
Statement"). As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information included or incorporated by
reference in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus or in any document incorporated herein
or therein as to the contents of any contract or other document referred to
herein or therein and filed as an exhibit to, or incorporated by reference in,
the Registration Statement are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference. For further
information with respect to Unifi and the Notes, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to Section 13 of the Exchange Act are hereby incorporated by reference
in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended June
29, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 28, 1997 and December 28, 1997; and
(c) The Company's Current Reports on Form 8-K filed on July 15, 1997
and January 9, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Notes shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST
DIRECTED TO WILLIS C. MOORE, III, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, UNIFI, INC., 7201 WEST FRIENDLY AVENUE, GREENSBORO, NORTH CAROLINA
27410, TELEPHONE (336) 316-5664, FACSIMILE (336) 294-4751. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE AT LEAST FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
------------------------
3
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE
DETAILED INFORMATION AND FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO)
APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
THE COMPANY
The Company is one of the largest and most diversified processors of
polyester and nylon yarns in the world, marketing products to over 1,000
customers worldwide. The Company, together with its subsidiaries, is engaged in
the business of texturing polyester and nylon filament fiber to produce
polyester and nylon yarns, dyed yarns and spandex yarns covered with nylon and
polyester. The Company sells its products to knitters and weavers that produce
fabrics for the apparel, automotive upholstery, hosiery, home furnishings,
industrial and other end use markets. The Company operates 16 manufacturing and
warehousing facilities, primarily in North Carolina and Ireland, two
distribution centers and six sales offices around the world.
Texturing polyester and nylon filament fiber involves the processing of
partially oriented yarn ("POY"), which is either raw polyester or nylon filament
fiber purchased from chemical manufacturers, to give it greater bulk, strength,
stretch, consistent dyeability and a softer feel, thereby making it suitable for
use in knitting and weaving of fabrics. The texturing process involves the use
of high speed machines to draw, heat and twist the POY to produce yarn having
various physical characteristics, depending on its ultimate end use. The primary
suppliers of POY to the Company are E.I. DuPont de Nemours and Co. ("DuPont"),
Nan Ya Plastics Corporation of America, Hoechst Celanese Corporation and Wellman
Industries, Inc., with the majority being supplied by DuPont. In addition to its
POY manufacturing facilities in Ireland, the Company recently began operation of
the pilot lines in its newly constructed, state-of-the-art manufacturing
facility in Yadkinville, North Carolina, designed to further vertically
integrate the Company's domestic polyester operations. In January 1998, the
Company began adding approximately one operating line per week (26 operating
lines in total) to this facility and expects to be fully operational by the end
of fiscal 1998. By the end of the same fiscal year, management expects this
facility to provide approximately 25% of its total domestic POY supply needs and
to lower the Company's cost of sales. Management expects that all polyester
fiber manufactured by this facility will be used by the Company.
The Company's growth strategy is to continue to increase its domestic and
international market share in both polyester and nylon through internal capacity
expansion and strategic acquisitions. The Company also will continue its efforts
to reduce production costs by utilizing automated machinery and facilities.
On June 30, 1997, the Company and Parkdale Mills, Inc. ("Parkdale")
contributed cash, assets and certain liabilities associated with their
respective open-end and air jet spun cotton yarn operations to a newly formed
joint venture, Parkdale America, LLC ("Parkdale America"). As a result, the
Company and Parkdale own a 34.0% and 66.0% equity interest in Parkdale America,
respectively. Parkdale America is one of the largest and most diversified
processors of spun cotton yarns in the world. The Company believes that Parkdale
America provides it with an opportunity to partner with the leading manufacturer
in the cotton yarn industry and to increase the profitability of these
operations through economies of scale and elimination of redundant overhead
costs. On November 14, 1997, the Company completed its $55.8 million acquisition
of SI Holding Company ("SI Holding"), a manufacturer of covered nylon yarns
operating under the "Spanco" name, generating approximately $85.0 million in
annual sales. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- General."
In fiscal 1997, the Company had record sales of $1.7 billion, net income of
$115.7 million (6.8% of sales) and earnings before interest, taxes, depreciation
and amortization ("EBITDA") of $274.0 million. The Company made capital
expenditures of $143.2 million in fiscal 1997 and anticipates making $220 to
$230 million of capital expenditures in fiscal 1998, primarily for the Company's
vertical integration efforts and for modernization and capacity expansion of its
polyester and nylon texturing and covering operations.
The Company's headquarters are located at 7201 West Friendly Avenue,
Greensboro, North Carolina, 27410 and its telephone number is (336) 294-4410.
THE FOREGOING PARAGRAPHS CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND CERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS. WORDS SUCH AS
"EXPECTS," "ANTICIPATES," "BELIEVES," "ESTIMATES," VARIATIONS OF SUCH WORDS AND
OTHER SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. INFORMATION CONCERNING CERTAIN FACTORS THAT COULD IMPACT EXPECTED
RESULTS IS INCLUDED IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- FORWARD-LOOKING STATEMENTS."
4
THE EXCHANGE OFFER
Registration Agreement................................ The Existing Notes were issued on February 5, 1998 to the initial
purchasers (the "Initial Purchasers") of the Existing Notes. The
Initial Purchasers resold the Existing Notes to certain qualified
institutional buyers in reliance on, and subject to the restrictions
imposed pursuant to, Rule 144A. In connection therewith, the Company
and the Initial Purchasers entered into the Registration Rights
Agreement, dated as of February 5, 1998 (the "Registration Rights
Agreement"), providing, among other things, for the Exchange Offer.
See "The Exchange Offer."
The Exchange Offer.................................... New Notes are being offered in exchange for an equal principal amount
of Existing Notes. As of the date hereof, $250,000,000 aggregate
principal amount of Existing Notes is outstanding. Existing Notes may
be tendered only in integral multiples of $1,000.
Resale of New Notes................................... Based on interpretations by the staff of the Commission as set forth
in no-action letters issued to third parties, the Company believes
that the New Notes issued pursuant to the Exchange Offer may be
offered for resale, resold or otherwise transferred by any holder
thereof (other than any such holder that is a broker-dealer or an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that
(i) such New Notes are acquired in the ordinary course of business,
(ii) at the time of the commencement of the Exchange Offer such
holder has no arrangement with any person to participate in a
distribution of the New Notes and (iii) such holder is not engaged
in, and does not intend to engage in, a distribution of the New
Notes. By tendering Existing Notes in exchange for New Notes, each
holder will represent to the Company that: (i) it is not such an
affiliate of the Company, (ii) any New Notes to be received by it
will be acquired in the ordinary course of business and (iii) at the
time of the commencement of the Exchange Offer it had no arrangement
with any person to participate in a distribution of the New Notes
and, if such holder is not a broker-dealer, it is not engaged in, and
does not intend to engage in, a distribution of New Notes. If a
holder of Existing Notes is unable to make the foregoing
representations, such holder may not rely on the applicable interpre-
tations of the Staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities
Act in connection with any secondary resale.
5
Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of
New Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business 90 days after
the Expiration Date, it will make this Prospectus available to any
participating broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
To comply with the securities laws of certain jurisdictions, it may
be necessary to qualify for sale or register the New Notes prior to
offering or selling such New Notes. The Company has agreed, pursuant
to the Registration Rights Agreement and subject to certain specified
limitations therein, to register or qualify the New Notes for offer
or sale under the securities or "blue sky" laws of such jurisdictions
as may be necessary to permit the holders of New Notes to trade the
New Notes without any restrictions or limitations under the
securities laws of the several states of the United States.
Consequences of Failure to Exchange Existing Notes.... Upon consummation of the Exchange Offer, subject to certain limited
exceptions, holders of Existing Notes who do not exchange their
Existing Notes for New Notes in the Exchange Offer will no longer be
entitled to registration rights and will not be able to offer or sell
their Existing Notes, unless such Existing Notes are subsequently
registered under the Securities Act (which, subject to certain
limited exceptions, the Company will have no obligation to do),
except pursuant to an exemption from, or in a transaction not subject
to, the Securities Act and applicable state securities laws. See "The
Exchange Offer -- Terms of the Exchange Offer" and " -- Consequences
of Failure to Exchange."
Expiration Date....................................... 5:00 p.m., New York City time, on , 1998 (30 calendar days
following the commencement of the Exchange Offer), unless the
Exchange Offer is extended, in which case the term "Expiration Date"
means the latest date and time to which the Exchange Offer is
extended.
Interest on the New Notes............................. The New Notes will accrue interest at rate of 6 1/2% per annum from
February 5, 1998, the issue date of the Existing Notes. Interest on
the New Notes is payable on February 1 and August 1 of each year.
Conditions to the Exchange Offer...................... The Exchange Offer is not conditioned upon any minimum principal
amount of Existing Notes being tendered for exchange. However, the
Exchange Offer is subject to certain customary conditions, which may
be waived by the Company. See "The Exchange Offer -- Conditions."
Except for the requirements of applicable federal and state
securities laws, there are no federal or state regulatory
requirements to be complied with or approvals to be obtained by the
Company in connection with the Exchange Offer.
6
Procedures for Tendering Existing Notes............... Each holder of Existing Notes wishing to accept the Exchange Offer
must complete, sign and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with any other required
documentation to the Exchange Agent (as defined herein) at the
address set forth herein and effect a tender of Existing Notes
pursuant to the procedures for book-entry transfer as provided for
herein. See "The Exchange Offer -- Procedures for Tendering" and
" -- Book Entry Transfer."
Guaranteed Delivery Procedures........................ Holders of Existing Notes who wish to tender their Existing Notes and
who cannot deliver their Existing Notes and a properly completed
Letter of Transmittal or any other documents required by the Letter
of Transmittal to the Exchange Agent prior to the Expiration Date may
tender their Existing Notes according to the guaranteed delivery. See
"Exchange Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights..................................... Tenders of Existing Notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date. To withdraw a
tender of Existing Notes, a written or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at its address
set forth herein under "The Exchange Offer -- Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date.
Acceptance of Existing Notes and Delivery of New Subject to certain conditions, any and all Existing Notes that are
Notes............................................... properly tendered in the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date will be accepted for exchange. The
New Notes issued pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Certain United States Tax Consequences................ The exchange of Existing Notes for New Notes will not constitute a
taxable exchange for United States federal income tax purposes. See
"Certain United States Federal Tax Considerations for Non-United
States Holders."
Exchange Agent........................................ First Union National Bank is serving as exchange agent (the "Exchange
Agent") in connection with the Exchange Offer.
Fees and Expenses..................................... All expenses incident to the Company's consummation of the Exchange
Offer and compliance with the Registration Rights Agreement will be
borne by the Company. See "The Exchange Offer -- Fees and Expenses."
Use of Proceeds....................................... There will be no cash proceeds payable to Unifi from the issuance of
the New Notes pursuant to the Exchange Offer. The proceeds from the
sale of the Existing Notes were used to repay a portion of the
Company's bank credit facility. See "Use of Proceeds."
7
SUMMARY OF TERMS OF NEW NOTES
The Exchange Offer relates to the exchange of up to $250,000,000 aggregate
principal amount of Existing Notes for up to an equal aggregate principal amount
of New Notes. New Notes will be entitled to the benefits of the same Indenture
(as defined herein) that governs the Existing Notes and will govern the New
Notes. The form and terms of the New Notes are identical in all material
respects as the form and terms of the Existing Notes, except that the New Notes
do not contain terms with respect to interest rate step-up provisions and the
New Notes have been registered under the Securities Act and will not bear
legends restricting the transferability thereof. See "Description of Notes."
Maturity Date......................................... February 1, 2008.
Interest Payment Dates................................ February 1, and August 1, commencing on August 1, 1998
Optional Redemption................................... The New Notes will be redeemable as a whole or in part, at any time
at the option of the Company at a redemption price, plus accrued
interest to the date of redemption, equal to the greater of (i) 100%
of the principal amount of such Notes and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest
thereon discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
applicable Treasury Yield (as defined herein), plus 20 basis points.
See "Description of Notes -- Optional Redemption."
Ranking............................................... The New Notes will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. See "Description of
Notes."
8
USE OF PROCEEDS
There will be no cash proceeds payable to Unifi from the issuance of the
New Notes pursuant to the Exchange Offer. The proceeds from the sale of the
Existing Notes were used to repay a portion of the Company's $400 million bank
credit facility with NationsBank, N.A., Wachovia Bank of North Carolina, N.A.
and Credit Suisse, dated as of April 15, 1996 (the "Credit Facility"). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical and pro forma ratios of
earnings to combined fixed charges of the Company for the periods indicated:
SIX MONTHS
FISCAL YEAR END ENDED
--------------------------------------------------------------- ------------
PRO
FORMA
JUNE 27, JUNE 26, JUNE 25, JUNE 30, JUNE 29, JUNE 29, DECEMBER 28,
1993 1994 1995 1996 1997 1997(1) 1997
-------- -------- -------- -------- -------- -------- ------------
Ratio of earnings to fixed charges......... 9.4x 8.2x 12.4x 8.8x 13.8x 12.2x 8.8x
PRO FORMA
DECEMBER 28,
1997(1)
------------
Ratio of earnings to fixed charges......... 8.2x
- ---------------
(1) To reflect the change in interest costs resulting from the refinancing of
amounts outstanding under the Credit Facility during the period presented
with a portion of the Notes, using an effective interest rate for the Notes
of 6.704%.
For purposes of computing the ratios of earnings to fixed charges, earnings
represent earnings from continuing operations before income taxes and fixed
charges and fixed charges consist of interest expense and the portion of rents
calculated to be representative of the interest factor. The ratios of earnings
to fixed charges should be read in conjunction with the financial statements and
other financial data included or incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
CAPITALIZATION
The following table sets forth the consolidated cash and cash equivalents,
short-term debt and capitalization of the Company as of December 28, 1997, and
as adjusted to give effect to the sale on February 5, 1998 of the Existing Notes
and the application of the anticipated net proceeds therefrom to repay long-term
debt. See "Use of Proceeds."
DECEMBER 28, 1997
---------------------
ACTUAL AS ADJUSTED
------ -----------
(IN MILLIONS)
Cash and cash equivalents.............................................................................. $ 5 $ 5
------ -----------
Short-term debt:
Note Payable -- Parkdale America, LLC................................................................ $ 10 $ 10
Current maturities of sale-leaseback obligations..................................................... -- --
------ -----------
Total short-term debt............................................................................. 10 10
------ -----------
Long-term debt:
Note payable -- Parkdale America, LLC................................................................ 10 10
Sale-leaseback obligation............................................................................ 3 3
Indebtedness to banks under revolving credit facility (1)............................................ 400 154
6 1/2% Notes due 2008................................................................................ -- 250
------ -----------
Total long-term debt.............................................................................. 413 417
------ -----------
Total debt........................................................................................ 423 427
------ -----------
Shareholders' equity:
Common stock (2)..................................................................................... 6 6
Capital in excess of par value....................................................................... 21 21
Retained earnings.................................................................................... 565 565
Cumulative translation adjustment.................................................................... (6) (6)
------ -----------
Total shareholders' equity........................................................................ 586 586
------ -----------
Total short-term debt and capitalization............................................................... $1,009 $ 1,013
------ -----------
------ -----------
9
- ---------------
(1) At December 28, 1997, the Company did not have any unsecured borrowings
available under the Credit Facility with interest rates payable as described
therein. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
(2) There are 500,000,000 shares authorized, $.10 par value, of which 61,390,252
were issued and outstanding at December 28, 1997.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data for the five years ended June 29,
1997 in the following table are derived from the Company's audited consolidated
financial statements and reflect the operations and financial position of the
Company at the dates and for the periods indicated. The financial data for the
six-month periods ended December 29, 1996 and December 28, 1997 are derived from
unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
items, which the Company's management considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the six months ended December 28, 1997 may not be
indicative of the results that may be expected for the entire year ending June
28, 1998. The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
the financial statements and other financial data included or incorporated by
reference in this Prospectus.
SIX MONTHS
FISCAL YEAR ENDED (1) ENDED
---------------------------------------------------- ------------
JUNE 27, JUNE 26, JUNE 25, JUNE 30, JUNE 29, DECEMBER 29,
1993 1994 1995 1996 1997 1996
-------- -------- -------- -------- -------- ------------
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE DATA)
CONSOLIDATED STATEMENTS OF INCOME:
Net sales............................................. $1,406 $1,385 $1,555 $1,603 $1,705(2) $834(2)
Cost of sales...................................... 1,141 1,186 1,331 1,407 1,474 725
Gross profit.......................................... 265 199 224 196 231 109
Selling, general and administrative expense........ 38 40 43 45 46 22
Non-recurring charge............................... -- 13(3) -- 24(4) -- --
Operating income...................................... 227 146 181 127 185(2) 87(2)
Equity in earnings of unconsolidated affiliates (5)... -- -- -- -- -- --
Income before extraordinary item and accounting
change............................................. 137 76 116 78 116 53
Extraordinary item.................................... -- -- -- 6(6) -- --
Cumulative effect of accounting change................ -- -- -- -- -- --
Net income............................................ 137 76 116 72 116 53
PER SHARE OF COMMON STOCK:
Basic earnings:
Income before extraordinary item and accounting
change........................................... $ 1.96 $ 1.09 $ 1.68 $ 1.19 $ 1.83 $.82
Net income......................................... 1.96 1.09 1.68 1.10(6) 1.83 .82
Diluted earnings:
Income before extraordinary item and accounting
change........................................... 1.85 1.07 1.62 1.18 1.81 .81
Net income......................................... 1.85 1.07 1.62 1.09(6) 1.81 .81
Cash dividends........................................ .42 .56 .40 .52 .44 .22
OTHER DATA:
EBITDA (8)............................................ $ 304 $ 239 $ 277 $ 244 $ 274 $130
Ratio of EBITDA to interest expense................... 11.8x 13.1x 17.9x 16.7x 23.3x 22.0x
CONSOLIDATED BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................................... $ 320 $ 304 $ 333 $ 196 $ 216 $210
Net property, plant and equipment..................... 468 512 516 549 598 576
Total assets.......................................... 1,017 1,003 1,041 951 1,019 971
Long-term debt........................................ 250 230 230 170 256 225
Shareholders' equity (9).............................. 546 589 604 583 549 563
DECEMBER 28,
1997
------------
CONSOLIDATED STATEMENTS OF INCOME:
Net sales............................................. $ 673
Cost of sales...................................... 564
Gross profit.......................................... 109
Selling, general and administrative expense........ 20
Non-recurring charge............................... --
Operating income...................................... 89
Equity in earnings of unconsolidated affiliates (5)... 9
Income before extraordinary item and accounting
change............................................. 61
Extraordinary item.................................... --
Cumulative effect of accounting change................ 5(7)
Net income............................................ 56
PER SHARE OF COMMON STOCK:
Basic earnings:
Income before extraordinary item and accounting
change........................................... $ .99
Net income......................................... .92
Diluted earnings:
Income before extraordinary item and accounting
change........................................... .99
Net income......................................... .91
Cash dividends........................................ .28
OTHER DATA:
EBITDA (8)............................................ $ 132
Ratio of EBITDA to interest expense................... 20.1x
CONSOLIDATED BALANCE SHEET DATA (AT END OF PERIOD):
Working capital....................................... $ 219
Net property, plant and equipment..................... 566
Total assets.......................................... 1,183
Long-term debt........................................ 413
Shareholders' equity (9).............................. 586
10
- ---------------
(1) All years were 52-week fiscal years, except the fiscal year ended June 30,
1996, which was 53 weeks.
(2) On a pro forma basis, net sales and operating income of the ongoing
polyester and nylon business would have been $1.401 billion and $180.4
million in fiscal 1997, respectively, and $685.9 million and $86.5 million
in the first six months of fiscal 1997, respectively, if the business
contributed to Parkdale America was not included.
(3) The Company recognized a non-recurring charge of $13.4 million related to
the sale of the Company's investment in its wholly owned French subsidiary,
Unifi Texturing S.A., and the Company's decision to exit the European nylon
market.
(4) The Company recognized a non-recurring charge of $23.8 million related to
restructuring plans to consolidate certain manufacturing operations and
dispose of under-utilized assets.
(5) Consists of a 34% interest in Parkdale America and a 50% interest in MiCELL
Technologies, Inc. ("MiCELL"). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- General."
(6) The Company recognized an extraordinary after-tax charge of $5.9 million, or
$.09 per share, as a result of the early redemption of $230 million of its
6% convertible subordinated notes due 2002.
(7) The Company recognized an after-tax charge of $4.6 million, or $.08 per
share, as a result of the cumulative effect of the change in accounting to
comply with the provisions of Emerging Issues Task Force No. 97-13 issued in
November 1997.
(8) Represents earnings before extraordinary items, non-recurring charges,
interest, taxes, depreciation and amortization. The measure does not
represent cash generated from operating activities determined in accordance
with generally accepted accounting principles, is not necessarily indicative
of cash available to fund cash needs and should not be considered as an
alternative to operating income or net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a
measure of liquidity.
(9) On October 21, 1993, the Board of Directors authorized the repurchase of up
to 15 million shares of the Company's common stock. Through December 28,
1997, 10.2 million shares had been repurchased at a total cost of $282.5
million.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS PROVIDES INFORMATION REGARDING THE
COMPANY'S CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS DURING THE
PAST THREE FISCAL YEARS AND SUBSEQUENT INTERIM PERIOD. THIS DISCUSSION SHOULD BE
READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY,
WHICH ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
RESULTS OF OPERATIONS
The data below reflect the percentage relationship between net sales and
major categories in the Company's consolidated statements of income for the
periods indicated:
SIX MONTHS
FISCAL YEAR ENDED (1) ENDED
-------------------------------- ------------
JUNE 25, JUNE 30, JUNE 29, DECEMBER 29,
1995 1996 1997 (2) 1996 (2)
-------- -------- -------- ------------
Net sales......................................................... 100.0% 100.0% 100.0% 100.0%
Cost of sales................................................... 85.6 87.8 86.4 87.0
Gross profit...................................................... 14.4 12.2 13.6 13.0
Selling, general and administrative expense..................... 2.8 2.8 2.7 2.6
Non-recurring charge............................................ -- 1.5 -- --
Operating income.................................................. 11.6 7.9 10.9 10.4
Interest expense................................................ 1.0 .9 .7 .7
Other expense (income).......................................... (1.4) (.7) -- --
Equity in earnings of unconsolidated affiliates................. -- -- -- --
Income before income taxes........................................ 12.0 7.7 10.2 9.7
Provision for income taxes...................................... 4.5 2.8 3.4 3.4
Income before extraordinary item and accounting change............ 7.5 4.9 6.8 6.3
Net income........................................................ 7.5 4.5 6.8 6.3
DECEMBER 28,
1997
------------
Net sales......................................................... 100.0%
Cost of sales................................................... 83.9
Gross profit...................................................... 16.1
Selling, general and administrative expense..................... 3.0
Non-recurring charge............................................ --
Operating income.................................................. 13.1
Interest expense................................................ 1.0
Other expense (income).......................................... (.1)
Equity in earnings of unconsolidated affiliates................. (1.4)
Income before income taxes........................................ 13.6
Provision for income taxes...................................... 4.6
Income before extraordinary item and accounting change............ 9.0
Net income........................................................ 8.3
- ---------------
(1) The fiscal year ended June 30, 1996 consisted of 53 weeks, whereas the
fiscal years ended June 29, 1997 and June 25, 1995 consisted of 52 weeks.
(2) On a pro forma basis, gross profit and operating income as percentages of
sales of the ongoing polyester and nylon business would have been 15.5% and
12.9%, respectively, in fiscal 1997 and 15.2% and 12.6%, respectively, in
the first six months of fiscal 1997 if the business contributed to Parkdale
America was not included.
GENERAL
On June 30, 1997, the Company entered into a Contribution Agreement (the
"Contribution Agreement") with Parkdale that set forth the terms and conditions
by which Parkdale and the Company contributed all of the assets and certain
liabilities associated with their respective spun cotton yarn operations
utilizing open-end and air jet spinning technologies to Parkdale America, a
newly created limited liability company. Pursuant to the Contribution Agreement,
each entity's inventory, owned real and tangible personal property and
improvements thereon and the Company's leased real property associated with
these operations were contributed to Parkdale America. Additionally, the Company
contributed cash to Parkdale America of $32.9 million on June 30, 1997, and is
committed to contribute cash of $10.0 million on June 30, 1998, and $10.0
million on June 30, 1999, whereas Parkdale contributed cash of $51.6 million on
June 30, 1997 and has no future cash contribution commitments. Parkdale America
assumed certain long-term debt obligations of the Company and Parkdale in the
amounts of $23.5 million and $46.0 million, respectively. In exchange for the
assets contributed to Parkdale America and the liabilities assumed by Parkdale
America, the Company received a 34% ownership interest in Parkdale America and
Parkdale received a 66% ownership interest in Parkdale America. Spun cotton yarn
operations contributed by the Company to Parkdale America had net sales of
$304.4 million during fiscal 1997. Management expects that the consolidation of
spun cotton yarn operations in Parkdale America will provide operating
efficiencies and economies of scale.
The Company also has a 50% investment in MiCELL, a leading developer of
carbon dioxide ("CO2") surfactant (soaps that work as surface active agents)
systems. MiCELL is involved in the development of surfactants to be used in
conjunction with CO2 for garment care, parts cleaning and textile processing.
The amount of the investment is not material to the Company, and the Company has
no obligations to make future contributions to MiCELL.
12
On November 14, 1997, the Company completed the acquisition of SI Holding
to acquire its covered yarn business for $55.8 million, including certain
covenants-not-to-compete entered into with principal officers of SI Holding.
SIX MONTHS ENDED DECEMBER 28, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 29,
1996
Consolidated net sales decreased 1.0% from $346.6 million in the second
quarter of fiscal 1997 to $343.1 million in the second quarter of fiscal 1998
and declined 1.9% for the first six months of fiscal 1998 from $685.9 million
for the first six months of fiscal 1997 to $672.9 million in the first six
months of fiscal 1998, after eliminating the net sales of the Company's spun
cotton yarn operations that were contributed to Parkdale America at the
beginning of the 1998 fiscal year. Net sales of the spun cotton yarn operations
were $72.8 million and $148.2 million for the second quarter of fiscal 1997 and
the first six months of fiscal 1997, respectively. Unit volume for the quarter
and year to date periods, after eliminating spun yarn cotton operations from the
fiscal 1997 periods, increased 1.3% and 0.3%, respectively. Average unit sales
prices, based on product mix, declined 2.5% for the second quarter of fiscal
1998 quarter and 2.0% for the year to date after giving effect to the
elimination of spun cotton yarn sales for the prior year periods.
Domestically, polyester and nylon yarn sales declined slightly for the
first six months of fiscal 1998 due primarily to a decline in average sales
price, based on product mix. For the first six months of fiscal 1998, sales of
the Company's polyester and nylon yarns decreased approximately 1.6% due to
slight declines in both unit sales and average sales prices. Internationally,
sales declined 1.4% for the second quarter of fiscal 1998 and 4.1% for the first
six months of fiscal 1998 as decreases in unit prices for both periods offset
increases in unit sales over prior year corresponding periods. Also impacting
sales for the second quarter of fiscal 1998 relative to the prior year was the
strengthening of the U.S. dollar to the Irish punt during this period, which had
the currency translation effect of reducing net sales by $4.1 million.
Gross profit increased 6.4% to $59.0 million for the second quarter of
fiscal 1998 and 4.4% to $108.5 million for the first six months of fiscal 1998,
after eliminating spun cotton yarn operating results from the prior year
periods. Gross margin (gross profit as a percentage of net sales) improved 1.2%
for the second quarter of fiscal 1998 and 0.9% for the first six months of
fiscal 1998 compared to the prior year periods, after removing the spun cotton
yarn operating results for these periods. Decreases in fiber and manufacturing
components of cost of sales more than offset increases in depreciation and other
fixed charges as a percentage of net sales for both current year periods
compared to the corresponding prior year periods resulting in the improved gross
margin percentages.
Selling, general and administrative expenses as a percentage of net sales
increased from 2.7% in the second quarter of fiscal 1997 to 3.1% for the second
quarter of fiscal 1998. Selling, general and administration expense as a
percentage of net sales increased from 2.6% in the first six months of fiscal
1997 to 3.0% in the first six months of fiscal 1998. On a dollar basis, selling,
general and administrative expense declined $0.7 million to $10.6 million for
the second quarter of fiscal 1998 and decreased $1.6 million to $20.5 million
for the first six months of fiscal 1998. Lower selling, general and
administrative expenses for both current year periods reflect cost reductions
associated with the contribution of our spun cotton yarn operations at the
beginning of the fiscal year. The increase in selling, general and
administrative expense as a percentage of net sales for both current year
periods is attributable to the lower sales base discussed above.
Interest expense increased $0.3 million to $3.3 million in the second
quarter of fiscal 1998 and $0.7 million to $6.6 million for the first six months
of fiscal 1998. The increase in interest expense for both fiscal 1998 periods
reflects higher levels of outstanding debt at higher average interest rates.
Interest income has decreased from $0.6 million in the second quarter of fiscal
1997 to $0.4 million in the second quarter of fiscal 1998. For the six-month
period, interest income has decreased from $1.1 million in fiscal 1997 to $0.9
million in fiscal 1998. Other expense declined $0.5 million in the second
quarter of fiscal 1998 and $0.6 million for the first six months of fiscal 1998
compared to the corresponding periods in the prior year.
Income from the Company's equity affiliates, Parkdale America and MiCELL,
contributed $4.5 million to pre-tax income for the quarter and $9.1 million for
the year to date. During the second quarter of fiscal 1997, and for the first
six months of fiscal 1997, net sales and operating income from the Company's
spun cotton yarn assets contributed to Parkdale America amounted to $72.8
million and $1.0 million, and $148.2 million and $0.2 million, respectively.
The effective tax rate has decreased from 34.7% to 33.3% in the second
quarter of fiscal 1998 and from 34.9% to 33.6% for the first six months of
fiscal 1998. The difference between the statutory federal income tax rate and
the effective tax rate is primarily due to the realization of state and federal
tax credits and the results of foreign subsidiaries, which are taxed at rates
below those of U.S. operations.
13
Pursuant to Emerging Issues Tasks Force No. 97-13 issued in November 1997,
the Company changed its accounting policy in the second quarter of fiscal 1998
regarding a project to install an entirely new computer software system that it
began in fiscal 1995. Previously, substantially all direct costs relating to the
project were capitalized, including the portion related to business process
reengineering. In accordance with this accounting pronouncement, the unamortized
balance of these reengineering costs as of September 28, 1997 of $7.5 million
($4.6 million after tax), or $.08 per share, was written off as a one-time,
non-cash, cumulative catch-up adjustment in the second quarter of fiscal 1998.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," (SFAS 128) which was required to be
adopted in the December 1997 fiscal quarter. The Company adopted SFAS 128 in the
second quarter of fiscal 1998 and restated all prior periods. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options is excluded. Diluted earnings per share continues to reflect the
assumed conversion of all potentially diluted securities, without significant
changes in the method of computation.
As a result of the above, the Company realized during the second quarter of
fiscal 1998 income before the cumulative effect of the accounting change of
$33.0 million, or diluted earnings per share of $.54, compared to $28.8 million,
or $.44 per share, for the second quarter of fiscal 1997. Net income for the
second quarter of fiscal 1998 amounted to $28.4 million, or $.46 per diluted
share, after the charge for the cumulative effect of the change in accounting of
$4.6 million, or $.08 per diluted share. Net income for the first six months of
fiscal 1998 amounted to $55.9 million, or $.91 per share, compared to
corresponding amounts for the first six months of fiscal 1997 of $52.7 million,
or $.81 per share. For the first six months of fiscal 1998, income before the
cumulative effect of the accounting change was $60.5 million, or $.98 per share.
FISCAL 1997 COMPARED TO FISCAL 1996
Consolidated net sales increased 6.3% from $1.603 billion in fiscal 1996 to
$1.705 billion in 1997. The 1997 fiscal year included fifty-two weeks compared
to fifty-three weeks in the 1996 fiscal year. Growth in net sales was achieved
by a 7.2% increase in unit volume, which was offset slightly by a modest decline
in per unit average sales prices.
Domestically, unit volumes increased 6.3%, while average per unit sales
prices remained stable. Increased unit volumes were experienced across all of
the Company's sales-yarn operations. Fiscal 1997 unit sales growth benefited
from phased-in production of the Company's new polyester texturing facility in
Yadkinville, North Carolina, which was substantially completed at fiscal year
end, and from realizing a full year's sales activity after purchasing the
texturing operations of Glen Raven Mills, Inc.'s Norlina Division in November
1995. In addition, growth in export sales contributed to the increase in unit
volume.
Internationally, increased unit growth was offset by lower per unit average
sales prices, resulting in a net 8.3% increase in sales. Sales from foreign
operations are denominated in local currencies and are hedged in part by the
purchases of raw materials and services in those same currencies. Currency
exchange rate risk is mitigated by the utilization of foreign currency forward
contracts. Additionally, the net asset exposure is hedged by borrowings in local
currencies, which minimize the risk of currency fluctuations. The Company does
not enter into derivative financial instruments for trading purposes.
Gross margin increased from 12.2% in fiscal 1996 to 13.6% in fiscal 1997.
The increased gross margin reflected lower operating costs as a percentage of
net sales, due to improved efficiency and volume increases and raw material cost
reductions based on product mix.
Selling, general and administrative expense, as a percentage of net sales,
decreased from 2.8% in fiscal 1996 to 2.7% in fiscal 1997. On a dollar-basis,
selling, general and administrative expense increased $1.1 million to $46.2
million, or 2.5%. Increased selling, general and administrative expenses were
primarily attributable to higher information systems' costs and professional
fees associated with various technology and corporate reengineering improvement
efforts.
Interest expense declined $2.8 million, or 19.5%, from $14.6 million in
fiscal 1996 to $11.7 million in fiscal 1997. In the fourth quarter of fiscal
1996, $230 million of the Company's 6% convertible subordinated notes were
redeemed utilizing borrowings under the Credit Facility. The effective interest
rate under the Credit Facility remained below the convertible debt interest
rate, and the average debt level outstanding throughout fiscal 1997 was also
lower than the prior year, resulting in reduced interest expense. Interest
income declined from $6.8 million in fiscal 1996 to $2.2 million in fiscal 1997.
This change reflected lower levels of invested funds, which were primarily used
for capital expenditures, and the purchase and retirement of shares of the
Company's common stock.
Net other income and expense changed unfavorably by $5.6 million, from $4.4
million of income in fiscal 1996 to $1.2 million of expense in fiscal 1997. In
fiscal 1996, gains were recorded from the sale of capital assets and
investments.
14
In the first quarter of fiscal 1996, the Company announced restructuring
plans to further reduce the Company's cost structure and improve productivity
through the consolidation of certain manufacturing operations and the
disposition of under-utilized assets. The estimated cost of restructuring
resulted in a non-recurring charge to earnings of $23.8 million, or an after-tax
charge to earnings of $14.9 million ($.23 per share). The Company has completed
substantially all of these restructuring efforts and anticipates no material
differences in actual charges compared to its original estimates.
The effective tax rate decreased from 36.4% in fiscal 1996 to 33.6% in
fiscal 1997. The improvement in the effective tax rate was primarily due to the
realization of state tax credits during fiscal 1997 and the improved operating
results of foreign subsidiaries, which are taxed at rates below those of United
States operations.
As a result of the above, the Company realized during fiscal 1997 net
income of $115.7 million (6.8% of sales), or $1.83 per share, compared to $72.5
million (4.5% of sales), or $1.10 per share, for fiscal 1996. Before the effects
of the non-recurring and the extraordinary charges recognized in the prior year,
net earnings would have been $93.3 million (5.8% of sales), or $1.42 per share.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), which is required to be
adopted for fiscal years beginning after December 15, 1997, if not previously
adopted. SFAS 130 requires the reporting of comprehensive income and its
components in complete general purpose financial statements, as well as requires
certain interim comprehensive income information be disclosed. Comprehensive
income represents the change in net assets of a business during the period from
non-owner sources. Such non-owner changes in net assets that are not included in
net income include, among others, foreign currency translation adjustments,
unrealized gains and losses on available-for-sale securities and certain minimum
pension liabilities. The Company has not as yet determined the impact that the
adoption of this standard will have on its consolidated financial statements.
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"), which is required to be adopted for fiscal years
beginning after December 15, 1997, if not previously adopted. SFAS 131
establishes standards for public companies for the reporting of financial
information from operating segments in annual and interim financial statements
as well as establishes standards for related disclosures about products and
services, geographic areas and major customers. Operating segments are defined
in SFAS 131 as components of an enterprise about which separate financial
information is available to the chief operating decision maker for purposes of
assessing performance and allocating resources. The Company has not completed
its analysis of the effect that the adoption of this standard will have on its
financial statement disclosure. However, the adoption of SFAS 131 will not
affect the Company's results of operations or financial position.
FISCAL 1996 COMPARED TO FISCAL 1995
Consolidated net sales increased 3.1% from $1.555 billion in fiscal 1995 to
$1.603 billion in fiscal 1996. The growth in net sales was accomplished by a
6.4% increase in per unit average sales price, which was offset in part by a
decline in unit volume of 3.1%. The decline in unit volume corresponded with the
general softness experienced by the retail sector during fiscal 1996.
The Company's domestic operations experienced an overall decline in unit
volume of 6.2% in fiscal 1996. Average per unit sales price for these operations
increased approximately 7.5% during this period, reflecting a change in product
mix to lower-volume, higher-priced products and a response to increased raw
material costs. Sales growth of 45.4% in the Company's international operations
reflected increased capacity due to expansion and higher average unit sales
prices.
Gross margin decreased from 14.4% in fiscal 1995 to 12.2% in fiscal 1996.
On a per unit basis, increases in raw material, packaging and manufacturing
costs and depreciation expense, together with reduced unit volume, offset the
effect of higher average sales prices.
Selling, general and administrative expenses, as a percentage of net sales,
in fiscal 1996 remained consistent with the prior year at 2.8%. On a dollar
basis, selling, general and administrative expenses increased 4.6% from $43.1
million in fiscal 1995 to $45.1 million in fiscal 1996. This increase primarily
reflected ongoing efforts to enhance the Company's information systems to
improve operating performance throughout the Company and the level of service to
customers.
Interest expense declined $0.9 million, or 5.6%, from $15.5 million in
fiscal 1995 to $14.6 million in fiscal 1996. In the fourth quarter of fiscal
1996, the $230 million of 6% convertible subordinated notes were redeemed by the
Company. The redemption was funded by the proceeds from a $400 million five-year
revolving credit facility, which resulted in a lower effective interest rate
than the convertible notes. The decrease in the interest rate, in combination
with the reduction in the
15
debt level to $170 million at June 30, 1996, contributed to the decline in
interest expense. Interest income declined from $10.4 million in fiscal 1995 to
$6.8 million in fiscal 1996. This change reflected lower levels of invested
funds, which were used for capital expenditures, acquisitions, long-term debt
extinguishment and the purchase and retirement of Company common stock. Other
income declined $5.3 million from $9.7 million in fiscal 1995 to $4.4 million in
fiscal 1996. In fiscal 1995, gains were recognized from the sale of equity
affiliates and capital assets in excess of fiscal 1996 gains from the sale of
short-term investments and capital assets.
In the first quarter of fiscal 1996, the Company recorded a non-recurring
charge of $23.8 million, or an after-tax charge to earnings of $14.9 million, or
$0.23 per share. The significant components of the non-recurring charge included
$2.4 million of severance and other employee-related costs ($1.7 million
incurred through June 30, 1996, associated with the termination of 275
employees) and a $21.4 million write-down to estimated fair value less the cost
of disposal of under-utilized or consolidated assets ($7.4 million realized as
of June 30, 1996). The charge resulted from the plan to restructure and further
reduce the Company's cost structure and improve productivity through the
consolidation of certain manufacturing facilities and the disposition of
under-utilized assets. As part of the restructuring plan, the Company closed,
effective November 17, 1995, its spun yarn manufacturing facilities in Edenton
and Mount Pleasant, North Carolina.
The Company's effective tax rate decreased from 37.4% in fiscal 1995 to
36.4% in fiscal 1996. The decline in the effective tax rate was attributable to
the increase in earnings of foreign subsidiaries taxed at rates below the
domestic rate and increased federal tax benefits of the Company's foreign sales
corporation and research and experimentation tax credits.
During the fourth quarter of fiscal 1996, the Company recognized an
extraordinary after-tax charge of $5.9 million, or $0.09 per share, as a result
of the premium paid for the early retirement of the $230 million of the
Company's 6% convertible subordinated notes due 2002.
As a result of the above, the Company realized during fiscal 1996 net
income of $72.5 million, or $1.10 per share, compared to a corresponding total
in fiscal 1995 of $116.2 million, or $1.68 per share. Before the effects of the
non-recurring and the extraordinary charges recognized in fiscal 1996, net
earnings would have been $93.3 million, or $1.42 per share.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations continues to be a primary source of funds to
finance operating needs and capital expenditures. Cash generated from operations
was $60.7 million for the six-month period ended December 28, 1997, compared to
$83.0 million for the fiscal 1997 corresponding period. The primary sources of
cash from operations, other than net income, were decreases in accounts
receivable of $51.2 million and non-cash adjustments aggregating $35.9 million.
Depreciation and amortization of $34.1 million, the after-tax cumulative
accounting change of $4.6 million and the deferred income tax provision of $6.3
million, offset by earnings of unconsolidated affiliates of $9.1 million, were
the primary components of the non-cash adjustments to cash provided by
operations. Offsetting these sources were an increase in inventory of $13.9
million and a decrease in accounts payable and accruals of $68.4 million. All
working capital changes have been adjusted to exclude the effect of the current
quarter acquisition. The decreases in accounts receivable and accounts payable
and accruals were impacted by the contribution of the spun cotton yarn
operations at the beginning of fiscal 1998 as well as the timing of the holiday
shut down at the end of the second quarter of fiscal 1998 relative to the
shutdown that normally occurs near the beginning of the Company's fiscal year.
In addition, the timing of the Company's disbursements at the end of the second
quarter of fiscal 1998 compared to those at June 29, 1997 contributed to the
significant decline in accounts payable for the current period.
The Company utilized $199.0 million for net investing activities and
obtained $134.2 million from net financing activities, during the six-month
period ended December 28, 1997. Significant expenditures during this period
included $136.4 million for capacity expansions and upgrading of facilities,
$25.6 million for acquisitions, $35.2 million for investments in equity
affiliates, $17.1 million for the payment of the Company's cash dividends, $20.2
million for the purchase and retirement of Company common stock and $0.2
million, net for other activity. The Company obtained proceeds from net
borrowings under its long-term debt agreement of $169.9 million to substantially
offset these cash expenditures.
The Company ended the second quarter of fiscal 1998 with working capital of
$219.2 million, which included cash and cash equivalents of $5.1 million.
As described above, on June 30, 1997, the Company entered into the
Contribution Agreement with Parkdale creating Parkdale America. It is
anticipated that Parkdale America will distribute dividends to the Company and
Parkdale sufficient to satisfy any income tax liability attributable to the
taxable earnings of Parkdale America. The Company has no financial obligation to
Parkdale America other than a commitment to contribute cash of $10 million on
June 30, 1998 and $10 million on June 30, 1999.
16
At December 28, 1997, the Company had committed approximately $192.4
million for the purchase and upgrade of equipment and facilities, which is
scheduled to be expended during fiscal years 1998 and 1999. The Company expects
to make capital expenditures of $220 to $230 million in fiscal 1998. A
significant component of these committed funds, as well as a major component of
the year-to-date capital expenditures, is the continuing construction of a POY
production facility in Yadkinville, North Carolina. The Company also has in
process several other capital projects, including the construction of a new
nylon texturing and covering facility in Madison, North Carolina. This plant
will consolidate the existing capacity at several locations, replacing older
equipment with state-of-the-art technology, and will provide for additional
capacity and expansion capabilities. Certain construction and machinery
components of this project are still under negotiation.
On October 21, 1993, the Board of Directors authorized management to
repurchase up to 15 million shares of the Company's common stock from time to
time at such prices as management feels advisable and in the best interest of
the Company. Through December 28, 1997, 10.2 million shares had been repurchased
at a total cost of $282.5 million pursuant to this Board authorization. The
Company will continue to operate its stock buy back program from time to time as
it deems appropriate, based on prevailing financial and market conditions.
Management believes the current financial position of the Company in
connection with its operations and its access to debt and equity markets are
sufficient to meet anticipated capital expenditure, strategic acquisition,
working capital, Company common stock repurchases and other financial needs.
YEAR 2000 COMPUTER CONVERSION STATUS
The Company is in the process of identifying the business issues associated
with the year 2000 that impact information systems both internally and in
relation to its external customers, suppliers and other business associates.
Factors considered in the assessment of the business issues involved with the
year 2000 include the evaluation of compliance capabilities and the current
status of the Company's enterprise-wide system conversion project, significant
customers' and vendors' compliance plans and status thereof (including the
impact on electronic commerce systems with these companies) and the compliance
plans and status for businesses in which the Company has investments.
The Company has identified a team of professionals with the responsibility
of addressing business issues associated with the year 2000 and has completed a
preliminary assessment of the issues and actions needed to be performed. The
Company does not believe any material exposures or contingencies exist with
respect to its internal information systems. The Company has not completed its
evaluation of year 2000 compliance for its external business affiliates, but is
not aware of any material exposure or contingency to date.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations, other sections of this Prospectus and the documents
incorporated by reference contain forward-looking statements about the Company's
financial condition and results of operations that are based on management's
current expectations, estimates and projections about the markets in which the
Company operates, management's beliefs and assumptions made by management. Words
such as "expects," "anticipates," "believes," "estimates," variations of such
words and other similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions which are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in, or implied by, such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's judgment only as of
the date hereof. The Company undertakes no obligation to update publicly any of
these forward-looking statements to reflect new information or future events or
otherwise.
Factors that may cause actual outcomes and results to differ materially
from those expressed in, or implied by, these forward-looking statements
include, but are not necessarily limited to, availability, sourcing and pricing
of raw materials, pressures on sales prices due to competition and economic
conditions, reliance on and financial viability of significant customers,
technological advancements, employee relations, changes in construction spending
and capital equipment expenditures (including those related to unforeseen
acquisition opportunities), continued availability of financial resources
through financing arrangements and operations, negotiation of new or
modifications of existing contracts for asset management and for property and
equipment construction and acquisition, regulations governing tax laws, other
governmental and authoritative bodies' policies and legislation, the
continuation and magnitude of the Company's common stock repurchase program and
proceeds received from the sale of assets held for disposal. In addition to
these representative factors, forward-looking statements could be impacted by
general domestic and international economic and industry conditions in the
markets where the Company competes, such as changes in currency exchange rates,
interest and inflation rates, recession and other economic and political factors
over which the Company has no control.
17
THE EXCHANGE OFFER
THE SUMMARY HEREIN OF CERTAIN PROVISIONS OF THE REGISTRATION RIGHTS
AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND REFERENCE IS MADE TO THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, WHICH HAS BEEN FILED AS AN
EXHIBIT TO THE REGISTRATION STATEMENT AND A COPY OF WHICH IS AVAILABLE AS SET
FORTH UNDER THE HEADING "AVAILABLE INFORMATION."
TERMS OF THE EXCHANGE OFFER
GENERAL
In connection with the issuance of the Existing Notes pursuant to a
Purchase Agreement, dated February 2, 1998, between the Company and the Initial
Purchasers named therein, the Initial Purchasers and their respective assignees
became entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company has agreed (i) to file
with the Commission within 90 days after February 5, 1998, the date the Existing
Notes were issued (the "Issue Date"), the Registration Statement of which this
Prospectus is a part with respect to a registered offer to exchange the Existing
Notes for the New Notes, and (ii) to use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act within
180 days after the Issue Date. The Company will keep the Exchange Offer open for
not less than 30 days after the date notice of the Exchange Offer is mailed to
holders of the Existing Notes. The Exchange Offer being made hereby, if
commenced and consummated within the time periods described in this paragraph,
will satisfy those requirements under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, all Existing Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will be
accepted for exchange. New Notes will be issued in exchange for an equal
principal amount of outstanding Existing Notes accepted in the Exchange Offer.
Existing Notes may be tendered only in integral multiples of $1,000. This
Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of , 1998. The Exchange Offer is not
conditioned upon any minimum principal amount of Existing Notes being tendered
for exchange. However, the obligation to accept Existing Notes for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under
" -- Conditions."
Existing Notes shall be deemed to have been accepted as validly tendered
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Existing Notes for the purposes of receiving the New Notes and delivering New
Notes to such holders.
Based on interpretations by the Staff of the Commission as set forth in
no-action letters issued to third parties, the Company believes that the New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is a broker-dealer or an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that (i) such New
Notes are acquired in the ordinary course of business, (ii) at the time of the
commencement of the Exchange Offer such holder has no arrangement with any
person to participate in a distribution of such New Notes and (iii) such holder
is not engaged in, and does not intend to engage in, a distribution of such New
Notes. The Company has not sought, and does not intend to seek, a no-action
letter from the Commission with respect to the effects of the Exchange Offer,
and there can be no assurance that the Staff would make a similar determination
with respect to the New Notes as it has in such no-action letters.
By tendering Existing Notes in exchange for New Notes and executing the
Letter of Transmittal, each holder will represent to the Company that: (i) it is
not an affiliate of the Company, (ii) any New Notes to be received by it will be
acquired in the ordinary course of business and (iii) at the time of the
commencement of the Exchange Offer it had no arrangement with any person to
participate in a distribution of the New Notes and, if such holder is not a
broker-dealer, it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If a holder of Existing Notes is unable to make the
foregoing representations, such holder may not rely on the applicable
interpretations of the Staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction unless such sale is made
pursuant to an exemption from such requirements.
Each broker-dealer that receives New Notes for its own account in exchange
for Existing Notes where such Existing Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution."
18
Upon consummation of the Exchange Offer, subject to certain limited
exceptions, holders of Existing Notes who do not exchange their Existing Notes
for New Notes in the Exchange Offer will no longer be entitled to registration
rights and will not be able to offer or sell their Existing Notes, unless such
Existing Notes are subsequently registered under the Securities Act (which,
subject to certain limited exceptions, the Company will have no obligation to
do), except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The term "Expiration Date" shall mean , 1998 (30 calendar days
following the commencement of the Exchange Offer), unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the term "Expiration
Date" shall mean the latest date to which the Exchange Offer is extended.
Notwithstanding any extension of the Exchange Offer, if the Exchange Offer is
not consummated by , 1998, the interest rate borne by the Existing
Notes will increase as provided in the Existing Notes.
To extend the Expiration Date, the Company will notify the Exchange Agent
of any extension by oral or written notice and will notify the holders of the
Existing Notes by means of a press release or other public announcement prior to
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Existing
Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not
permit acceptance of Existing Notes not previously accepted if any of the
conditions set forth herein under " -- Conditions" shall have occurred and shall
not have been waived by the Company, by giving oral or written notice of such
delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Existing Notes. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment in a manner reasonably calculated
to inform the holders of the Existing Notes of such amendment.
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligations to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW NOTES
The New Notes will accrue interest at the rate of 6 1/2% per annum from the
Issue Date of the Existing Notes. Interest on the New Notes is payable on
February 1 and August 1 of each year, commencing August 1, 1998.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Existing Notes into
the Exchange Agent's account at DTC (the "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date or (ii) the holder
must comply with the guaranteed delivery procedures described below. THE METHOD
OF DELIVERY OF LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR OTHER REQUIRED DOCUMENTS SHOULD BE SENT TO THE
COMPANY. Delivery of all documents must be made to the Exchange Agent at its
address set forth below. Holders may also request their respective brokers,
dealers, commercial banks, trust companies or nominees to effect such tender for
such holders.
The tender by a holder of Existing Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal. Any beneficial
owner whose Existing Notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
19
who wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the
Existing Notes tendered pursuant thereto are tendered for the account of an
Eligible Institution.
If the Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such person should so indicate
when signing, and unless waived by the Company, evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Existing Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Existing Notes not
properly tendered or any Existing Notes which, if accepted, would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
absolute right to waive any irregularities or conditions of tender as to
particular Existing Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Existing Notes must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Existing Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Existing Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Existing Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion, subject
to the provisions of the Indenture, to (i) purchase or make offers for any
Existing Notes that remain outstanding subsequent to the Expiration Date or, as
set forth under " -- Conditions," to terminate the Exchange Offer in accordance
with the terms of the Registration Agreement, (ii) to redeem Existing Notes as a
whole or in part at any time and from time to time, as set forth under
"Description of Notes -- Optional Redemption" and (iii) to the extent permitted
by applicable law, purchase Existing Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
could differ from the terms of the Exchange Offer.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
all Existing Notes properly tendered will be accepted promptly after the
Expiration Date, and the New Notes will be issued promptly after acceptance of
the Existing Notes. See " -- Conditions." For purposes of the Exchange Offer,
Existing Notes shall be deemed to have been accepted as validly tendered for
exchange when, as and if the Company has given oral or written notice thereof to
the Exchange Agent.
In all cases, issuance of New Notes for Existing Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of a Book-Entry Confirmation of such Existing
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal and all other
required documents. If any tendered Existing Notes are not accepted for any
reason set forth in the terms and conditions of the Exchange Offer, such
unaccepted or such nonexchanged Existing Notes will be credited to an account
maintained with such Book-Entry Transfer Facility as promptly as practicable
after the expiration or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Existing Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Existing Notes by causing the
Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, the Letter
20
of Transmittal or facsimile thereof with any required signature guarantees and
any other required documents must, in any case, be transmitted to and received
by the Exchange Agent at one of the addresses set forth below under
" -- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If the procedures for book-entry transfer cannot be completed on a timely
basis, a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmission,
mail or hand delivery), setting forth the name and address of the holder of
Existing Notes and the amount of Existing Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, a Book-Entry Confirmation and any other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent and (iii) a Book-Entry Confirmation and all other documents
required by the Letter of Transmittal are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL OF TENDERS
Tenders of Existing Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date at one of the addresses set forth below under " -- Exchange
Agent." Any such notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility from which the Existing Notes were
tendered, identify the principal amount of the Existing Notes to be withdrawn,
and specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Existing Notes and otherwise comply
with the procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notice will be determined by the
Company, whose determination shall be final and binding on all parties. Any
Existing Notes so withdrawn will be deemed not be have been validly tendered for
exchange for purposes of the Exchange Offer. Any Existing Notes which have been
tendered for exchange but which are not exchanged for any reason will be
credited to an account maintained with such Book-Entry Transfer Facility for the
Existing Notes as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Existing Notes may be
retendered by following one of the procedures described under " -- Procedures
for Tendering" and " -- Book-Entry Transfer" above at any time on or prior to
the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Existing Notes will
not be required to be accepted for exchange, nor will New Notes be issued in
exchange for any Existing Notes, and the Company may terminate or amend the
Exchange Offer as provided herein before the acceptance of such Existing Notes,
if because of any change in law, or applicable interpretations thereof by the
Commission, the Company determines that it is not permitted to effect the
Exchange Offer. The Company has no obligation to, and will not knowingly, permit
acceptance of tenders of Existing Notes from Affiliates of the Company or from
any other holder or holders who are not eligible to participate in the Exchange
Offer under applicable law or interpretations thereof by the Staff of the
Commission, or if the New Notes to be received by such holder or holders of
Existing Notes in the Exchange Offer, upon receipt, will not be tradable by such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
EXCHANGE AGENT
First Union National Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail: By Hand/Federal Express/UPS:
First Union National Bank First Union National Bank
Corporate Trust Reorganization Dept. Corporate Trust Reorganization Dept.
1525 West W.T. Harris Blvd., 3C3 1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28288 Charlotte, North Carolina 28262
Attention: Mr. Mike Klotz Attention: Mr. Mike Klotz
Telephone: 704-590-7408
Facsimile: 704-590-7628
21
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of the Prospectus and related documents to the beneficial
owners of the Existing Notes, and in handling or forwarding tenders for
exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, New Notes or
Existing Notes for principal amounts not tendered or accepted for exchange are
to be registered or issued in the name of any person other than the registered
holder of the Existing Notes tendered, or if tendered Existing Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Existing Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. The
Company does not currently anticipate that it will register the Existing Notes
under the Securities Act. To the extent that Existing Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Existing Notes could be adversely affected.
DESCRIPTION OF NOTES
The Notes are issued as a single series of debt securities under an
Indenture, dated as of February 5, 1998 (the "Indenture"), between the Company
and First Union National Bank as trustee (the "Trustee"), resolutions of the
Company's Board of Directors dated December 31, 1997, and resolutions of the
Executive Committee of the Board of Directors dated February 2, 1998 and March
30, 1998. The following summaries of certain provisions of the Indenture do not
purport to be complete, and where particular provisions of the Indenture are
referred to, such provisions, including definitions of certain terms, are
incorporated by reference as a part of such summaries. The summaries are
qualified in their entirety by reference to the provisions of the Indenture. The
section references below are to sections in the Indenture. The Indenture is by
its terms subject to and governed by the Trust Indenture Act of 1939, as
amended. Copies of the Indenture are available at the corporate trust office of
the Trustee.
GENERAL
The Notes are unsecured senior obligations of the Company, will mature on
February 1, 2008, and are limited to $250 million aggregate principal amount.
The Notes bear interest at 6 1/2% per annum from February 5, 1998, or from the
most recent interest payment date to which interest has been paid or provided
for, payable semi-annually on February 1 and August 1 in each year, commencing
August 1, 1998, to the person in whose name such Note (or any predecessor Note)
is registered at the close of business on the January 15 or July 15,
respectively, preceding such interest payment date. Interest shall be calculated
based on a 360-day year consisting of twelve 30-day months. (Sections 2.03, 2.04
and 2.05)
Principal of and premium, if any, and interest on the Notes are payable,
and the Notes are exchangeable and transfers thereof are registrable, at an
office or agency of the Company, one of which is maintained for such purpose in
New York, New York (which initially will be the corporate trust office of the
Trustee) or such other office or agency permitted under the
22
Indenture. Payment of any interest due on any Note is made to the person in
whose name such Note is registered at the close of business on the regular
record date for such interest. (Sections 2.05, 2.07, 3.01, 3.02 and 13.04)
The Company does not intend to list the Notes on a national securities
exchange.
The Indenture does not limit the aggregate principal amount of debt
securities that may be issued thereunder, and the Indenture provides that debt
securities, including the Notes, may be issued thereunder from time to time in
one or more series. The Indenture does not contain any provisions that would
limit the ability of the Company to incur indebtedness or require the
maintenance of financial ratios or specified levels of net worth or liquidity,
nor does it contain covenants or other provisions designed to afford holders of
the Notes protection in the event of a highly leveraged transaction, change in
credit rating or other similar occurrence. However, the provisions of the
Indenture do (i) provide that, subject to certain exceptions, neither the
Company nor any Restricted Subsidiary (as defined therein) will subject its
property or assets to any mortgage or other encumbrance unless the debt
securities, including the Notes, issued under the Indenture are secured equally
and ratably with such other indebtedness thereby secured, (ii) contain certain
limitations on the entry into certain sale and leaseback arrangements by the
Company and its Restricted Subsidiaries and (iii) contain certain limitations on
the issuance of certain indebtedness by Restricted Subsidiaries. In addition,
the Indenture does not contain any provisions which would require the Company to
repurchase or redeem or otherwise modify the terms of any of the Notes upon a
change in control or other events involving the Company which may adversely
affect the creditworthiness of the Notes. See " -- Certain Covenants."
FORM OF NOTES; BOOK ENTRY SYSTEM
The Notes are issued in fully registered form without interest coupons. The
Notes are represented by one or more permanent global Notes in definitive, fully
registered form without interest coupons (the "Global Securities") and are
deposited with the Trustee as custodian for DTC and registered in the name of a
nominee of DTC.
Upon the issuance of a Global Security, DTC credited, on its internal
system, the respective principal amounts of the individual beneficial interests
represented by such Global Security to the accounts of persons that have
accounts with DTC or its nominee ("Participants"). Ownership of beneficial
interests in a Global Security is limited to Participants or persons that may
hold interests through Participants ("Indirect Participants"). Ownership of
beneficial interests in such Global Security is shown on, and the transfer of
those ownership interests is effected only through, records maintained by DTC
(with respect to Participants' interests) and by such Participants (with respect
to the owners of beneficial interests in such Global Security). Qualified
institutional buyers (as defined in Section 144A of the Securities Act)
("Qualified Institutional Buyers" or "QIBs") may hold their interests in such
Global Security directly through DTC if they are Participants or indirectly
through Indirect Participants.
So long as DTC, or its nominee, is the registered holder and owner of such
Global Security, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the related Notes for all purposes of such Notes and
for all purposes under the Indenture. No beneficial owner of an interest in a
Global Security will be able to transfer such interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Morgan Guaranty Trust Company of New
York, Brussels office, as operator of the Euroclear System ("Euroclear").
Payment of principal of, and interest on, and any redemption price, of
Notes represented by a Global Security are made to DTC or its nominee, as the
case may be, as the registered owner and holder of such Global Security.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest or redemption price in respect of a Global Security, will
immediately credit the accounts of the Participants with such payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in the Global Security as shown in the records of DTC or its nominee.
The Company also expects that payments by Participants to owners of beneficial
interests in a Global Security held through such Participants will be governed
by standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name,"and
will be the responsibility of such Participants. Neither the Company nor the
Trustee will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in a
Global Security for any Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for receipt of
notices, voting and requesting or directing the Trustee to take, or not to take,
or consenting to, certain actions thereunder or for any other aspect of the
relationship between DTC and its Participants or the relationship between such
Participants and the owners of beneficial interests in such Global Security
owned through such Participants.
23
Transfers between Participants in DTC are effected in the ordinary way in
accordance with DTC rules and are settled in same-day funds. Transfers between
Participants in Euroclear are effected in the ordinary way in accordance with
its rules and operating procedures.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more Participants to whose
account the DTC interests in a Global Security is credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default (as defined herein) under the Notes, DTC will exchange
the Global Securities for certificated notes in definitive form ("Certificated
Notes") which it will distribute to its Participants.
DTC has advised the Company and the Trustee as follows: DTC is a
limited-purpose trust company organized under New York law, a "banking
organization" within the meaning of New York law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code as in effect in the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC was created to hold securities deposited by
Participants and to facilitate the clearance and settlement of securities
transactions among Participants through electronic computerized book-entry
changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. Indirect access to DTC's book-entry system is also
available to Indirect Participants, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly.
Although DTC and Euroclear have agreed to the foregoing procedures in order
to facilitate transfers of interests in the Global Securities among participants
of DTC and Euroclear, they are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their respective
operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Securities and a successor depositary is not appointed by the Company
within 90 days, the Company will issue Certificated Notes in exchange for the
Global Securities.
OPTIONAL REDEMPTION
The Company, at its option, may at any time redeem all or any portion of
the Notes, at a redemption price, plus accrued interest to the date of
redemption, equal to the greater of (i) 100% of their principal amount or (ii)
the sum of the present values of the remaining scheduled payments of principal
and interest thereon discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Yield plus 20 basis points.
"Treasury Yield" means, with respect to any redemption date applicable to
the Notes, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means, with respect to the Notes, the United
States Treasury security selected by an Independent Investment Banker as having
a maturity comparable to the remaining term of the Notes that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Independent Investment Banker" means, with respect to the Notes offered
hereby, Credit Suisse First Boston Corporation or, if such firm is unwilling or
unable to select the applicable Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date
applicable to the Notes, (i) the average of the applicable Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such
24
applicable Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains
fewer than four such Reference Treasury Dealer Quotations, the average of all
such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue for the Notes (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means, with respect to the Notes offered
hereby, Credit Suisse First Boston Corporation; PROVIDED HOWEVER, that if the
foregoing shall cease to be a primary United States Government securities dealer
in New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
Holders of the Notes to be redeemed will receive notice thereof by
first-class mail at least 30 and not more than 60 days prior to the date fixed
for redemption.
CERTAIN COVENANTS
RESTRICTIONS ON SECURED FUNDED DEBT. The Indenture provides that the
Company will not, nor will it permit any Restricted Subsidiary to, incur, issue,
assume, guarantee or create any Secured Funded Debt, without effectively
providing concurrently with the incurrence, issuance, assumption, guaranty or
creation of any such Secured Funded Debt that the Notes (together with, if the
Company shall so determine, any other Indebtedness of the Company or such
Restricted Subsidiary then existing or thereafter created which is not
subordinated to the Notes) will be secured equally and ratably with (or prior
to) such Secured Funded Debt, unless, after giving effect thereto, the sum of
the aggregate amount of all outstanding Secured Funded Debt of the Company and
its Restricted Subsidiaries together with all Attributable Debt in respect of
sale and leaseback transactions relating to a Principal Property (with the
exception of Attributable Debt which is excluded pursuant to clauses (1) to (6)
described under "Limitations on Sale/Leaseback Transactions" below), would not
exceed 15% of Consolidated Net Tangible Assets; PROVIDED, HOWEVER, that this
restriction will not apply to, and there will be excluded from Secured Funded
Debt in any computation under this restriction, Funded Debt secured by: (1)
Liens on property, shares of capital stock or indebtedness of any corporation
existing at the time such corporation becomes a Subsidiary; (2) Liens on
property, shares of capital stock or indebtedness existing at the time of
acquisition thereof or incurred within 180 days of the time of acquisition
thereof (including, without limitation, acquisition through merger or
consolidation) by the Company or any Restricted Subsidiary; (3) Liens on
property, shares of capital stock or indebtedness thereafter acquired (or
constructed) by the Company or any Restricted Subsidiary and created prior to,
at the time of, or within 270 days after such acquisition (including, without
limitation, acquisition through merger or consolidation) (or the completion of
such construction or commencement of commercial operation of such property,
whichever is later) to secure or provide for the payment of all or any part of
the purchase price (or the construction price) thereof; (4) Liens in favor of
the Company or any Restricted Subsidiary; (5) Liens in favor of the United
States of America, any State thereof or the District of Columbia, or any agency,
department or other instrumentality thereof, to secure partial, progress,
advance or other payments pursuant to any contract or provisions of any statute;
(6) Liens incurred or assumed in connection with the issuance of revenue bonds
the interest on which is exempt from Federal income taxation pursuant to Section
103(b) of the Internal Revenue Code; (7) Liens securing the performance of any
contract or undertaking not directly or indirectly in connection with the
borrowing of money, the obtaining of advances or credit or the securing of
Funded Debt, if made and continuing in the ordinary course of business; (8)
Liens incurred (no matter when created) in connection with the Company's or a
Restricted Subsidiary's engaging in leveraged or single-investor lease
transactions; PROVIDED, HOWEVER, that the instrument creating or evidencing any
borrowings secured by such Lien will provide that such borrowings are payable
solely out of the income and proceeds of the property subject to such Lien and
are not a general obligation of the Company or such Restricted Subsidiary; (9)
Liens under workers' compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
or deposits to secure public or statutory obligations of the Company or any
Restricted Subsidiary, or deposits of cash or obligations of the United States
of America to secure surety and appeal bonds to which the Company or any
Restricted Subsidiary is a party or in lieu of such bonds, or pledges or
deposits for similar purposes in the ordinary course of business, or Liens
imposed by law, such as laborers' or other employees', carriers',
warehousemen's, mechanics', materialmen's and vendors' Liens, and Liens arising
out of judgments or awards against the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary at the time shall be
prosecuting an appeal or proceedings for review and with respect to which it
shall have secured a stay of execution pending such appeal or proceedings for
review, or Liens for taxes not yet subject to penalties for nonpayment or the
amount or validity of which is being in good faith contested by appropriate
proceedings by the Company or any Restricted Subsidiary, as the case may be, or
minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for, rights of way, sewers, electric lines, telegraph and
telephone
25
lines and other similar purposes, or zoning or other restrictions or Liens as to
the use of real properties, which Liens, exceptions, encumbrances, easements,
reservations, rights and restrictions do not, in the opinion of the Company, in
the aggregate materially detract from the value of said properties or materially
impair their use in the operation of the business of the Company and its
Restricted Subsidiaries; (10) Liens incurred to finance all or any portion of
the cost of construction, alteration or repair of any Principal Property and
improvements thereto created prior to or within 270 days after completion of
such construction, alteration or repair; (11) Liens outstanding on the date of
the Indenture; or (12) any extension, renewal, refunding or replacement of the
foregoing, PROVIDED THAT (i) such extension, renewal, refunding or replacement
Lien shall be limited to all or a part of the same property that secured the
Lien extended, renewed, refunded or replaced (plus improvements on such
property) and (ii) the Funded Debt secured by such Lien at such time is not
increased.
"Attributable Debt" means, as to any particular lease under which either
the Company or any Restricted Subsidiary is at the time liable as lessee for a
term of more than 12 months and at any date as of which the amount thereof is to
be determined, the total net obligations of the lessee for rental payments
during the remaining term of the lease (including any period for which such
lease has been extended or may, at the option of the lessor, be extended)
discounted from the respective due dates thereof to such determination date at a
rate per annum equivalent to the greater of (i) the weighted-average Yield to
Maturity (as defined in the Indenture) of the Notes, such average being weighted
by the principal amount of the Notes or, in the case of Original Issue Discount
Securities (as defined in the Indenture), such amount to be the principal amount
of such outstanding Original Issue Discount Securities that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the maturity thereof pursuant to the Indenture and (ii) the interest rate
inherent in such lease (as determined in good faith by the Company), both to be
compounded semi-annually.
"Consolidated Net Tangible Assets" means, at any date, the total assets
appearing on the most recent consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of the fiscal quarter of the Company
ending not more than 135 days prior to such date, prepared in accordance with
U.S. generally accepted accounting principles, less (i) all current liabilities
(due within one year) as shown on such balance sheet, (ii) investments in and
advances to Unrestricted Subsidiaries and (iii) Intangible Assets and
liabilities relating thereto.
"Funded Debt" means (i) any indebtedness of the Company or a Restricted
Subsidiary maturing more than 12 months after the time of computation thereof,
(ii) guarantees of Funded Debt or of dividends of others (except guarantees in
connection with the sale or discount of accounts receivable, trade acceptances
and other paper arising in the ordinary course of business), (iii) in the case
of any Restricted Subsidiary, all preferred stock having mandatory redemption
provisions of such Restricted Subsidiary as reflected on such Restricted
Subsidiary's balance sheet prepared in accordance with U.S. generally accepted
accounting principles, and (iv) all Capital Lease Obligations (as defined in the
Indenture).
"Indebtedness" means, at any date, without duplication, (i) all obligations
for borrowed money of the Company or a Restricted Subsidiary or any other
indebtedness of the Company or a Restricted Subsidiary, evidenced by bonds,
debentures, notes or other similar instruments, and (ii) Funded Debt.
"Intangible Assets" means, at any date, the value, as shown on or reflected
in the most recent consolidated balance sheet of the Company and its Restricted
Subsidiaries as at the end of the fiscal quarter of the Company ending not more
than 135 days prior to such date, prepared in accordance with generally accepted
accounting principles, of: (i) all trade names, trademarks, licenses, patents,
copyrights, service marks, goodwill and other like intangibles; (ii)
organizational and development costs; (iii) deferred charges (other than prepaid
items, such as insurance, taxes, interest, commissions, rents, pensions,
compensation and similar items and tangible assets being amortized); and (iv)
unamortized debt discount and expense, less unamortized premium.
"Liens" means such pledges, mortgages, security interests and other liens
on any Principal Property of the Company or a Restricted Subsidiary which secure
Secured Funded Debt.
"Principal Property" means any manufacturing facility owned and operated by
the Company or any Restricted Subsidiary on or after the date hereof, and any
manufacturing equipment (as defined in the Indenture) owned by the Company or
any Restricted Subsidiary on or after the date hereof in such manufacturing
facility.
"Restricted Subsidiary" means each Subsidiary other than Unrestricted
Subsidiaries.
"Secured Funded Debt" means Funded Debt which is secured by any pledge of,
or mortgage, security interest or other lien on any (i) Principal Property
(whether owned on the date of the Indenture or thereafter acquired or created),
(ii) shares of stock owned by the Company or a Subsidiary in a Restricted
Subsidiary or (iii) indebtedness of a Restricted Subsidiary.
26
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock, which under ordinary circumstances (not dependent upon the
happening of a contingency) has voting power to elect a majority of the board of
directors of such corporation (or similar management body), is owned directly or
indirectly by the Company or by one or more Subsidiaries of the Company, or by
the Company and one or more Subsidiaries.
"Unrestricted Subsidiary" means Subsidiaries designated as Unrestricted
Subsidiaries from time to time by the Board of Directors of the Company;
PROVIDED, HOWEVER, that the Board of Directors of the Company (i) will not
designate as an Unrestricted Subsidiary any Subsidiary of the Company that owns
any Principal Property or any stock of a Restricted Subsidiary, (ii) will not
continue the designation of any Subsidiary of the Company as an Unrestricted
Subsidiary at any time that such Subsidiary owns any Principal Property, and
(iii) will not, nor will it cause or permit any Restricted Subsidiary to,
transfer or otherwise dispose of any Principal Property to any Unrestricted
Subsidiary (unless such Unrestricted Subsidiary will in connection therewith be
redesignated as a Restricted Subsidiary and any pledge, mortgage, security
interest or other lien arising in connection with any Indebtedness of such
Unrestricted Subsidiary so redesignated does not extend to such Principal
Property (unless the existence of such pledge, mortgage, security interest or
other lien would otherwise be permitted under the Indenture)). (Section 3.09)
LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Indenture provides that the
Company will not, nor will it permit any Restricted Subsidiary to, enter into
any arrangement with any person providing for the leasing by the Company or any
Restricted Subsidiary of any Principal Property of the Company or any Restricted
Subsidiary, which Principal Property has been or is to be sold or transferred by
the Company or such Restricted Subsidiary to such person (a "sale and leaseback
transaction") unless, after giving effect thereto, the aggregate amount of all
Attributable Debt with respect to all such sale and leaseback transactions plus
all Secured Funded Debt (with the exception of Funded Debt secured by Liens
which is excluded pursuant to clauses (1) to (12) described under "Restrictions
on Secured Funded Debt" above) would not exceed 15% of Consolidated Net Tangible
Assets. This covenant will not apply to, and there will be excluded from
Attributable Debt in any computation under this restriction or under
"Restrictions on Secured Funded Debt" above, Attributable Debt with respect to
any sale and leaseback transaction if (1) the Company or a Restricted Subsidiary
is permitted to create Funded Debt secured by a Lien pursuant to clauses (1) to
(12) inclusive described under "Restrictions on Secured Funded Debt" above on
the Principal Property to be leased, in an amount equal to the Attributable Debt
with respect to such sale and leaseback transaction, without equally and ratably
securing the Notes; (2) the Company or a Restricted Subsidiary, within 270 days
after the sale or transfer shall have been made by the Company or a Restricted
Subsidiary, shall apply an amount in cash equal to the greater of (i) the net
proceeds of the sale or transfer of the Principal Property leased pursuant to
such arrangement or (ii) the fair market value of the Principal Property so
leased at the time of entering into such arrangement (as determined by the Chief
Executive Officer, the President, the Chief Financial Officer, the Treasurer or
the Controller of the Company) to the retirement of Secured Funded Debt of the
Company or any Restricted Subsidiary (other than Secured Funded Debt owned by
the Company or any Restricted Subsidiary); PROVIDED, HOWEVER, that no retirement
referred to in this clause (2) may be effected by payment at maturity or
pursuant to any mandatory sinking fund payment or any mandatory prepayment
provision of Secured Funded Debt; (3) the Company or a Restricted Subsidiary
applies the net proceeds of the sale or transfer of the Principal Property
leased pursuant to such transaction to investment in another Principal Property
within 270 days prior or subsequent to such sale or transfer; PROVIDED, HOWEVER,
that this exception shall apply only if such proceeds invested in such other
Principal Property shall not exceed the total acquisition, repair, alteration
and construction cost of the Company or any Restricted Subsidiary in such other
Principal Property less amounts secured by any purchase money or construction
mortgages on such Principal Property; (4) the effective date of any such
arrangement is within 270 days of the acquisition of the Principal Property
(including, without limitation, acquisition by merger or consolidation) or the
completion of construction and commencement of operation thereof, whichever is
later; (5) the lease in such sale and leaseback transaction is for a term,
including renewals, of not more than three years; or (6) the sale and leaseback
transaction is entered into between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries. (Section 3.10)
RESTRICTIONS ON FUNDED DEBT OF RESTRICTED SUBSIDIARIES. The Indenture
provides that the Company will not permit any Restricted Subsidiary to incur,
issue, assume, guarantee or create any Funded Debt, unless after giving effect
thereto, the sum of the aggregate amount of all outstanding Funded Debt of the
Restricted Subsidiaries would not exceed 15% of Consolidated Net Tangible
Assets; PROVIDED, HOWEVER, that this restriction will not apply to, and there
will be excluded from, Funded Debt in any computation under this restriction,
(i) Funded Debt secured by Liens which is excluded pursuant to clauses (1) to
(12) described under "Restrictions on Secured Funded Debt," above, (ii) Funded
Debt of any corporation existing at the time such
27
corporation becomes a Restricted Subsidiary and (iii) Indebtedness among the
Company and its Subsidiaries and Indebtedness between Subsidiaries; PROVIDED,
FURTHER, that this restriction will not prohibit the incurrence of Indebtedness
in connection with any extension, renewal, refinancing, replacement or refunding
(including successive extensions, renewals, refinancings, replacements and
refundings), in whole or in part, of any Indebtedness of the Restricted
Subsidiaries (provided that the principal amount of such Indebtedness being
extended, renewed, refinanced, replaced or refunded is not increased), but any
such Indebtedness shall be included in the computation of Funded Debt under this
restriction. (Section 3.11)
MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS
The Company will not consolidate with or merge into any other entity or
convey, transfer or lease its properties and assets substantially as an entirety
to any person, and the Company will not permit any person to consolidate with or
merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless (i) the successor person or
purchaser shall be a corporation, partnership, trust or other entity organized
and validly existing under the law of the United States of America, any State or
the District of Columbia and shall expressly assume the Company's obligations
under the Indenture and the Notes, (ii) immediately after giving effect to such
transaction, no Event of Default under the Indenture or event which, after
notice or lapse of time or both, would become an Event of Default thereunder
would exist and be continuing, and (iii) the Company has delivered to the
Trustee an Officers' Certificate and, if requested by the Trustee, an opinion of
counsel, each stating that such transaction complies with the Indenture. Upon
any consolidation or merger by the Company into any other person or any
conveyance, transfer or lease of the Company's properties substantially as an
entirety to any person in compliance with these provisions, the successor person
will succeed to, and be substituted for, the Company under the Indenture, and
the Company, except in the case of a lease, will be relieved of its obligations
under the Indenture and the Notes. (Sections 3.06, 10.01, 10.02 and 10.03)
The Indenture does not restrict, or require the Company to redeem or permit
holders of the Notes to cause a redemption of Notes in the event of, (i) a
consolidation, merger, sale of assets or other similar transaction that may
adversely affect the creditworthiness of the Company or its successor or
combined entity, (ii) a change in control of the Company or (iii) a highly
leveraged transaction involving the Company, whether or not involving a change
in control. Accordingly, the Holders of the Notes would not have protection in
the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction involving the Company that may adversely affect
the Holders of Notes. The existing protective covenants applicable to the Notes
would continue to apply to the Company, or its successor, in the event of such a
transaction initiated or supported by the Company, the management of the
Company, or any affiliate of the Company or its management, but may not prevent
such a transaction from taking place.
EVENTS OF DEFAULT, WAIVER AND NOTICE
"Event of Default" is defined in the Indenture with respect to the Notes as
being (i) default for 30 days in the payment of any interest installment on any
Notes, (ii) default in the payment when due of principal of any Note, (iii)
default for 90 days, after notice to the Company by the Trustee or to the
Company and the Trustee by the holders of not less than 25% in principal amount
of the Notes at that time outstanding, in the performance, or breach, of any
covenant or warranty of the Indenture (other than covenants and warranties
specifically dealt with elsewhere), (iv) the acceleration or failure to pay at
maturity (including any applicable grace period) of any indebtedness in excess
of $15,000,000 for money borrowed by the Company, which acceleration is not
rescinded or annulled, or which indebtedness is not paid in full, within 30 days
after notice specified in the next preceding clause and (v) certain events of
bankruptcy, insolvency and reorganization. (Section 5.01)
If an Event of Default with respect to the Notes at that time outstanding
shall occur and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the outstanding Notes may, by notice in writing
to the Company (and to the Trustee if given by holders), declare the principal
amount of all Notes to be due and payable. (Section 5.01) In certain cases, the
holders of a majority in principal amount of the outstanding Notes may, on
behalf of the holders of all the Notes, rescind and annul such acceleration or
waive any past default or Event of Default, except a default not theretofore
cured in payment of the principal of or interest on any of the Notes or a
default relating to a covenant or provision of the Indenture that could not be
modified or amended without the consent of all holders of Notes. (Sections 5.01
and 5.07) See " -- Modification and Waiver."
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Notes, give to the holders of the
Notes notice of such default known to it, unless such default shall have been
cured or waived. (Section 5.08) The Indenture contains a provision entitling the
Trustee, subject to the duty of the Trustee during a default to act with the
required standard of care, to be indemnified by holders of the Notes before
proceeding to exercise any right or
28
power under the Indenture at the request of such holders. (Sections 6.01) The
Indenture provides that the holders of a majority in principal amount of the
outstanding Notes may direct the time, method and place of conducting
proceedings for remedies available to the Trustee or of exercising any trust or
power conferred on the Trustee with respect to the Notes. (Section 5.07)
No holder of any Notes will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless (i) such holder
shall have previously given to the Trustee written notice of a continuing Event
of Default with respect to the Notes, (ii) the holders of at least 25% in
aggregate principal amount of the outstanding Notes shall have made written
request to the Trustee to institute proceedings as Trustee, (iii) such holder or
holders shall have offered to the Trustee reasonable indemnity, (iv) the Trustee
shall have failed to institute such proceeding within 60 days thereafter and (v)
the Trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request. (Section 5.04) However, the holder of any Notes will have an absolute
right to receive payment of the principal of and any interest on such Notes on
or after the due dates expressed in such Notes and to institute suit for the
enforcement of any such payment. (Section 5.04)
The Company will be required to file with the Trustee annually, within 120
days of the end of each fiscal year of the Company, a certificate as to the
compliance with all conditions and covenants of the Indenture. (Section 3.05)
DISCHARGE AND DEFEASANCE OF NOTES AND COVENANTS
The Indenture provides that the Company, at its option, (i) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations that include registering the transfer or exchange of the
Notes, replacing stolen, lost or mutilated Notes, maintaining paying agencies
and holding monies for payment in trust), or (ii) need not comply with certain
restrictive covenants of the Indenture, upon the irrevocable deposit with the
Trustee (and in the case of a discharge, 91 days after such deposit), in trust,
cash in U.S. dollars or U.S. Government Obligations (as defined in the
Indenture), or a combination thereof, which through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay each installment of principal of, premium, if any
and any interest on the Notes on the dates such payments are due in accordance
with the terms of the Indenture. Such a trust may be established only if, among
other things, (i) no Event of Default or event which with the giving of notice
or lapse of time, or both, would become an Event of Default under the Indenture
shall have occurred and be continuing on the date of such deposit or on such
later date specified in the Indenture in the case of certain events in
bankruptcy, insolvency or reorganization of the Company, (ii) such deposit will
not cause the Trustee to have any conflicting interest with respect to other
securities of the Company, (iii) such defeasance will not result in a breach or
violation of, or constitute a default under, the Indenture or any other
agreement or instrument to which the Company is a party or by which it is bound
and (iv) the Company shall have delivered an Opinion of Counsel to the effect
that the Holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit or defeasance and will
be subject to federal income tax in the same manner as if such defeasance had
not occurred, which Opinion of Counsel, in the case of clause (i) above, must
refer to and be based upon a published ruling of the Internal Revenue Service, a
private ruling of the Internal Revenue Service addressed to the Company, or
otherwise a change in applicable federal income tax law occurring after the date
of the Indenture. In the event the Company omits to comply with its remaining
obligations under the Indenture after a defeasance of the Indenture with respect
to the Notes and the Notes are declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations on deposit with the Trustee may be insufficient to pay amounts due
on the Notes at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
(Sections 5.02, 11.01 and 11.05)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee, with the consent of the Holders of not less than a majority in
principal amount of the Notes at the time outstanding; PROVIDED, HOWEVER, that
no such modification or amendment may, without the consent of the Holder of each
outstanding Note affected thereby, (i) extend the stated maturity of the
principal of, or any installment of interest on the time of payment of interest
on any Note, (ii) reduce the principal amount of, or the premium, if any, or
interest on, or any amount payable on redemption of, any Note, (iii) change the
place or currency of payment of principal of, or premium, if any, or interest
on, any Note, (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any Note, (v) reduce the above-stated percentage
of outstanding Notes necessary to modify or amend the Indenture or (vi) reduce
the percentage of aggregate principal amount of outstanding Notes necessary for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults. (Section 9.02)
29
The Company and the Trustee may from time to time enter into an indenture
or a supplemental indenture without the consent of the Holders for one or more
of the following purposes: (i) to evidence the succession of another corporation
to the Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company pursuant
to the terms of the Indenture; (ii) to add to the covenants of the Company such
further covenants, restrictions or conditions for the protection of the Holders
as the Company and Trustee shall consider to be for the protection of the
Holders; (iii) to provide for the issuance under the Indenture of Securities (as
defined in the Indenture) in coupon form and to provide for exchangeability of
such Securities with the Securities issued hereunder in fully registered form
and to make all appropriate changes for such purposes; (iv) to cure any
ambiguity or to correct or supplement any provision in the Indenture or
supplemental indenture or to make such other provisions provided that any such
action shall not adversely affect the interests of the Holders; (v) to add to,
delete from, or revise the terms of Securities of any series as permitted by
Sections 2.01 and 2.03 of the Indenture; (vi) to evidence and provide for the
acceptance of appointment by a successor trustee and to add or change any of the
provisions of the Indenture as shall be necessary to provide for or facilitate
the administration by more than one trustee; (vii) to provide for uncertificated
Securities in addition to or in place of certificated Securities; (viii) to make
any change that does not adversely affect the rights of any Holder in any
material respect; or (ix) to provide for the issuance of and establish the form
and terms and conditions of the Securities of any series, to establish the form
of any certifications required to be furnished pursuant to the terms of the
Indenture or any series of Securities, or to add to the rights of the Holders of
any series of Securities.
The Holders of not less than a majority in principal amount of the Notes at
the time outstanding may on behalf of the holders of all Notes waive compliance
by the Company with certain restrictive provisions of the Indenture. (Section
5.07) The holders of a majority in principal amount of the Notes at the time
outstanding may on behalf of the Holders of all Notes waive any past default
under the Indenture except a default not theretofore cured in the payment of the
principal of or any interest on any Note or in respect of a provision under
which the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Note. (Sections 5.01 and 5.07)
NOTICE TO CANADIAN RESIDENTS
Canadian holders of Notes should consult their own legal and tax advisors
with respect to the consequences of an exchange of the Notes in their particular
circumstances.
THE TRUSTEE
The Trustee is First Union National Bank, which also serves as transfer
agent and registrar for the Company's common stock and as the Exchange Agent.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and disposition
of Notes by a purchaser of Notes that, for United States federal income tax
purposes, is not a "U.S. person" (a "Non-U.S. Holder"). For purposes of this
discussion, a "U.S. person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
the United States or under the laws of the United States or of any political
subdivision thereof, (iii) an estate whose income is includable in gross income
for United States federal income tax purposes regardless of its source, (iv) a
trust subject to the primary supervision of a court within the United States and
the control of one or more United States fiduciaries, or (v) any other person
whose income or gain with respect to a Note is effectively connected with the
conduct of a United States trade or business. For purposes of the following
discussion, interest and gain on the sale, exchange or other disposition of a
Note will be considered to be "U.S. trade or business income" if such income or
gain is (i) effectively connected with the conduct of a U.S. trade or business,
or (ii) in the case of most treaty residents attributable to a permanent
establishment (or, in the case of an individual, a fixed base) in the United
States.
30
This discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury Regulations, Internal Revenue Service ("IRS") rulings and
judicial decisions now in effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations. There can be no assurance
that the IRS will not challenge one or more of the tax consequences described
herein, and the Company has not obtained, nor does it intend to obtain, a ruling
from the IRS with respect to any of the U.S. federal income tax consequences of
acquiring or holding the Notes. In addition, this discussion is limited to
original purchasers of Notes who acquire the Notes at their original issue price
within the meaning of Section 1273 of the Code and who will hold the Notes as
"capital assets" within the meaning of Section 1221 of the Code. The tax
treatment of the holders of each series of Notes may vary depending upon their
particular situations. Certain holders (including insurance companies, tax
exempt organizations, financial institutions and broker-dealers) may be subject
to special rules not discussed below. Prospective investors are strongly urged
to consult their tax advisors regarding the United States federal tax
consequences of acquiring, holding and disposing of Notes, as well as any tax
consequences that may arise under the laws of any foreign, state, local or other
taxing jurisdiction.
INTEREST
Interest paid by the Company to a Non-U.S. Holder will not be subject to
United States federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Holder and (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company, (ii) the Non-U.S. Holder is not a controlled foreign corporation
with respect to which the Company is a "related person" within the meaning of
the Code, (iii) the U.S. withholding agent receives from the beneficial owner of
the Notes a statement, signed under penalties of perjury, that the beneficial
owner is not a U.S. person and providing the beneficial owner's name and
address, and (iv) the Notes are in registered form. The gross amount of interest
payments to a Non-U.S. Holder that does not qualify for this exemption and that
are not U.S. trade or business income will be subject to U.S. federal income tax
at the rate of 30%, unless a U.S. income tax treaty applies to reduce or
eliminate withholding.
GAIN ON DISPOSITION
A Non-U.S. Holder will generally not be subject to United States federal
income tax on gain recognized on a sale, exchange, redemption or other
disposition of a Note unless (i) the gain is effectively connected with the
conduct of a trade or business within the United States by the Non-U.S. Holder,
(ii) subject to certain exceptions, the Non-U.S. Holder is a U.S. nonresident
alien individual and holds the Notes as a capital asset and is present in the
United States for 183 or more days in the taxable year and certain other
requirements are met, and (iii) the Non-U.S. Holder is subject to tax pursuant
to the provisions of U.S. tax law applicable to certain U.S. expatriates
(including certain former citizens or residents of the United States).
FEDERAL ESTATE TAXES
If interest on the Notes is exempt from withholding of United States
federal income tax under the rules described above, the Notes will not be
included in the estate of a deceased Non-U.S. Holder for United States federal
estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will, where required, report to the holder of Notes and the
Internal Revenue Service the amount of any interest paid on the Notes in each
calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments to Non-U.S. Holders, Treasury Regulations provide
that the 31% backup witholding tax and certain information reporting will not
apply to such payments. Treasury Regulations provide that backup withholding and
additional information reporting will not apply to payments of principal on the
Notes by the Company to a Non-U.S. Holder if the holder certifies as to its
Non-U.S. status under penalty of perjury or otherwise establishes an exemption
(provided that neither the Company or its paying agent has actual knowledge that
the holder is a U.S. Person or that the conditions of any other exemption are
not, in fact, satisfied).
The payment of the proceeds from the disposition of the Notes to or through
the U.S. office of any broker, U.S. or foreign, will be subject to information
reporting and possible backup withholding unless the owner certifies as to its
Non-U.S. Holder status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a Note
to or through a non-U.S. office of a non-U.S. broker that is not a U.S. related
person will not be subject to information reporting or backup withholding. For
this purpose, a "U.S. related person" is
31
(i) a "controlled foreign corporation" for U.S. federal income tax purposes,
(ii) a foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
U.S. trade or business, or (iii) with respect to payments made after December
31, 1998, a foreign partnership that, at any time during its taxable year, is
50% or more (by income or capital interest) owned by U.S. persons or is engaged
in the conduct of a U.S. trade or business.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability, provided that the required
information is furnished to the IRS.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE
TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR
TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS,
AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business 90 days after the Expiration
Date, it will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the holders of the New Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
32
LEGAL MATTERS
The validity of the New Notes will be passed upon by Smith Helms Mulliss &
Moore, L.L.P., Charlotte, North Carolina, who may rely upon the opinion of New
York counsel as to New York law matters. As of December 31, 1997, certain
members of Smith Helms Mulliss & Moore, L.L.P. beneficially own approximately
20,000 shares of the Company's Common Stock.
EXPERTS
The consolidated financial statements of Unifi, Inc. incorporated by
reference in the Company's Annual Report (Form 10-K) for the year ended June 29,
1997, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon incorporated by reference therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
33
============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THIS PROSPECTUS NOR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS, NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR
BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
------------------------
TABLE OF CONTENTS
PAGE
-----
Available Information................................ 3
Incorporation of Certain Documents by
Reference.......................................... 3
Prospectus Summary................................... 4
Use of Proceeds...................................... 9
Ratio of Earnings to Fixed Charges................... 9
Capitalization....................................... 9
Selected Consolidated Financial Data................. 10
Management's Discussion and Analysis
of Financial Condition and
Results of Operations.............................. 12
The Exchange Offer................................... 18
Description of Notes................................. 22
Certain United States Federal Tax Considerations for
Non-United States Holders.......................... 30
Plan of Distribution................................. 32
Legal Matters........................................ 33
Experts.............................................. 33
============================================================================
============================================================================
UNIFI
QUALITY THROUGH PRIDE
OFFER TO EXCHANGE
6 1/2% NOTES DUE 2008, SERIES B
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED,
FOR ANY AND ALL OUTSTANDING
6 1/2% NOTES DUE 2008
----------------
PROSPECTUS
----------------
, 1998
============================================================================
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Bylaws provide that the Registrant shall
indemnify a director, officer or employee of the Registrant who is a party to or
is threatened to be made a party to any proceeding or action by reason of the
fact that he is or was a director, officer or employee against all expenses,
liability and loss reasonably incurred in connection with such a proceeding, to
the fullest extent authorized by the New York Business Corporation Law, except
that the Registrant shall indemnify a director, officer or employee for expenses
in connection with a proceeding that such director, officer or employee
initiated only if the Registrant authorized the proceeding. Section 721 of the
New York Business Corporation Law prohibits indemnification of directors and
officers if (i) in a judgment against the director or officer or in another
final adjudication adverse to him it is determined that such director or officer
either acted in bad faith or acted with deliberate dishonesty, and his actions
were material to the cause of action so adjudicated, or (ii) the director or
officer personally gained a financial profit or other advantage to which he was
not legally entitled.
The foregoing is only a general summary of certain aspects of New York law
dealing with indemnification of directors and officers and does not purport to
be complete. It is qualified in its entirety by reference to the relevant
statutes which contain detailed, specific provisions regarding the circumstances
under which the person for whose benefit indemnification shall or may be made.
Section 721 of the New York Business Corporation Law is set forth in Exhibit
99.1 hereto and is incorporated herein by reference.
As authorized by the Restated Bylaws and by statute, the Registrant has
purchased liability insurance policies providing an aggregate of $5,000,000
coverage for all directors and officers of the Registrant and providing for
reimbursement to the Registrant for payments made on behalf of directors and
officers pursuant to the indemnification provisions.
Pursuant to the Registrant's Restated Certificate of Incorporation, a
director of the Registrant is not liable to the Company or its shareholders for
monetary damages for breach of duty as a director, except to the extent that
such exemption from liability is not permitted under the New York Business
Corporation Law. The New York Business Corporation Law generally provides that a
director is not so liable for negligence and gross negligence, including grossly
negligent business decisions involving takeover proposals for the Registrant, in
the performance of the director's duty of care. Other remedies are available,
such as injunctive relief against, and rescission of actions taken by, the
directors. A director remains liable for monetary damages, however, if (i) the
director's acts or omissions were in bad faith or involved active and deliberate
dishonesty; (ii) the director personally gained a financial profit or other
advantage to which the director was not legally entitled; or (iii) the
director's acts violated laws of the New York Business Corporation Law relating
to the payment of dividends, purchase of shares, distributions of assets after
dissolution or the making of loans.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed with or incorporated by reference in this
Registration statement:
(A) List of Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------------
3(I) Restated Certificate of Incorporation of the Registrant, dated July 21, 1994 (filed as Exhibit (3a) with
the Registrant's Annual Report on Form 10-K for the fiscal year ended June 26, 1994 and incorporated
herein by reference).
3(II) Restated Bylaws of the Registrant (filed as Exhibit (3b) with the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 29, 1997 and incorporated herein by reference).
4.1 Specimen Certificate of the Registrant's Common Stock (filed as Exhibit 4(a) to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-23201) and incorporated herein by reference).
4.2 Indenture, dated as of February 5, 1998, between the Registrant and First Union National Bank, as trustee.
4.3 Resolutions of the Registrant's Board of Directors, dated December 31, 1997.
4.4 Written Consent to Action Without a Meeting of the Executive Committee of the Board of Directors, dated
March 30, 1998.
4.5 Registration Rights Agreement, dated as of February 5, 1998, among the Registrant, Credit Suisse First
Boston Corporation and Invemed Associates, Inc.
4.6 Form of 6 1/2% Note due 2008, Series B.
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. as to the legality of the securities being registered.
II-1
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------------
12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of Attorney (included with the signature page to this Registration Statement).
25.1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 (Form T-1) of First Union
National Bank.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
99.5 Provisions of the New York Business Corporation Law relating to indemnification of directors and officers
(filed as Exhibit 99.1 to the Registrant's Registration Statement on Form S-3 (Registration No. 333-40531)
and incorporated herein by reference.)
(B) Financial Statement Schedules.
Financial statement schedules of the Registrant for which provision is made
in the applicable accounting regulations of the Commission are not required, are
inapplicable or have been disclosed in the Notes to the financial statements
and, therefore, have been omitted.
ITEM 22. UNDERTAKINGS
(a) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(c) The Registrant hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Items 4,
10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
(d) The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greensboro, State of
North Carolina, on March 30, 1998.
UNIFI, INC.
By: /s/ WILLIS C. MOORE, III
----------------------------------
WILLIS C. MOORE, III
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
Each of the several undersigned Officers and Directors of Unifi, Inc. (the
"Company") whose signature appears below hereby makes, constitutes and appoints
Willis C. Moore, III and C. Clifford Frazier, Jr., and each of them acting
individually, his true and lawful attorney-in-fact, with full power to act
without the other and with full power of substitution, to execute, deliver and
file with the Securities and Exchange Commission in his name and on his behalf,
and in each of the undersigned Officer's and Director's capacity or capacities
as shown below, (a) this Registration Statement on Form S-4 with respect to the
registration under the Securities Act of 1933, as amended, of $250,000,000 of
the Company's 6 1/2% Notes due 2008, Series B, and any amendments thereto and
all documents in support thereof or supplemental thereto and any and all
amendments, including any and all post-effective amendments to the foregoing,
and (b) such registration statements, petitions, applications, consents to
service of process or other instruments, and any and all amendments or
supplements to the foregoing, as may be necessary or advisable to qualify or
register the securities covered by said Registration Statement under such state
or other securities laws, regulations and requirements as may be applicable; and
each of said Officers and Directors hereby grants to said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing whatsoever as said attorney-in-fact may deem necessary or advisable to
carry out fully the intent of this power of attorney to the same extent and with
the same effect as each of said Officers and Directors might or could do
personally in his capacity or capacities as aforesaid; and each of said Officers
and Directors hereby ratifies and confirms all acts and things which said
attorneys-in-fact or attorney-in-fact might lawfully do or cause to be done by
virtue of this power of attorney.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ G. ALLEN MEBANE, IV Chairman of the Board March 30, 1998
----------------------
G. ALLEN MEBANE, IV
/s/ WILLIAM T. KRETZER President, Chief Executive Officer and March 30, 1998
---------------------- Director (principal executive officer)
WILLIAM T. KRETZER
/s/ WILLIS C. MOORE, III Vice President and Chief Financial Officer March 30, 1998
------------------------ (principal financial officer and
WILLIS C. MOORE, III principal accounting officer)
/s/ R. WILEY BOURNE, JR. Director March 30, 1998
-----------------------
R. WILEY BOURNE, JR.
/s/ CHARLES R. CARTER Director March 30, 1998
--------------------
CHARLES R. CARTER
/s/ J. B. DAVIS Director March 30, 1998
--------------
J. B. DAVIS
II-3
/s/ JERRY W. ELLER Executive Vice President and Director March 30, 1998
-------------------
JERRY W. ELLER
/s/ KENNETH G. LANGONE Director March 30, 1998
----------------------
KENNETH G. LANGONE
/s/ DONALD F. ORR Director March 30, 1998
------------------
DONALD F. ORR
/s/ ROBERT A. WARD Director March 30, 1998
------------------
ROBERT A. WARD
/s/ G. ALFRED WEBSTER Executive Vice President and Director March 30, 1998
---------------------
G. ALFRED WEBSTER
II-4
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------------------------------------------------------------------------------------------
3(I) Restated Certificate of Incorporation of the Registrant, dated July 21, 1994 (filed as Exhibit (3a) with
the Registrant's Annual Report on Form 10-K for the fiscal year ended June 26, 1994 and incorporated
herein by reference).
3(II) Restated Bylaws of the Registrant (filed as Exhibit (3b) with the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 29, 1997 and incorporated herein by reference).
4.1 Specimen Certificate of the Registrant's Common Stock (filed as Exhibit 4(a) to the Registrant's
Registration Statement on Form S-1 (Registration No. 33-23201) and incorporated herein by reference).
4.2 Indenture, dated as of February 5, 1998, between the Registrant and First Union National Bank, as trustee.
4.3 Resolutions of the Registrant's Board of Directors, dated December 31, 1997.
4.4 Written Consent to Action Without a Meeting of the Executive Committee of the Board of Directors, dated
March 30, 1998.
4.5 Registration Rights Agreement, dated as of February 5, 1998, among the Registrant, Credit Suisse First
Boston Corporation and Invemed Associates, Inc.
4.6 Form of 6 1/2% Note due 2008, Series B.
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. as to the legality of the securities being registered.
12.1 Statement regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of Attorney (included with the signature page to this Registration Statement).
25.1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 (Form T-1) of First Union
National Bank.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
99.5 Provisions of the New York Business Corporation Law relating to indemnification of directors and officers
(filed as Exhibit 99.1 to the Registrant's Registration Statement on Form S-3 (Registration No. 333-40531)
and incorporated herein by reference.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNIFI, INC.
------------------------------
------------------------------
INDENTURE
DATED AS OF FEBRUARY 5, 1998
------------------------------
FIRST UNION NATIONAL BANK
AS TRUSTEE
------------------------------
SENIOR NOTES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture
dated as of February 5, 1998 between Unifi, Inc. and First Union
National Bank, as Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1)..................................................................6.09
(a)(2) .................................................................6.09
310(a)(3)..................................................................N.A.
(a)(4)..................................................................N.A.
310(b).................................................6.08; 6.10(a)(b) and (d)
310(c).....................................................................N.A.
311(a) and (b).............................................................6.13
311(c).....................................................................N.A.
312(a)............................................................4.01; 4.02(a)
312(b) and (c)..................................................4.02(b) and (c)
313(a)..................................................................4.04(a)
313(b)(1)..................................................................N.A.
313(b)(2)...............................................................4.04(a)
313(c)..................................................................4.04(a)
313(d)..................................................................4.04(d)
314(a)(1) and (2)...............................................4.03(a) and (b)
314(a)(3)...............................................................4.03(d)
314(a)(4)..................................................................3.05
314(b).....................................................................N.A.
314(c)(1) and (2).........................................................13.06
314(c)(3)..................................................................N.A.
314(d) ....................................................................N.A.
314(e)....................................................................13.06
314(f) ....................................................................N.A.
315(a)(c) and (d)..........................................................6.01
315(b) ....................................................................5.08
315(e) ....................................................................5.09
316(a)(1) ...........................................................5.01; 5.07
316(a)(2) ..............................................................Omitted
316(a) last sentence ......................................................7.04
316(b) ....................................................................5.04
317(a) ....................................................................5.02
317(b) .................................................................3.04(a)
318(a) ...................................................................13.08
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
TABLE OF CONTENTS*
Page
Parties ....................................................................1
Recitals.....................................................................1
Authorization of Indenture...................................................1
Compliance with Legal Requirements...........................................1
Purpose of and Consideration for Indenture...................................1
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions................................................1
Affiliate....................................................................2
Attributable Debt............................................................2
Authenticating Agent.........................................................3
Bankruptcy Law...............................................................3
Board of Directors...........................................................3
Board Resolution.............................................................3
Business Day.................................................................3
Capital Lease Obligations....................................................3
Certificate..................................................................3
Commission...................................................................3
Company ....................................................................4
Company Common Stock.........................................................4
Consolidated Net Tangible Assets.............................................4
Custodian....................................................................4
Default ....................................................................4
Depositary...................................................................4
Event of Default.............................................................5
Funded Debt..................................................................5
Global Security..............................................................5
Indebtedness.................................................................5
Indenture....................................................................5
Intangible Assets............................................................5
Interest ....................................................................5
Interest Payment Date........................................................5
Liens ....................................................................6
Maturity Date................................................................6
Mortgage ....................................................................6
Nonpayment...................................................................6
Officers' Certificate........................................................6
Opinion of Counsel...........................................................6
Original Issue Date..........................................................6
- --------
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE
DEEMED TO BE A PART OF THE INDENTURE.
i
Original Issue Discount Security.............................................6
outstanding..................................................................6
Person ....................................................................7
Predecessor Security.........................................................7
Principal Office of the Trustee..............................................7
Principal Property...........................................................7
Responsible Officer..........................................................8
Restricted Subsidiary........................................................8
Secured Funded Debt..........................................................8
Security ....................................................................8
Securities...................................................................8
Securityholder...............................................................8
Subsidiary...................................................................8
Trust Indenture Act of 1939..................................................9
Trustee ....................................................................9
Unrestricted Subsidiary......................................................9
U.S. Government Obligations..................................................9
Vice President..............................................................10
Yield to Maturity...........................................................10
ARTICLE TWO
SECURITIES
SECTION 2.01. Forms Generally...........................................10
SECTION 2.02. Form of Trustee's Certificate of
Authentication............................................11
SECTION 2.03. Amount Unlimited; Issuable in Series......................11
SECTION 2.04. Authentication and Dating.................................13
SECTION 2.05. Date and Denomination of Securities.......................15
SECTION 2.06. Execution of Securities...................................17
SECTION 2.07. Exchange and Registration of Transfer of
Securities................................................17
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities................................................18
SECTION 2.09. Temporary Securities......................................19
SECTION 2.10. Cancellation of Securities Paid, etc......................20
SECTION 2.11. Global Securities.........................................20
SECTION 2.12. CUSIP Numbers.............................................22
ARTICLE THREE
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest................22
SECTION 3.02. Offices for Notices and Payments, etc.....................22
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office....................................................23
SECTION 3.04. Provision as to Paying Agent..............................23
SECTION 3.05. Certificate to Trustee....................................24
SECTION 3.06. Compliance with Consolidation Provisions..................25
SECTION 3.07. Calculation of Original Issue Discount....................25
SECTION 3.08. Existence.................................................25
ii
SECTION 3.09. Restrictions on Secured Funded Debt. .....................25
SECTION 3.10. Limitation on Sales and Leasebacks........................28
SECTION 3.11. Restrictions on Funded Debt of Restricted
Subsidiaries......................................29
SECTION 3.12. Waiver of Certain Covenants...............................29
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists....................................30
SECTION 4.02. Preservation and Disclosure of Lists......................30
SECTION 4.03. Reports by Company........................................32
SECTION 4.04. Reports by the Trustee....................................33
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
SECTION 5.01. Events of Default.........................................33
SECTION 5.02. Payment of Securities on Default; Suit
Therefor..................................................37
SECTION 5.03. Application of Moneys Collected by Trustee................39
SECTION 5.04. Proceedings by Securityholders............................40
SECTION 5.05. Proceedings by Trustee....................................41
SECTION 5.06. Remedies Cumulative and Continuing........................41
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders...................42
SECTION 5.08. Notice of Defaults and Nonpayments........................43
SECTION 5.09. Undertaking to Pay Costs..................................43
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee....................43
SECTION 6.02. Reliance on Documents, Opinions, etc......................45
SECTION 6.03. No Responsibility for Recitals, etc.......................46
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May Own
Securities................................................47
SECTION 6.05. Moneys to be Held in Trust................................47
SECTION 6.06. Compensation and Expenses of Trustee......................47
SECTION 6.07. Officers' Certificate as Evidence.........................48
SECTION 6.08. Conflicting Interest of Trustee...........................48
SECTION 6.09. Eligibility of Trustee....................................48
SECTION 6.10. Resignation or Removal of Trustee.........................49
SECTION 6.11. Acceptance by Successor Trustee...........................51
SECTION 6.12. Succession by Merger, etc.................................52
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor .................................................52
SECTION 6.14. Authenticating Agents.....................................52
iii
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.................................54
SECTION 7.02. Proof of Execution by Securityholders.....................55
SECTION 7.03. Who Are Deemed Absolute Owners............................55
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding...............................................55
SECTION 7.05. Revocation of Consents; Future Holders Bound..............56
ARTICLE EIGHT
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings......................................56
SECTION 8.02. Call of Meetings by Trustee...............................57
SECTION 8.03. Call of Meetings by Company or
Securityholders...........................................57
SECTION 8.04. Qualifications for Voting.................................57
SECTION 8.05. Regulations...............................................58
SECTION 8.06. Voting....................................................58
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent
of Securityholders........................................59
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders...........................................61
SECTION 9.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures................................63
SECTION 9.04. Notation on Securities....................................63
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.........................63
ARTICLE TEN
CONSOLIDATION, MERGER, SALE AND CONVEYANCE
SECTION 10.01. Company May Consolidate, etc., on Certain
Terms.....................................................64
SECTION 10.02. Successor Corporation to be Substituted
for Company...............................................64
SECTION 10.03. Opinion of Counsel to be Given Trustee....................65
iv
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture....................................65
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by Trustee................66
SECTION 11.03. Paying Agent to Repay Moneys Held.........................66
SECTION 11.04. Return of Unclaimed Moneys................................67
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations....................................67
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations......................................69
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors................................................70
SECTION 13.02. Official Acts by Successor Corporation....................70
SECTION 13.03. Surrender of Company Powers...............................70
SECTION 13.04. Addresses for Notices, etc................................70
Section 13.05. Governing Law.............................................71
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.................................................71
SECTION 13.07. Legal Holidays............................................71
SECTION 13.08. Trust Indenture Act to Control............................72
SECTION 13.09. Table of Contents, Headings, etc..........................72
SECTION 13.10. Execution in Counterparts.................................72
SECTION 13.11. Separability..............................................72
SECTION 13.12. Assignment................................................72
ARTICLE FOURTEEN
REDEMPTION OF SECURITIES
SECTION 14.01. Applicability of Article..................................73
SECTION 14.02. Notice of Redemption; Selection of
Securities................................................73
SECTION 14.03. Payment of Securities Called for Redemption...............74
Testimonium.................................................................75
Signatures..................................................................75
Acknowledgments.............................................................76
v
THIS INDENTURE, dated as of ________________, between UNIFI,
INC., a New York corporation (hereinafter sometimes called the "Company"), and
FIRST UNION NATIONAL BANK, a national banking association, as trustee
(hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the issue from time to time of its senior debt securities, notes
or other evidence of indebtedness to be issued in one or more series (the
"Securities") up to such principal amount or amounts as may from time to time be
authorized by the Company, and, to provide the terms and conditions upon which
the Securities are to be authenticated, issued and delivered, the Company has
duly authorized the execution of this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture
a valid agreement according to its terms, have been done and performed;
NOW, THEREFORE:
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities or of a series thereof, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All other terms used in
this Indenture which are defined in the Trust Indenture Act (as defined herein),
or which are by reference therein defined in the Securities Act of 1933, as
amended (the "Securities Act"), shall (except as herein otherwise expressly
provided or unless the context otherwise requires) have the meanings assigned to
such terms in said Trust Indenture Act and in the Securities Act as in force at
the date of this Indenture as originally executed. All accounting terms used
herein and not expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are
1
generally accepted at the time of any computation. The words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding with power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Attributable Debt" means as to any particular lease under
which either the Company or any Restricted Subsidiary is at the time liable as
lessee for a term of more than 12 months and, at any date as of which the amount
thereof is to be determined, the total net obligations of the lessee for rental
payments during the remaining term of the lease (including any period for which
such lease has been extended or may, at the option of the lessor, be extended)
discounted from the respective due dates thereof to such determination date at a
rate per annum equivalent to the greater of (a) the weighted-average Yield to
Maturity of the Outstanding Securities, such average being weighted by the
principal amount of the Outstanding Securities of each series or, in the case of
Original Issue Discount Securities, such amount to be the principal amount of
such outstanding Original Issue Discount Securities that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the maturity thereof pursuant to this Indenture and (b) the interest rate
inherent in such lease (as determined in good faith by the Company), both to be
compounded semi-annually. The net total obligations of the lessee for rental
payments under any such lease for any such period shall be the aggregate amount
of the rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of maintenance and repairs, services,
insurance, taxes, assessments, water rates and similar charges and contingent
rents (such as those based on sales or monetary inflation). If any lease is
terminable by the lessee upon the payment of a penalty and under the terms of
the lease the termination right is not exercisable until after the determination
date and the amount of such penalty discounted to the determination date as
provided above is less than the net amount of rentals payable after the time as
of which such termination could occur (the "termination time") discounted to the
determination date as provided above, then such discounted penalty amount shall
be used instead of such discounted amount of
2
net rentals payable after the termination time in calculating the Attributable
Debt for such lease. If any lease is terminable by the lessee upon the payment
of a penalty and such termination right is exercisable on the determination date
and the amount of the net rentals payable under such lease after the
determination date discounted to the determination date as provided above is
greater than the amount of such penalty, the "Attributable Debt" for such lease
as of such determination date shall be equal to the amount of such penalty.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean the Board of Directors or the
Executive Committee or any other duly authorized designated officers of the
Company.
"Board Resolution" shall mean a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors or by a committee acting under authority of or
appointment by the Board of Directors and to be in full force and effect on the
date of such certification.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a day on which federal or state banking
institutions in New York, New York, or Charlotte, North Carolina, are authorized
or obligated by law, executive order or regulation to close.
"Capital Lease Obligations" of either the Company or any
Restricted Subsidiary means the obligations of such Person to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real property, the term of which extends beyond 12 months, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting principles (including
Statement No. 13 of Financial Accounting Standards Board) and, for the purposes
of this Indenture, the amount of such obligation shall be the capitalized amount
thereof, determined in accordance with generally accepted accounting principles
(including such Statement No. 13).
"Certificate" shall mean a certificate signed by the
Chief Executive Officer, President, Chief Financial Officer, any
Vice President or Treasurer of the Company.
"Commission" means the U.S. Securities and Exchange
Commission or any successor thereto.
3
"Company" shall mean Unifi, Inc., a New York corporation, and,
subject to the provisions of Article Ten, shall include its successors and
assigns.
"Company Common Stock" shall mean the Common Stock of the
Company or any other class of stock resulting from changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. Subject to the
anti-dilution provisions of any convertible Security, however, shares of Company
Common Stock issuable on conversion of a Security shall include only shares of
the class designated as Common Stock of the Company at the date of the
supplemental indenture, Board Resolution or other instrument authorizing such
Security or shares of any class or classes resulting from any reclassification
or reclassifications thereof and which have no preference in respect of the
payment of dividends or the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company, provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of such classes resulting from all such reclas-
sifications.
"Consolidated Net Tangible Assets" means, at any date, the
total assets appearing on the most recent consolidated balance sheet of the
Company and its Restricted Subsidiaries as at the end of the fiscal quarter of
the Company ending not more than 135 days prior to such date, prepared in
accordance with generally accepted accounting principles, less (a) all current
liabilities (due within one year) as shown on such balance sheet, (b)
investments in and advances to Unrestricted Subsidiaries, and (c) Intangible
Assets and liabilities relating thereto.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, The Depository
4
Trust Company, New York, New York, another clearing agency, or any successor
registered as a clearing agency pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable
statute or regulation, which, in each case, shall be designated by the Company
pursuant to either Section 2.04 or 2.11.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Funded Debt" means (i) any indebtedness of the Company or a
Restricted Subsidiary maturing more than 12 months after the time of computation
thereof, (ii) guarantees of Funded Debt or of dividends of others (except
guarantees in connection with the sale or discount of accounts receivable, trade
acceptances and other paper arising in the ordinary course of business), (iii)
in the case of any Restricted Subsidiary, all preferred stock having mandatory
redemption provisions of such Restricted Subsidiary as reflected on such
Restricted Subsidiary's balance sheet prepared in accordance with U.S. generally
accepted accounting principles, and (iv) all Capital Lease Obligations.
"Global Security" means, with respect to any series of
Securities, a Security executed by the Company and delivered by the Trustee to
the Depositary or pursuant to the Depositary's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
"Indebtedness" means, at any date, without duplication, (i)
all obligations for borrowed money of the Company or a Restricted Subsidiary or
any other indebtedness of the Company or a Restricted Subsidiary, evidenced by
bonds, debentures, notes or other similar instruments, and (ii) Funded Debt.
"Indenture" shall mean this instrument as originally executed
or, if amended or supplemented as herein provided, as so amended or
supplemented, or both, and shall include the form and terms of particular series
of Securities established as contemplated hereunder.
"Intangible Assets" means, at any date, the value (net of any
applicable reserves), as shown on or reflected in the most recent consolidated
balance sheet of the Company and its Restricted Subsidiaries as at the end of
the fiscal quarter of the Company ending not more than 135 days prior to such
date, prepared in accordance with generally accepted accounting principles, of:
(i) all trade names, trademarks, licenses, patents, copyrights, service marks,
goodwill and other like intangibles; (ii) organization and development costs;
(iii) deferred charges (other than prepaid items, such as insurance, taxes,
interest, commissions, rents, pensions, compensation and similar items and
intangible assets amortized), and (iv) unamortized debt discount and expense,
less unamortized premium.
"Interest" shall mean, when used with respect to non-interest
bearing Securities, interest payable after maturity.
"Interest Payment Date", when used with respect to any
installment of interest on a Security of a particular series, shall mean the
date specified in such Security or in a Board Resolution or in an indenture
supplemental hereto with respect to such series as the fixed date on which an
installment of interest with respect to Securities of that series is due and
payable.
"Liens" means such pledges, Mortgages, security interests and
other liens on any Principal Property of the
5
Company or a Restricted Subsidiary which secure Secured Funded Debt.
"Maturity Date" shall mean the date on which any Securities
mature and on which the principal shall be due and payable together with all
accrued and unpaid interest thereon.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Nonpayment" shall have the meaning set forth in
Section 5.08.
"Officers' Certificate" shall mean a certificate signed by the
Chief Executive Officer, the President or any Vice President, by the Treasurer
or an Assistant Treasurer and delivered to the Trustee. Each such certificate
shall include the statements provided for in Section 13.06 if and to the extent
provided by the provisions of such Section.
"Opinion of Counsel" shall mean an opinion in writing signed
by legal counsel, who may be an employee of or counsel to the Company, or may be
other counsel satisfactory to the Trustee. Each such opinion shall include the
statements provided for in Section 13.06 if and to the extent required by the
provisions of such Section.
"Original Issue Date" of any Security (or any portion thereof)
shall mean the earlier of (a) the date of such Security or (b) the date of any
Security (or portion thereof) for which such Security was issued (directly or
indirectly) on registration of transfer, exchange or substitution.
"Original Issue Discount Security" shall mean any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 5.01.
The term "outstanding" (except as otherwise provided in
Section 6.08), when used with reference to Securities, shall, subject to the
provisions of Section 7.04, mean, as of any particular time, all Securities
authenticated and delivered by the Trustee or the Authenticating Agent under
this Indenture, except
(a) Securities theretofore canceled by the Trustee or
the Authenticating Agent or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been deposited in
trust with the Trustee or with any paying agent
6
(other than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent); provided
that, if such Securities, or portions thereof, are to be redeemed prior to
maturity thereof, notice of such redemption shall have been given as provided in
Article Fourteen or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Securities paid pursuant to Section 2.08 or in lieu of or
in substitution for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08 unless proof satisfactory to the
Company and the Trustee is presented that any such Securities are held by bona
fide holders in due course.
In determining whether the holders of the requisite principal
amount of outstanding Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, the principal amount of an
Original Issue Discount Security that shall be deemed to be outstanding for such
purposes shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the maturity thereof pursuant to Section 5.01.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term,
shall mean the principal office of the Trustee, at which at any particular time
its corporate trust business shall be administered.
"Principal Property" means any manufacturing facility owned
and operated by the Company or any Restricted Subsidiary on or after the date
hereof, and any manufacturing equipment owned by the Company or any Restricted
Subsidiary on or after the date hereof in such manufacturing plant.
"Manufacturing equipment" means manufacturing equipment in such manufacturing
plant directly used in the production of the Company's products and parts and
components thereof, and shall not include office equipment, rolling stock and
other equipment not directly used in the production of the Company's products.
7
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman and vice chairman of the board of directors, the
chairman or vice chairman of the executive committee of the board of directors,
the president, any vice president, any assistant vice president, the cashier,
any assistant cashier, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any senior trust officer, any trust officer, the
controller, any assistant controller or any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Subsidiary" means each Subsidiary other
than Unrestricted Subsidiaries.
"Secured Funded Debt" means Funded Debt which is secured by
any pledge of, or Mortgage, security interest or other Lien on any (i) Principal
Property (whether owned on the date hereof or hereafter acquired or created),
(ii) shares of stock owned by the Company or a Subsidiary in a Restricted
Subsidiary or (iii) indebtedness of a Restricted Subsidiary.
"Security" or "Securities" shall have the meaning stated in
the first recital of this Indenture and more particularly means any security or
securities, as the case may be, authenticated and delivered under this
Indenture.
"Securityholder", "holder of Securities", or other similar
terms, shall mean any person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner, (iv) any limited
liability corporation of which such Person or any of its Subsidiaries is a
member. For the purposes of this definition, "voting stock" means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
8
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
"Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03; provided, however, that if the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article Six hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Unrestricted Subsidiary" means any Subsidiary designated as
an Unrestricted Subsidiary from time to time by the Board of Directors of the
Company; provided, however, that the Board of Directors of the Company (i) shall
not designate as an Unrestricted Subsidiary any Subsidiary of the Company that
owns any Principal Property or any stock of a Restricted Subsidiary, (ii) shall
not continue the designation of any Subsidiary of the Company as an Unrestricted
Subsidiary at any time that such Subsidiary owns any Principal Property, and
(iii) shall not, nor shall it cause or permit any Restricted Subsidiary to,
transfer or otherwise dispose of any Principal Property to any Unrestricted
Subsidiary (unless such Unrestricted Subsidiary shall in connection therewith be
designated as a Restricted Subsidiary and any pledge, Mortgage, security
interest or other Lien arising in connection with any Indebtedness of such
Unrestricted Subsidiary so designated does not extend to such Principal Property
(unless the existence of such pledge, mortgage, security interest or other lien
would otherwise be permitted under this Indenture)).
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clauses (i) or (ii), are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any
9
deduction from the amount payable to the holder of such deposito-
ry receipt from any amount received by the custodian in respect
of the U.S. Government Obligation or the specific payment of
interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
"Vice President", when used with respect to the Company or the
Trustee, shall mean any vice president, whether or not designated by a number or
word or words added before or after the title "vice president," including any
Assistant, Executive or Senior Vice President.
"Yield to Maturity" shall mean the yield to maturity on a
series of Securities, calculated at the time of issuance of such series of
Securities, or if applicable, at the most recent redetermination of interest on
such series and calculated in accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.01. Forms Generally.
The Securities of each series shall be in substantially the
form as shall be established by or pursuant to a Board Resolution and as set
forth in an Officers' Certificate of the Company or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this Inden-
ture, and may have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may be required to comply with
any law or with any rules made pursuant thereto or with any rules of any
securities exchange or all as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities.
In the event the Securities are issued in definitive form
pursuant to this Indenture, such Securities shall be typewritten, printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
SECTION 2.02. Form of Trustee's Certificate of
Authentication.
The Trustee's certificate of authentication on all Securities
shall be in substantially the following form:
10
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
First Union National Bank
as Trustee
By_________________________________
Authorized Signatory
SECTION 2.03. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture or otherwise by the Corporation
is unlimited.
The Securities may be issued in one or more series up to the
aggregate principal amount of securities of that series from time to time
authorized by or pursuant to a Board Resolution of the Company or pursuant to
one or more indentures supplemental hereto. Prior to the initial issuance of
Securities of any series, there shall be established in or pursuant to a Board
Resolution of the Company and set forth in an Officers' Certificate of the
Company or established in one or more indentures supplemental hereto:
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series
from all other Securities);
(2) any limit upon the aggregate principal amount of
the Securities of the series which may be authen-
ticated and delivered under this Indenture (except
for Securities authenticated and delivered upon
registration of transfer of, or in exchange for,
or in lieu of, other Securities of the series
pursuant to Section 2.07, 2.08, 2.09, 9.04 or
14.03);
(3) the date or dates on which the principal of and
premium, if any, on the Securities of the series is
payable;
(4) the rate or rates at which the Securities of the
series shall bear interest, if any, or the method by
which such interest may be determined, the date or
dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall
be payable or the manner of determination of such
Interest Payment Dates and the record dates for the
determination of holders to whom interest is payable
on any such Interest Payment Dates;
11
(5) the place or places where the principal of, and
premium, if any, and any interest on Securities of
the series shall be payable;
(6) the right, if any, to extend the interest payment
periods and the duration of such extension;
(7) the price or prices at which, the period or periods
within which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or
in part, at the option of the Company, pursuant to
any sinking fund or otherwise;
(8) the obligation, if any, of the Company to redeem,
purchase or repay Securities of the series pursuant
to any sinking fund or analogous provisions or at the
option of a Securityholder thereof and the period or
periods within which the price or prices at which,
and the terms and conditions upon which Securities of
the series shall be redeemed, purchased or repaid, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which
Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the
portion of the principal amount of Securities of the
series which shall be payable upon declaration of
acceleration of the maturity thereof pursuant to
Section 5.01 or provable in bankruptcy pursuant to
Section 5.02;
(11) any Events of Default with respect to the Securities
of a particular series, if not set forth herein;
(12) the form of the Securities of the series including
the form of the Certificate of Authentication of such
series;
(13) any trustee, authenticating or paying agents, warrant
agents, transfer agents or registrars with respect to
the Securities of such series;
(14) whether the Securities of the series shall be issued
in whole or in part in the form of one or more Global
Securities and, in such case, the Depositary for such
Global Security or Securities, and whether beneficial
owners of interests in any such Global Securities may
exchange such interests
12
for other Securities of such series in the manner
provided in Section 2.07, and the manner and the
circumstances under which and the place or places
where any such exchanges may occur if other than in
the manner provided in Section 2.07, and any other
terms of the series relating to the global nature of
the Global Securities of such series and the
exchange, registration or transfer thereof and the
payment of any principal thereof, or interest or
premium, if any, thereon;
(15) whether the Securities of any series shall be
convertible or non-convertible and, if convertible,
the terms thereof; and
(16) any other terms of the series (which terms shall not
be inconsistent with the provisions of this
Indenture).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be provided in
or pursuant to such Board Resolution or in any such indenture supplemental
hereto.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate of the Company setting forth the terms of the series.
SECTION 2.04. Authentication and Dating.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, and the Trustee shall
thereupon authenticate and make available for delivery said Securities to or
upon the written order of the Company, signed by any two of its Chairman, Chief
Executive Officer, Chief Financial Officer, President, Vice Presidents or
Treasurer, without any further action by the Company hereunder. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 6.01) shall be fully protected in
relying upon:
(1) a copy of any Board Resolution or Resolutions
relating thereto and, if applicable, an appropriate
record of any action taken pursuant to such
resolution, in each case certified by the Secretary
or an Assistant Secretary of the Company;
13
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate setting forth the form and
terms of the Securities as required pursuant to
Sections 2.01 and 2.03, respectively; and
(4) an Opinion of Counsel which shall also state:
(a) that the form of such Securities has been
established by or pursuant to a Board
Resolution or by a supplemental indenture as
permitted by Section 2.01 in conformity with
the provisions of this Indenture;
(b) that the terms of such Securities have been
established by or pursuant to a Board
Resolution or by a supplemental indenture as
permitted by Section 2.03 in conformity with
the provisions of this Indenture;
(c) that such Securities, when authenticated and
delivered by the Trustee and issued by the
Company in the manner and subject to any
conditions specified in such Opinion of
Counsel, will constitute valid and legally
binding obligations of the Company;
(d) that all laws and requirements in respect of
the execution and delivery by the Company of
the Securities have been complied with in
all material respects and that
authentication and delivery of the
Securities by the Trustee will not violate
the terms of the Indenture; and
(e) such other matters as the Trustee may
reason- ably request.
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or vice presidents shall determine
that such action would expose the Trustee to personal liability to existing
holders.
SECTION 2.05. Date and Denomination of Securities.
The Securities shall be issuable as registered Securities
without coupons and in such denominations as shall be specified as contemplated
by Section 2.03. In the absence of any such specification with respect to the
Securities of any series,
14
the Securities of such Series shall be issuable in the denominations of $1,000
and any multiple thereof. The Securities shall be numbered, lettered, or
otherwise distinguished in such manner or in accordance with such plans as the
officers of the Company executing the same may determine with the approval of
the Trustee as evidenced by the execution and authentication thereof.
Every Security shall be dated the date of its authentication,
shall bear interest, if any, from such date and shall be payable on such dates,
in each case, as contemplated by Section 2.03. The interest installment on any
Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date for Securities of that series shall be paid to the Person
in whose name said Security (or one or more Predecessor Securities) is
registered at the close of business on the regular record date for such interest
installment. In the event that any Security of a particular series or portion
thereof is called for redemption and the redemption date is subsequent to a
regular record date with respect to any Interest Payment Date and prior to such
Interest Payment Date, interest on such Security will be paid upon presentation
and surrender of such Security as provided in Section 3.02.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date for Security
of the same series (herein called "Defaulted Interest") shall forthwith cease to
be payable to the registered holder on the relevant regular record date by
virtue of having been such holder; and such Defaulted Interest shall be paid by
the Company, at its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names
such Securities (or their respective Predecessor
Securities) are registered at the close of business
on a special record date for the payment of such
Defaulted Interest, which shall be fixed in the
following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security
and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special
record date for the payment of such Defaulted
Interest
15
which shall not be more than 15 nor less than 10 days
prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record
date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment
of such Defaulted Interest and the special record
date therefor to be mailed, first class postage
prepaid, to each Securityholder at his or her address
as it appears in the Security Register (as
hereinafter defined), not less than 10 days prior to
such special record date. Notice of the proposed
payment of such Defaulted Interest and the special
record date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons
in whose names such Securities (or their respective
Predecessor Securities) are registered on such
special record date and shall be no longer payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest on any Securities in any other lawful
manner not inconsistent with the requirements of
any securities exchange on which such Securities
may be listed, and upon such notice as may be
required by such exchange, if, after notice given
by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of
payment shall be deemed practicable by the
Trustee.
Unless otherwise set forth in a Board Resolution or one or
more indentures supplemental hereto establishing the terms of any series of
Securities pursuant to Sections 2.01 and 2.03 hereof, the term "regular record
date" as used in this Section with respect to a series of Securities with
respect to any Interest Payment Date for such series shall mean either the
fifteenth day of the month immediately preceding the month in which an Interest
Payment Date established for such series pursuant to Sections 2.01 and 2.03
hereof shall occur, if such Interest Payment Date is the first day of a month,
or the last day of the month immediately preceding the month in which an
Interest Payment Date established for such series pursuant to Sections 2.01 and
2.03 hereof shall occur, if such Interest Payment Date is the fifteenth day of a
month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each
Security of a series delivered under this Indenture upon transfer of or in
exchange for or in lieu of any other Security of such series shall carry the
rights to interest accrued and unpaid, and to accrue, that were carried by such
other Security.
16
SECTION 2.06. Execution of Securities.
The Securities shall be signed in the name and on behalf of
the Company by the manual or facsimile signature of its Chief Executive Officer,
President or one of its Vice-Presidents and may be attested by the manual or
facsimile signature of its Secretary or one of its Assistant Secretaries, under
its corporate seal which may be affixed thereto or printed, engraved or
otherwise reproduced thereon, by facsimile or otherwise, and which need not be
attested. Only such Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, executed by the
Trustee or the Authenticating Agent, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee or the Authenticating Agent upon any Security executed by the Company
shall be conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any
of the Securities shall cease to be such officer before the Securities so signed
shall have been authenticated and delivered by the Trustee or the Authenticating
Agent, or disposed of by the Company, such Securities nevertheless may be
authenticated and delivered or disposed of as though the person who signed such
Securities had not ceased to be such officer of the Company; and any Security
may be signed on behalf of the Company by such persons as, at the actual date of
the execution of such Security, shall be the proper officers of the Company,
although at the date of the execution of this Indenture any such person was not
such an officer.
SECTION 2.07. Exchange and Registration of Transfer of
Securities.
Subject to Section 2.03(12), Securities of any series may be
exchanged for a like aggregate principal amount of Securities of the same
series of other authorized denominations. Securities to be exchanged may be
surrendered at the principal corporate trust office of the Trustee or at any
office or agency to be maintained by the Company for such purpose as provided in
Section 3.02, and the Company or the Trustee shall execute and register and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in exchange therefor the Security or Securities which the
Securityholder making the exchange shall be entitled to receive. Upon due
presentment for registration of transfer of any Security of any series at the
principal corporate trust office of the Trustee or at any office or agency of
the Company maintained for such purpose as provided in Section 3.02, the Company
or the Trustee shall execute and register and the Trustee or the Authenticating
Agent shall authenticate and make available for delivery in the name of the
17
transferee or transferees a new Security or Securities of the same series for a
like aggregate principal amount. Registration or registration of transfer of any
Security by the Trustee or by any agent of the Company appointed pursuant to
Section 3.02, and delivery of such Security, shall be deemed to complete the
registration or registration of transfer of such Security.
The Company or the Trustee shall keep, at the Principal Office
of the Trustee, a register for each series of Securities issued hereunder in
which, subject to such reasonable regulations as it may prescribe, the Company
or the Trustee shall register all Securities and shall register the transfer of
all Securities as in this Article Two provided. Such register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time.
All Securities presented for registration of transfer or for
exchange or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or
registration of transfer of Securities, but the Company or the Trustee may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in connection therewith.
The Company or the Trustee shall not be required to exchange
or register a transfer of (a) any Security for a period of 15 days next
preceding the date of selection of Securities of such series for redemption, or
(b) any Securities of any series selected, called or being called for redemption
in whole or in part, except in the case of any Securities of any series to be
redeemed in part, the portion thereof not so to be redeemed.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities.
In case any temporary or definitive Security shall become
mutilated or be destroyed, lost or stolen, the Company shall execute, and upon
its request the Trustee shall authenticate and deliver, a new Security of the
same series bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Security, or in lieu of and in substitution for
the Security so destroyed, lost or stolen. In every case the applicant for a
substituted Security shall furnish to the Company and the Trustee such security
or indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satis-
18
faction of the destruction, loss or theft of such Security and of the ownership
thereof.
The Trustee may authenticate any such substituted Security and
deliver the same upon the written request or authorization of any officer of
the Company. Upon the issuance of any substituted Security, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith. In case any Security which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Security) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or
theft of such Security and of the ownership thereof.
Every substituted Security of any series issued pursuant to
the provisions of this Section 2.08 by virtue of the fact that any such Security
is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be found at any time, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of the
same series duly issued hereunder. All Securities shall be held and owned upon
the express condition that, to the extent permitted by applicable law, the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute and the Trustee shall authenticate and make
available for delivery temporary Securities (typed, printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company. Every such temporary Security shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Securities. Without unreasonable delay, the Company will execute
and deliver to the Trustee or the Authenticating Agent definitive Securities
19
and thereupon any or all temporary Securities of such series may be surrendered
in exchange therefor, at the principal corporate trust office of the Trustee or
at any office or agency maintained by the Company for such purpose as provided
in Section 3.02, and the Trustee or the Authenticating Agent shall authenticate
and make available for delivery in exchange for such temporary Securities a like
aggregate principal amount of such definitive Securities. Such exchange shall be
made by the Company at its own expense and without any charge therefor except
that, in case of any such exchange involving a registration of transfer, the
Company may require payment of a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto. Until so exchanged,
the temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of the same series
authenticated and delivered hereunder.
SECTION 2.10. Cancellation of Securities Paid, etc.
All Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly cancelled by it, and no Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Securities cancelled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall deliver all cancelled Securities to the Company. If
the Company shall acquire any of the Securities, however, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Securities unless and until the same are surrendered to the Trustee for
cancellation.
SECTION 2.11. Global Securities.
(a) If the Company shall establish pursuant to Section 2.03
that the Securities of a particular series are to be issued as a Global
Security, then the Company shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, a Global Security that (i) shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the outstanding Securities of such series, (ii)
shall be registered in the name of the nominee of the Depositary, (iii) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Except as otherwise provided in Section 2.11 of the Indenture, this Security
may be transferred, in whole but not in part, only to the Depositary or to
another nominee of the Depositary or to a successor Depositary or to a nominee
of such successor Depositary."
20
(b) Notwithstanding the provisions of Section 2.07, the Global
Security of a series may be transferred, in whole but not in part and in the
manner provided in Section 2.07, only to the Depositary or to another nominee of
the Depositary for such series, or to a successor Depositary for such series
selected or approved by the Company or to a nominee of such successor
Depositary.
(c) If at any time the Depositary for a series of the
Securities notifies the Company that it is unwilling or unable to continue as
Depositary for such series or if at any time the Depositary for such series
shall no longer be registered or in good standing under the Exchange Act, or
other applicable statute or regulation, and a successor Depositary for such
series is not appointed by the Company within 90 days after the Company re-
ceives such notice or becomes aware of such condition, as the case may be, this
Section 2.11 shall no longer be applicable to the Securities of such series and
the Company will execute, and subject to Section 2.07, the Trustee will
authenticate and make available for delivery the Securities of such series in
definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Security of such series in exchange for such Global Security. In addition, the
Company may at any time determine that the Securities of any series shall no
longer be represented by a Global Security and that the provisions of this
Section 2.11 shall no longer apply to the Securities of such series. In such
event the Company will execute and subject to Section 2.07, the Trustee, upon
receipt of an Officers' Certificate evidencing such determination by the
Company, will authenticate and make available for delivery the Securities of
such series in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security of such series in exchange for such Global
Security. Upon the exchange of the Global Security for such Securities in
definitive registered form without coupons, in authorized denominations, the
Global Security shall be cancelled by the Trustee. Such Securities in definitive
registered form issued in exchange for the Global Security pursuant to this
Section 2.11(c) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Depositary for delivery to the Persons in
whose names such Securities are so registered.
So long as the system of registration described in this
Section 2.11 is in effect, (a) the records of the Depositary will be
determinative for all purposes and (b) neither the Company, the Trustee nor any
paying agent, Security registrar or transfer agent for such Securities will have
any responsibility or liability for (i) any aspect of the records relating to or
payments made on account of owners of beneficial interests in the Securities of
such series, (ii) maintaining, supervising or
21
reviewing any records relating to such beneficial interests, (iii) receipt of
notices, voting and requesting or directing the Trustee to take, or not to take,
or consenting to, certain actions hereunder, or (iv) the records and procedures
of the Depositary.
SECTION 2.12. CUSIP Numbers
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE THREE
PARTICULAR COVENANTS OF THE COMPANY.
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay or cause to be paid
the principal of, premium, if any, and interest on each of the Securities of
that series at the place, at the respective times and in the manner provided in
such Securities. Each installment of interest on the Securities of any series
may be paid by mailing checks for such interest payable to the order of the
holders of Securities entitled thereto as they appear on the registry books of
the Company.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remains outstanding, the
Company will maintain in New York, New York, an office or agency where the
Securities of each series may be presented for payment, an office or agency
where the Securities of that series may be presented for registration of
transfer and for exchange as in this Indenture provided and an office or agency
where notices and demands to or upon the Company in respect of the Securities of
that series or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by Section
2.03, any such office or agency for all of the above purposes
22
shall be the office or agency of the Trustee. In case the Company shall fail to
maintain any such office or agency in New York, New York, or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the principal
corporate trust office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside New York, New
York, where the Securities may be presented for registration of transfer and for
exchange in the manner provided in this Indenture, and the Company may from time
to time rescind such designation, as the Company may deem desirable or
expedient; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain any such office or
agency in New York, New York, for the purposes above mentioned. The Company will
give to the Trustee prompt written notice of any such designation or rescission
thereof.
SECTION 3.03. Appointments to Fill Vacancies in
Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities of any series, it will cause such paying
agent to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest, if any,
on the Securities of such series (whether
such sums have been paid to it by the
Company or by any other obligor on the
Securities of such series) in trust for the
benefit of the holders of the Securities of
such series; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other
obli- gor on the Securities of such series)
to make any payment of the principal of and
premium, if any, or interest, if any, on the
Securities of such series when the same
shall be due and payable.
23
(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of and premium, if any, or interest,
if any, on the Securities of any series, set aside, segregate and hold in trust
for the benefit of the holders of the Securities of such series a sum sufficient
to pay such principal, premium or interest so becoming due and will notify the
Trustee of any failure to take such action and of any failure by the Company (or
by any other obligor under the Securities of such series) to make any payment of
the principal of and premium, if any, or interest, if any, on the Securities of
such series when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Trustee or any paying
agent hereunder, as required by this Section 3.04, such sums to be held by the
Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, so long as Securities of any
series are outstanding hereunder, a Certificate stating that in the course of
the performance by the signers of their duties as officers of the Company they
would normally have knowledge of the Company's compliance with all conditions
and covenants and of any default by the Company in the performance of any
covenants contained herein, stating whether or not they have knowledge of the
Company's compliance with all conditions and covenants and of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
SECTION 3.06. Compliance with Consolidation
Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, any other entity or convey,
transfer or lease its properties and assets substantially as an entirety to any
entity, and the Company will not permit any entity to consolidate with or merge
into the Company or convey all or transfer or lease its properties and assets
substantially as an entity to the Company unless the provisions of Article Ten
hereof are complied with.
SECTION 3.07. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of
each calendar year a written notice specifying the amount
24
of any original issue discount (including daily rates and accrual periods)
accrued on outstanding Securities as of the end of such year.
SECTION 3.08. Existence.
The Company will do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 3.09. Restrictions on Secured Funded Debt.
The Company will not, nor will it permit any Restricted
Subsidiary to, incur, issue, assume, guarantee or create any Secured Funded
Debt, without effectively providing concurrently with the incurrence, issuance,
assumption, guaranty or creation of any such Secured Funded Debt that the
outstanding Securities (together with, if the Company shall so determine, any
other Indebtedness of the Company or such Restricted Subsidiary then existing or
thereafter created which is not subordinated to the outstanding Securities)
shall be secured equally and ratably with (or prior to) such Secured Funded
Debt, unless after giving effect thereto, the sum of the aggregate amount of
all outstanding Secured Funded Debt of the Company and its Restricted
Subsidiaries together with all Attributable Debt in respect of sale and
leaseback transactions relating to a Principal Property (with the exception of
Attributable Debt which is excluded pursuant to clause (1) to (6) of Section
10.7), would not exceed 15% of Consolidated Net Tangible Assets; provided,
however, that this Section 3.09 shall not apply to, and there shall be excluded
from Secured Funded Debt in any computation under this Section 3.09, Funded Debt
secured by:
(1) Liens on property, shares of capital stock or indebtedness
of any corporation existing at the time such corporation becomes a
Subsidiary;
(2) Liens on property, shares of capital stock or indebtedness
existing at the time of acquisition thereof or incurred within 180 days
of the time of acquisition thereof (including, without limitation,
acquisition through merger or consolidation) by the Company or any
Restricted Subsidiary;
(3) Liens on property, shares of capital stock or indebtedness
hereafter acquired (or constructed) by the
25
Company or any Restricted Subsidiary and created prior to, at the time
of, or within 270 days after such acquisition (including, without
limitation, acquisition through merger or consolidation) (or the
completion of such construction or commencement of commercial operation
of such property, whichever is later) to secure or provide for the
payment of all or any part of the purchase price (or the construction
price) thereof;
(4) Liens in favor of the Company or any Restricted
Subsidiary;
(5) Liens in favor of the United States of America, any State
thereof or the District of Columbia, or any agency, department or other
instrumentality thereof, to secure partial, progress, advance or other
payments pursuant to any contract or provisions of any statute;
(6) Liens incurred or assumed in connection with an issuance
of revenue bonds the interest on which is exempt from Federal income
taxation pursuant to Section 103(b) of the Internal Revenue Code of
1986, as amended;
(7) Liens securing the performance of any contract or
undertaking not directly or indirectly in connection with the borrowing
of money, the obtaining of advances or credit or the securing of Funded
Debt, if made and continuing in the ordinary course of business;
(8) Liens incurred (no matter when created) in connection with
the Company's or a Restricted Subsidiary's engaging in leveraged or
single-investor lease transactions; provided, however, that the
instrument creating or evidencing any borrowings secured by such Lien
shall provide that such borrowings are payable solely out of the income
and proceeds of the property subject to such Lien and are not a general
obligation of the Company or such Restricted Subsidiary;
(9) Liens under workers' compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts or deposits to secure public
or statutory obligations of the Company or any Restricted Subsidiary,
or deposits of cash or obligations of the United States of America to
secure surety and appeal bonds to which the Company or any Restricted
Subsidiary is a party or in lieu of such bonds, or pledges or deposits
for similar purposes in the ordinary course of business, or Liens
imposed by law, such as laborers' or other employees', carriers',
warehousemen's, mechanics', materialmen's and vendors' Liens, and Liens
arising out of judgments or awards against the Company or any
Restricted Subsidiary with respect to which the Company or such
26
Restricted Subsidiary at the time shall be prosecuting an appeal or
proceedings for review and with respect to which it shall have secured
a stay of execution pending such appeal or proceedings for review, or
Liens for taxes not yet subject to penalties for nonpayment or the
amount or validity of which is being in good faith contested by
appropriate proceedings by the Company or any Restricted Subsidiaries,
as the case may be, or minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions or Liens as to the use of
real properties, which Liens, exceptions, encumbrances, easements,
reservations, rights and restrictions do not, in the opinion of the
Company, in the aggregate materially detract from the value of said
properties or materially impair their use in the operation of the
business of the Company and its Restricted Subsidiaries;
(10) Liens incurred to finance all or any portion of the cost
of construction, alteration or repair of any Principal Property and
improvements thereto prior to or within 270 days after completion of
such construction, alteration or repair;
(11) Liens outstanding on the date of this Indenture;
or
(12) any extension, renewal, refunding or replacement (or
successive extensions, renewals, refundings or replacements), as a
whole or in part, of any Lien referred to in the foregoing clauses (1)
to (11), inclusive; provided, however, that (i) such extension,
renewal, refunding or replacement Lien shall be limited to all or a
part of the same property that secured the Lien extended, renewed,
refunded or replaced (plus improvements on such property) and (ii) the
Funded Debt secured by such Lien at such time is not increased.
SECTION 3.10. Limitation on Sales and Leasebacks.
The Company will not, nor will it permit any Restricted
Subsidiary to, enter into any arrangement with any Person providing for the
leasing by the Company or any Restricted Subsidiary of any Principal Property of
the Company or any Restricted Subsidiary, which Principal Property has been or
is to be sold or transferred by the Company or such Restricted Subsidiary to
such Person (herein referred to as a "sale and leaseback transaction") unless,
after giving effect thereto, the aggregate amount of all Attributable Debt with
respect to all such sale and leaseback transactions plus all Secured Funded Debt
(with the exception of Funded Debt secured by liens which is
27
excluded pursuant to clauses (1) to (12) of Section 3.09) would not exceed 15%
of Consolidated Net Tangible Assets. This covenant shall not apply to, and there
shall be excluded from Attributable Debt in any computation under Section 3.09
or this Section 3.10, Attributable Debt with respect to, any sale and leaseback
transaction if:
(1) the Company or a Restricted Subsidiary is permitted to
create Funded Debt secured by a Lien pursuant to clauses (1) to (12) of
Section 3.09 on the Principal Property to be leased, in an amount equal
to the Attributable Debt with respect to such sale and leaseback
transaction, without equally and ratably securing the Outstanding
Securities;
(2) the Company or a Restricted Subsidiary, within 270 days
after the sale or transfer shall have been made by the Company or a
Restricted Subsidiary, shall apply an amount in cash equal to the
greater of (i) the net proceeds of the sale or transfer of the
Principal Property leased pursuant to such arrangement or (ii) the fair
market value of the Principal Property so leased at the time of
entering into such arrangement (as determined by the Chief Executive
Officer, the President, the Chief Financial Officer, the Treasurer or
the Controller of the Company) to the retirement of Secured Funded Debt
of the Company or any Restricted Subsidiary (other than Secured Funded
Debt owned by the Company or any Restricted Subsidiary); provided,
however, that no retirement referred to in this clause (2) may be
effected by payment at maturity or pursuant to any mandatory sinking
fund payment or any mandatory prepayment provision of Secured Funded
Debt;
(3) the Company or a Restricted Subsidiary applies the net
proceeds of the sale or transfer of the Principal Property leased
pursuant to such transaction to investment in another Principal
Property within 270 days prior or subsequent to such sale or transfer;
provided, however, that this exception shall apply only if such
proceeds invested in such other Principal Property shall not exceed the
total acquisition, repair, alteration and construction cost of the
Company or any Restricted Subsidiary in such other Principal Property
less amounts secured by any purchase money or construction mortgages on
such Principal Property;
(4) the effective date of any such arrangement is within 270
days of the acquisition of the Principal Property (including, without
limitation, acquisition by merger or consolidation) or the completion
of construction and commencement of operation thereof, whichever is
later;
28
(5) the lease in such sale and leaseback transaction is for a
term, including renewals, of not more than three years; or
(6) such sale and leaseback transaction is entered into
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries.
SECTION 3.11. Restrictions on Funded Debt of
Restricted Subsidiaries.
The Company shall not permit any Restricted Subsidiary to
incur, issue, assume, guarantee or create any Funded Debt, unless after giving
effect thereto, the sum of the aggregate amount of all outstanding Funded Debt
of the Restricted Subsidiaries would not exceed 15% of Consolidated Net Tangible
Assets; provided, however, that this Section 3.11 shall not apply to, and there
shall be excluded from, Funded Debt in any computation under this Section 3.11,
(i) Funded Debt secured by Liens which is excluded pursuant to clauses (1) to
(12) of Section 3.09, (ii) Funded Debt of any corporation existing at the time
such corporation becomes a Restricted Subsidiary and (iii) Indebtedness among
the Company and its Subsidiaries and Indebtedness between Subsidiaries;
provided, further, that this Section 3.11 shall not prohibit the incurrence of
Indebtedness in connection with any extension, renewal, refinancing, replacement
or refunding (including successive extensions, renewals, refinancings,
replacements and refundings), in whole or in part, of any Indebtedness of the
Restricted Subsidiaries (provided that the principal amount of such Indebtedness
being extended, renewed, refinanced, replaced or refunded is not increased) but
any such Indebtedness shall be included in the computation of Funded Debt under
this Section 3.11.
SECTION 3.12. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections 3.09 to 3.11, inclusive,
with respect to the Securities of any series if before the time for such
compliance the holders of at least a majority in principal amount of the
outstanding securities of such series shall, by Act of such holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
29
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE.
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a monthly basis on each regular record date for
each series of Securities, a list, in such form as
the Trustee may reasonably require, of the names
and addresses of the Securityholders of such se-
ries of Securities as of such record date (and on
dates to be determined pursuant to Section 2.03
for non-interest bearing securities in each year);
and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company, of any such request, a list of similar
form and content as of a date not more than 15
days prior to the time such list is furnished,
except that no such lists need be furnished so
long as the Trustee is in possession thereof by
reason of its acting as Security registrar for
such series.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of each series of Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or (2) received by it in the
capacity of Securities registrar (if so acting) hereunder. The Trustee may
destroy any list furnished to it as provided in Section 4.01 upon receipt of a
new list so furnished.
(b) In case three or more holders of Securities of any series
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Security of such series for a period of at least six months preceding the date
of such application, and such application states that the applicants desire to
communicate with other holders of Securities of such series or with holders of
all Securities with respect to their rights under this Indenture or under such
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
30
within five business days after the receipt of such application, at its
election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section
4.02, or
(2) inform such applicants as to the approximate number
of holders of such series or all Securities, as the
case may be, whose names and addresses appear in the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of
this Section 4.02, and as to the approximate cost of
mailing to such Securityholders the form of proxy or
other communication, if any, specified in such
application.
If the Trustee shall elect not to afford
such applicants access to such information, the
Trustee shall, upon the written request of such
appli- cants, mail to each Securityholder of such
series or all Securities, as the case may be, whose
name and address appear in the information preserved
at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02 a
copy of the form of proxy or other communication
which is specified in such request with reasonable
promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of
mailing, unless within five days after such tender,
the Trustee shall mail to such applicants and file
with the Commission, together with a copy of the
material to be mailed, a written statement to the
effect that, in the opinion of the Trustee, such
mailing would be contrary to the best interests of
the holders of Securities of such series or all
Securities, as the case may be, or would be in
violation of applicable law. Such written statement
shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the
objections specified in the written statement so
filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order
sustaining one or more of such objections, the
Commission shall find, after notice and opportunity
for hearing, that all the objections so sustained
have been met and shall enter an order so declaring,
the Trustee shall mail copies of such material to all
such Securityholders with reasonable promptness after
the entry of such order and the renewal of such
31
tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respecting
their application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
holders of Securities in accordance with the provisions of subsection (b) of
this Section 4.02, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under said subsection (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed from
time to time by the Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Certificates and Officers' Certificates).
32
(d) The Company covenants and agrees to transmit to the
Securityholders, in the manner and to the extent required by Section 313(c) of
the Trust Indenture Act, such summaries of any information, documents, and
reports required to be filed by the Company in subsections (a) and (b) of this
Section 4.03 or pursuant to any other applicable provision under the U.S.
securities laws, including but not limited to Rule 144A(d)(4) under the U.S.
Securities Act of 1933, as amended.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the
Trustee shall, within 60 days after each May 15 following the date of this
Indenture deliver to Securityholders a brief report, dated as of such May 15,
which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission and
with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
SECTION 5.01. Events of Default.
In case one or more of the following Events of Default with
respect to Securities of any series or such other events as may be established
with respect to the Securities of that series as contemplated by Section 2.03
hereof shall have occurred and be continuing:
(a) in case of nonpayment of any installment of interest
upon any of the Securities of any series as and when
the same shall become due and payable, and such
nonpayment shall have continued for a period of 30
days; or
(b) in case of nonpayment of any of the principal of or
premium, if any, on any of the Securities of any
series as and when the same shall have become due and
payable, whether at maturity of the Securities of
that series or upon redemption or by declaration or
otherwise; or
(c) in case of default in the deposit of any sinking fund
or other payment required pursuant to the
33
terms of a Security of that Series as established by
or pursuant to a Board Resolution as permitted by
Section 2.03(8), when and as due by the terms of a
Security of that series; or
(d) in case of a default or defaults under any mortgage,
indenture or instrument under which there may be
issued or by which there may be secured or evidenced
by any Indebtedness (including this Indenture), in an
aggregate principal amount exceeding $15 million,
individually or in the aggregate, whether such
Indebtedness now exists or shall hereafter be
created, which default or defaults shall have
resulted in such Indebtedness, having been declared
due and payable prior to the date on which it would
otherwise have become due and payable, or the failure
to pay at maturity (including any applicable grace
period) any Indebtedness in an aggregate principal
amount exceeding $15 million individually or in the
aggregate whether such Indebtedness now exists or
shall hereafter be created, without in any such case
such Indebtedness having been discharged, or such
acceleration having been rescinded or annulled, or
there having been deposited in trust, a sum of money
sufficient to discharge in full such indebtedness,
within a period of 30 days after there shall have
been given, by registered mail, to the Company by the
Trustee or to the Company and the Trustee by the
holder or holders of at least 25% in aggregate
principal amount of the outstanding Securities of
such series a written notice specifying such default
and requiring the Company to cause such Indebtedness
to be discharged, cause to be deposited in trust a
sum sufficient to discharge in full such Indebtedness
or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of
Default" hereunder; provided, however, that, subject
to the provisions of Sections 5.08 and 6.02, the
Trustee shall not be deemed to have knowledge of such
default unless either (A) the Trustee shall have
actual knowledge of such default or (B) the Trustee
shall have received written notice thereof from the
Company, from the holder of any such Indebtedness or
from any trustee under any such mortgage, indenture
or other instrument; or
(e) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of
the Company in an involuntary case under any ap-
plicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trust-
ee, sequestrator (or similar official) of the
Company or for any substantial part of its proper-
ty, or ordering the winding-up or liquidation of
34
its affairs and such decree or order shall remain
unstayed and in effect for a period of 90 consecu-
tive days; or
(f) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall
consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar offi-
cial) of the Company or of any substantial part of
its property, or shall make any general assignment
for the benefit of creditors, or shall fail gener-
ally to pay its debts as they become due; or
(g) in case there shall have occurred a failure in the
performance, or breach, of any covenant or
warranty of the Company in this Indenture (other
than those set forth exclusively in terms of any
particular series of Securities established as
contemplated in this Indenture), and continuance
of such failure or breach for a period of 90 days
after there has been given, by registered or cer-
tified mail, to the Company by the Trustee or to
the Company and the Trustee by the holders of at
least 25% in aggregate principal amount of the
outstanding Securities a written notice specifying
such failure or breach and requiring it to be
remedied and stating that such notice is a "Notice
of Default" hereunder; or
(h) in case of any event which constitutes an "Event of
Default" under the terms governing Securities of that
series established as provided in Section 2.03;
then, and in each and every such case, unless the principal of all of the
Securities of such series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities of that series then outstanding hereunder, by notice in writing to
the Company (and to the Trustee if given by Securityholders), may declare the
entire principal (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series and the interest
accrued thereon, if any, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.
35
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal (or, if the Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable, and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities of such series (or of all the Securities, as
the case may be) and the principal of and premium, if any, on any and all
Securities of such series (or of all the Securities, as the case may be) which
shall have become due otherwise than by acceleration (with interest upon such
principal and premium, if any, and, to the extent that payment of such interest
is enforceable under applicable law, on overdue installments of interest, at the
same rate as the rate of interest or Yield to Maturity (in the case of Original
Issue Discount Securities) specified in the Securities of such series, (or at
the respective rates of interest or Yields to Maturity of all the Securities, as
the case may be) to the date of such payment or deposit) and such amount as
shall be sufficient to cover reasonable compensation to the Trustee and each
predecessor Trustee, their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith, and
if any and all Events of Default under the Indenture, shall have been cured,
waived or otherwise remedied as provided herein -- then and in every such case
the holders of a majority in aggregate principal amount of the Securities of
such series (or of all the Securities, as the case may be) then outstanding, by
written notice to the Company and to the Trustee, may waive all defaults with
respect to that series (or with respect to all Securities, as the case may be,
in such case, treated as a single class) and rescind and annul such declaration
and its consequences, but no such waiver or rescission and annulment shall
extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
36
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that:
(a) in case of nonpayment of any installment of interest
upon any of the Securities of any series as and when
the same shall become due and payable, and such
nonpayment shall have continued for a period of 30
days; or
(b) in case of nonpayment of any of the principal of or
premium, if any, on any of the Securities of any
series as and when the same shall have become due and
payable, whether at maturity of the Securities of
that series or upon redemption or by declaration or
otherwise; or
(c) in case of default in the deposit of any sinking fund
or other payment required pursuant to the terms of a
Security of that Series as established by or pursuant
to a Board Resolution as permitted by Section
2.03(8), when and as due by the terms of a Security
of that series;
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Securities of that series, the amount that then
shall have become due and payable on all such Securities of that series for
principal and premium, if any, or interest, or both, as the case may be, with
interest upon the overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of interest at the rate or Yield to Maturity (in the case of
Original Issue Discount Securities) borne by the Securities of that series; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on such Securities wherever
situated the moneys adjudged or decreed to be payable.
37
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Securities
of any series under Title 11, United States Code, or any other applicable law,
or in case a receiver or trustee shall have been appointed for the property of
the Company or such other obligor, or in the case of any other similar judicial
proceedings relative to the Company or other obligor upon the Securities of any
series, or to the creditors or property of the Company or such other obligor,
the Trustee, irrespective of whether the principal of the Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 5.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal and interest (or, if the
Securities of that series are Original Issue Discount Securities such portion of
the principal amount as may be specified in the terms of that series) owing and
unpaid in respect of the Securities of such series and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee, except as a result of their
negligence or bad faith) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities of
any series, or to the creditors or property of the Company or such other
obligor, unless prohibited by applicable law and regulations, to vote on behalf
of the holders of the Securities or any series in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or person performing similar functions in comparable
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, in the event that the Trustee shall consent
to the making of such payments directly to the Securityholders, to pay to the
Trustee such amounts as shall be sufficient to cover reasonable compensation to
the Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of their
negligence or bad faith.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrange-
38
ment, adjustment or composition affecting the Securities of any series or the
rights of any holder thereof or to authorize the Trustee to vote in respect of
the claim of any Securityholder in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
Notwithstanding any provision in this Section 5.02, neither
the Trustee nor the Securityholders shall have the right to accelerate payment
of any series of the Securities or otherwise to declare such Securities due and
payable except as specifically set forth in Section 5.01.
SECTION 5.03. Application of Moneys Collected by
Trustee.
Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Securities in respect of which
moneys have been collected, and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of
collection applicable to such series and reasonable compensation
to the Trustee, its agents, attorneys and counsel, and of all
other expenses and liabilities incurred, and all advances made,
by the Trustee except as a result of its negligence or bad faith;
Second: To the payment of the amounts then due and unpaid upon
Securities of such series for principal (and premium, if any) and interest on
the Securities of such series, in respect of which or for the benefit of which
money has been collected, ratably, without preference or priority of any kind,
according to the amounts due on such Securities for principal (and premium, if
any) and interest, respectively.
39
Third: To the Company or its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same.
SECTION 5.04. Proceedings by Securityholders.
(a) No holder of any Security of any series shall have any
right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless (i) such holder previously shall have
given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Securities of such series specifying
such Event of Default, as hereinbefore provided; (ii) the holders of not less
than 25% in aggregate principal amount of the Securities of that series then
outstanding shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder; (iii) such
holder or holders shall have offered to the Trustee such reasonable indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby; (iv) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to institute any such
action, suit or proceeding, and (v) during such 60 day period the holders of a
majority in principal amount of the Securities of that series do not give the
Trustee a direction inconsistent with the request; it being understood and
intended, and being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that no one or more
holders of Securities of any series shall have any right in any manner whatever
by virtue of or by availing of any provision of this Indenture to affect,
disturb or prejudice the rights of any other holder of Securities, or to obtain
or seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities of the
applicable series.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of (premium, if any) and interest, if any, on such Security, on or
after the same shall have become due and payable, and to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such holder and by accepting a Security hereunder it is expressly
understood, intended and covenanted by the taker and holder of every Security of
such series, with every other such taker and holder and the Trustee, that no one
or more holders of Securities of such series shall have any right in any manner
whatsoever by virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any other such
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any
40
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities of series. For
the protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief, and to
institute suit therefor, as can be given either at law or in equity.
SECTION 5.05. Proceedings by Trustee.
In case of an Event of Default hereunder the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, and
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as otherwise provided in Section 2.08, all powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any other powers and remedies available to the Trustee or the holders of the
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such series, and no delay or omission of
the Trustee or of any holder of any of the Securities to exercise any right or
power accruing upon any Event of Default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be a waiver of
any such default or an acquiescence therein; and, subject to the provisions of
Section 5.04, every power and remedy given by this Article Five or by law to the
Trustee or to the Securityholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities of any or all series affected (voting as one class) at the time
outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that (subject to
the provisions of Section 6.01) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall deter-
41
mine that the action so directed would be unjustly prejudicial to the holders
not taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if the Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Trustee in personal liability. Prior to any declaration accelerating
the maturity of any series of the Securities, or of all the Securities, as the
case may be, the holders of a majority in aggregate principal amount of the
Securities of that series at the time outstanding may on behalf of the holders
of all of the Securities of such series waive any past default or Event of
Default including any default established pursuant to Section 2.03, and its
consequences, except a default (a) in the payment of principal of, premium, if
any, or interest on any of the Securities, (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Security affected. Upon any such waiver, the default covered
thereby shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Securities of such series shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon. Upon any such waiver the Company, the Trustee and the
holders of the Securities of that series (or of all Securities, as the case may
be) shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon. Whenever any default
or Event of Default hereunder shall have been waived as permitted by this
Section 5.07, such default or Event of Default shall for all purposes of the
Securities of that series (or of all Securities, as the case may be) and this
Indenture be deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults and Nonpayments.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities of any series, mail to all
Securityholders of that series, as the names and addresses of such holders
appear upon the Security register, notice of all defaults with respect to that
series or nonpayment of principal, premium, if any, or interest, when due on the
Securities of such series ("Nonpayments") known to the Trustee, unless such
defaults or Nonpayments shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.08 being hereby defined
to be the events specified in clauses (a) through (h) of Section 5.01, not
including periods of grace, if any, provided for therein.
42
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders of any series, holding in the aggregate more than 10% in
principal amount of the Securities of that series outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security against the
Company on or after the same shall have become due and payable.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of any series of Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default with
respect to Securities of that series and after the curing or waiving of all
Events of Default which may have occurred, with respect to Securities of that
series, undertakes to perform such duties and only such duties as are specifi-
cally set forth in this Indenture. In case an Event of Default with respect to
the Securities of a series has occurred (which has not been cured or waived as
provided herein) the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
43
(a) prior to the occurrence of an Event of Default with
respect to Securities of a series and after the
curing or waiving of all Events of Default with
respect to that series which may have occurred.
(1) the duties and obligations of the Trustee
with respect to Securities of a series shall
be determined solely by the express provi-
sions of this Indenture, and the Trustee
shall not be liable except for the perfor-
mance of such duties and obligations with
respect to such series as are specifically
set forth in this Indenture, and no implied
covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any Certificates or Opinions
of Counsel furnished to the Trustee and
conforming to the requirements of this
Indenture; but, in the case of any such
Certificates or Opinions of Counsel which by
any provision hereof are specifically
required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the
same to determine whether or not they
conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer
or Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in
good faith, in accordance with the direction of
the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conduct-
ing any proceeding for any remedy available to the
Trustee, or exercising any trust or power con-
ferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or liability is not reasonably assured to
44
it under the terms of this Indenture or adequate indemnity against such risk is
not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note,
debenture or other paper or document believed by it
to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein shall be sufficiently
evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein spe-
cifically prescribed); and any Board Resolution
may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secre-
tary of the Company;
(c) the Trustee may consult with counsel of its selec-
tion and any advice or Opinion of Counsel shall be
full and complete authorization and protection in
respect of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exer-
cise any of the rights or powers vested in it by
this Indenture at the request, order or direction
of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the
costs, expenses and liabilities which may be in-
curred therein or thereby;
(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this Inden-
ture; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to
a series of the Securities (that has not been
cured or waived or provided herein) to exercise with
respect to Secu- rities of that series such of the
rights and pow- ers vested in it by this Indenture,
and to use the same degree of care and skill in their
exercise
45
as a prudent person would exercise or use under the
circumstances in the conduct of his or her own
affairs;
(f) the Trustee shall not be bound to make any inves-
tigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper
or document, unless requested in writing to do so
by the holders of not less than a majority in
principal amount of the outstanding Securities of
the series affected thereby; provided, however,
that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the secu-
rity afforded to it by the terms of this Inden-
ture, the Trustee may require reasonable indemnity
against such expense or liability as a condition
to so proceeding; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either
directly or by or through agents (including any
Authenticating Agent) or attorneys, and the Trustee
shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney
appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company, and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any Securities or the proceeds of any Securities authenticated
and delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not
46
Trustee, Authenticating Agent, paying agent, transfer agent or Security
registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Trustee or any paying agent shall, until used or applied as
herein provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee and any paying agent shall be under no liability for interest
on any money received by it hereunder, except as otherwise agreed in writing
with the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chief Executive
Officer, the Chief Financial Officer, the President or a Vice President or the
Treasurer or an Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as shall
be agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all losses, claims, liabilities or expenses, including
taxes (other than taxes based on the income of the Trustee), incurred without
negligence or bad faith on the part of the Trustee or predecessor, and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Company under this Section
6.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
Indebtedness hereunder. Such additional Indebtedness shall be secured by a Lien
prior to that of the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the holders
of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(a)
47
or Section 5.01(b), the expenses (including the reasonable charges and expenses
of its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal, state, territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.09 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
48
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any Trustee or Trustees hereafter
appointed, may at any time resign with respect to one or more or all series of
Securities by giving written notice of such resignation to the Company and by
mailing notice thereof to the holders of the applicable series of Securities at
their addresses as they shall appear on the Security register. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
Trustee or Trustees with respect to the applicable series by written instrument,
in duplicate, executed under the authority of a Board Resolution, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed with
respect to any series of Securities and have accepted appointment within 30 days
after the mailing of such notice of resignation to the affected Securityholders,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Securityholder who has been a bona
fide holder of a Security or Securities of the applicable series for at least
six months may, subject to the provisions of Section 5.09, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor Trustee.
(b) In case at any time any of the following shall
occur --
(1) the Trustee shall fail to comply with the
provisions of subsection (a) of Section 6.08
after written request therefor by the
Company or by any Securityholder who has
been a bona fide holder of a Security or
Securities for at least six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section
6.09 and shall fail to resign after written
request therefor by the Company or by any
such Securityholder, or
49
(3) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or
of its property shall be appointed, or any
public officer shall take charge or control
of the Trustee or of its property or affairs
for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed under the
authority of a Board Resolution, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor Trustee, or, subject to
the provisions of Section 5.09, any Securityholder who has been a bona fide
holder of a Security or Securities of the applicable series for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor Trustee.
(c) The holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding may at any time remove the
Trustee with respect to such series and nominate a successor Trustee with
respect to the applicable series of Securities or all series, as the case may
be, which shall be deemed appointed as successor Trustee with respect to the
applicable series unless within 10 days after such nomination the Company
objects thereto, in which case the Trustee so removed or any Securityholder of
the applicable series, upon the terms and conditions and otherwise as in
subsection (a) of this Section 6.10 provided, may petition any court of
competent jurisdiction for an appointment of a successor Trustee with respect to
such series.
(d) Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor Trustee
as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee with respect to all or any
applicable series shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations with respect to such
50
series of its predecessor hereunder, with like effect as if originally named as
Trustee herein; but, nevertheless, on the written request of the Company or of
the successor Trustee, the Trustee ceasing to act shall, upon payment of any
amounts then due it pursuant to the provisions of Section 6.06, execute and
deliver an instrument transferring to such successor Trustee all the rights and
powers of the Trustee so ceasing to act and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee thereunder. Upon request of any such successor Trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor Trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a lien upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 6.06.
If a successor Trustee is appointed with respect to the
Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of any
applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable to
confirm that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of any series as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor Trustee,
and shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the Trustee
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-Trustees of the
same trust and that each such Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.
No successor Trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor Trustee
shall be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 6.11, the Company shall mail notice of the succession
of such Trustee hereunder to the holders of Securities of any applicable series
at their addresses as they shall appear on the Security register. If the Company
fails to mail such notice within 10 days after the acceptance of appointment by
the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Company.
51
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities of any
series shall have been authenticated but not delivered, any such successor to
the Trustee may adopt the certificate of authentication of any predecessor
Trustee, and deliver such Securities so authenticated; and in case at that time
any of the Securities of any series shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor Trustee; and in all
such cases such certificates shall have the full force which it is anywhere in
the Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate
Securities of any series in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor.
The Trustee shall comply with Section 3.11(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 3.11(b)
of the Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 3.11(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities of any
series issued upon exchange or transfer thereof as fully to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Securities of such series; provided, that the
Trustee shall have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of
Securities of any series. Any such Authenticating Agent shall at all times be a
corporation organized and doing business under the
52
laws of the United States or of any state or territory thereof or of the
District of Columbia authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of at least $5,000,000 and being subject
to supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the provi-
sions of this Section, it shall resign immediately in the manner and with the
effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign with respect
to one or more or all series of Securities by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any Authenticating Agent with respect to one or more or
all series of Securities by giving written notice of termination to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent with respect to the applicable series eligible
under this Section 6.14, shall give written notice of such appointment to the
Company and shall mail notice of such appointment to all holders of the
applicable series of Securities as the names and addresses of such holders
appear on the Security register. Any successor Authenticating Agent with respect
to all or any series upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities with respect to such
series of its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company agrees to pay to any Authenticating Agent from
time to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
53
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities of any or
all series may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action)
the fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by such Securityholders
in person or by agent or proxy appointed in writing, or (b) by the record of
such holders of Securities voting in favor thereof at any meeting of such
Securityholders duly called and held in accordance with the provisions of
Article Eight, or (c) by a combination of such instrument or instruments and any
such record of such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders of any
series any request, demand, authorization, direction, notice, consent, waiver or
other action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Securities of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the outstanding Securities of that series
shall be computed as of the record date; provided, however, that no such
authorization, agreement or consent by such Securityholders on the record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
54
satisfactory to the Trustee. The ownership of Securities shall be proved by the
Security register or by a certificate of the Security registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the Person in whose name
such Security shall be registered upon the Security register (including a
Depositary in the case of a Global Security) to be, and may treat him as, the
absolute owner of such Security (whether or not such Security shall be overdue)
for the purpose of receiving payment of or on account of the principal of,
premium, if any, and interest on such Security and for all other purposes; and
neither the Company nor the Trustee nor any Authenticating Agent nor any paying
agent nor any transfer agent nor any Security registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being or upon his order shall be valid, and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for moneys payable upon
any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which the
Trustee actually knows are so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 7.04 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Securities and that the pledgee
is not the Company or any such other obligor or person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In the case of a dispute as to such right,
any decision by the
55
Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 7.05. Revocation of Consents; Future Holders
Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor) the
serial number of which is shown by the evidence to be included in the
Securities the holders of which have consented to such action may, by filing
written notice with the Trustee at its principal office and upon proof of
holding as provided in Section 7.02, revoke such action so far as concerns such
Security (or so far as concerns the principal amount represented by any
exchanged or substituted Security). Except as aforesaid, any such action taken
by the holder of any Security shall be conclusive and binding upon such holder
and upon all future holders and owners of such Security, and of any Security
issued in exchange or substitution therefor, irrespective of whether or not any
nota- tion in regard thereto is made upon such Security or any Security issued
in exchange or substitution therefor.
ARTICLE EIGHT
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders of any or all series may be
called at any time and from time to time pursuant to the provisions of this
Article Eight for any of the following purposes:
(a) to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to
consent to the waiving of any default hereunder and
its consequences, or to take any other action
authorized to be taken by Securityholders pursuant to
any of the provisions of Article Five;
(b) to remove the Trustee and nominate a successor
Trustee pursuant to the provisions of Article Six;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
56
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Securities under any other
provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
of any or all series to take any action specified in Section 8.01, to be held at
such time and at such place in New York, New York, as the Trustee shall
determine. Notice of every meeting of the Securityholders of any or all series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to holders of
Securities of each series affected at their addresses as they shall appear on
the Security register of each series affected. Such notice shall be mailed not
less than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or
Securityholders.
In case at any time the Company pursuant to a resolution of
the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities of any or all series, as the case may be, then
outstanding, shall have requested the Trustee to call a meeting of
Securityholders of any or all series, as the case may be, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such Securityholders
may determine the time and the place in said Borough of Manhattan for such
meeting and may call such meeting to take any action authorized in Section 8.01,
by mailing notice thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
person shall (a) be a holder of one or more Securities with respect to which the
meeting is being held or (b) a person appointed by an instrument in writing as
proxy by a holder of one or more such Securities. The only persons who shall be
entitled to be present or to speak at any meeting of Securityholders shall be
the persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
57
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 7.04 and unless otherwise
provided in an indenture supplemental hereto, at any meeting each holder of
Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $25 principal amount (in the case of
Original Issue Discount Securities, such principal amount to be determined as
provided in the definition "outstanding") of Securities held or represented by
him or her; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Security challenged as not outstanding and ruled by
the chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by the
Chairman or instruments in writing as aforesaid duly designating the Chairman as
the person to vote on behalf of other Securityholders. Any meeting of
Securityholders duly called pursuant to the provisions of Section 8.02 or 8.03
may be adjourned from time to time by a majority of those present, whether or
not constituting a quorum, and the meeting may be held as so adjourned without
further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities with respect to which such meeting is being held shall be
by written ballots on which shall be subscribed the signatures of such holders
or of their representatives by proxy and the serial number or numbers of the
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
58
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that the notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Securities voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent
of Securityholders.
The Company and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect), without
the consent of the Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to
the Company, or successive successions, and the
assumption by the successor corporation of the
covenants, agreements and obligations of the Company
pursuant to the terms of this Indenture;
(b) to add to the covenants of the Company such fur-
ther covenants, restrictions or conditions for the
protection of the holders of all or any series of
Securities, (and, if such covenants are to be for
the benefit of less than all series of Securities
stating that such covenants are expressly being
included for the benefit of such series) as the
Company and the Trustee shall consider to be for
the protection of the holders of such Securities,
and to make the occurrence, or the occurrence and
continuance, of a default in any of such
additional covenants, restrictions or conditions a
default or an Event of Default permitting the
enforcement of all or any of the several remedies
provided in this Indenture as herein set forth;
provided, however, that in respect of any such
additional Covenant, restriction or condition, such
59
additional covenant, restriction or condition such
supplemental indenture may provide for a particular
period of grace after default (which period may be
shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate
enforcement upon such default or may limit the
remedies available to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the
Securities issued hereunder in fully registered form
and to make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement
any provision contained herein or in any supple-
mental indenture which may be defective or incon-
sistent with any other provision contained herein
or in any supplemental indenture, or to make such
other provisions in regard to matters or questions
arising under this Indenture; provided that any
such action shall not adversely affect the inter-
ests of the holders of the Securities;
(e) to add to, delete from, or revise the terms of
Securities of any series as permitted by Section
2.01 and 2.03, including, without limitation, any
terms relating to the issuance, exchange, regis-
tration or transfer of Securities issued in whole
or in part in the form of one or more global Secu-
rities and the payment of any principal thereof,
or interest or premium, if any, thereon;
(f) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with
respect to the Securities of one or more series
and to add to or change any of the provisions of
this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to
the requirements of Section 6.11;
(g) to provide for uncertificated Securities in
addition to or in place of certificated
Securities;
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect;
or
60
(i) to provide for the issuance of and establish the form
and terms and conditions of the Securities of any
series, to establish the form of any certifications
required to be furnished pursuant to the terms of
this Indenture or any series of Securities, or to
add to the rights of the holders of any series of
Securities.
The Trustee is hereby authorized to join with the Company in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder, but
the Trustee shall not be obligated to, but may in its discretion, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding of all series affected by such supplemental
indenture (each voting as a separate class), the Company and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act then in effect) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
holders of the Securities of each series so affected; provided, however, that no
such supplemental indenture shall, without the consent of the holders of each
security then outstanding and affected thereby, (i) extend the fixed maturity of
any Security of any series, or reduce the rate or extend the time of payment of
interest thereon, or (ii) reduce the principal amount thereof or any premium
thereon, or reduce any amount payable on redemption thereof, or (iii) make the
principal thereof or any interest or premium thereon payable in any place or any
coin or currency other than that provided in the Securities, or (iv) reduce the
amount of the principal of an Original Issue Discount Security that would be due
and payable upon an acceleration of the maturity thereof pursuant to Section
5.01 or the amount thereof provable in bankruptcy pursuant to Section 5.02, or
(v) impair or affect the right of any Securityholder to institute suit for
payment thereof or the right of repayment, if any, at the option of the holder,
61
or (vi) adversely affect any right of Security holders to convert Securities, or
(vii) reduce the aforesaid percentage of Securities the holders of which are
required to consent to any such supplemental indenture, or any modification
hereof or amendment hereto, or the consent of the holders of which is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their covenants) provided for in this Indenture,
or (viii) modify any of the provisions of this Section, Section 5.04 or Section
5.07, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the holder of each outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of Securityholders of such series with respect to such
covenant or provision, shall be deemed not to affect the rights under this
Indenture or the Securityholders of any other series.
Upon the request of the Company accompanied by a copy of a
Board Resolution authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture. The Trustee may receive an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article is authorized or permitted by, and conforms
to, the terms of this Article and that it is proper for the Trustee under the
provisions of this Article to join in the execution thereof.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders of all series affected thereby as
their names and addresses appear upon the Security register. Any failure of the
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article Nine shall comply with the Trust Indenture Act (to the extent
applicable), as then in effect. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article Nine, this Indenture shall be and be
deemed to be modified and
62
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the Trustee,
the Company and the holders of Securities of each series affected thereby shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture affecting such series pursuant to the
provisions of this Article Nine may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company or the Trustee shall so determine, new Securities of any series so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Securities of any series then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Nine.
ARTICLE TEN
CONSOLIDATION, MERGER, SALE AND CONVEYANCE
SECTION 10.01. Company May Consolidate, etc., on Cer-
tain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or into
any other entity (whether or not affiliated with the Company, as the case may
be), or successive consolidations or mergers in which the Company, as the case
may be, or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance, transfer, lease or other disposition of the
property of the Company, as the case may be, or its successor or successors as
an entirety, or substantially as an entirety, to any other entity (whether or
not affiliated with the Company, as the case may be, or its successor or
successors)
63
authorized to acquire and operate the same so long as any successor entity or
purchaser shall be a corporation, partnership, trust or other entity organized
and validly existing under the laws of the United States of America, any State
or the District of Columbia; provided, however, the Company hereby covenants and
agrees that, upon any such consolidation or merger, or upon any sale,
conveyance, transfer, lease or other disposition of all or substantially all of
the property of the Company, the due and punctual payment, in the case of the
Company, of the principal of, premium, if any, and interest on all of the
Securities of all series in accordance with the terms of each series, according
to their tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture with respect to each series or
established with respect to such series pursuant to Section 2.03 to be kept or
performed by the Company shall be expressly assumed, by supplemental indenture
(which shall conform to the provisions of the Trust Indenture Act, as then in
effect) satisfactory in form to the Trustee executed and delivered to the
Trustee by the entity formed by such consolidation, or into which the Company,
as the case may be, shall have been merged, or by the entity which shall have
acquired such property, and that immediately after giving effect to such
transaction, no Event of Default or event which, after notice or lapse of time
or both, would become an Event of Default hereunder would exist and be
continuing.
SECTION 10.02. Successor Corporation to be Substituted
for Company.
In case of any such consolidation or merger, or upon any sale,
conveyance, transfer or other disposition of all or substantially all of the
property of the Company and upon the assumption by the successor entity, by
supplemental indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the principal of and
premium, if any, and interest on all of the Securities and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture or the Declaration to be performed or observed by the Company, such
successor entity shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the party of the first part, and
the Company thereupon shall be relieved of any further liability or obligation
hereunder or upon the Securities. Such successor entity thereupon may cause to
be signed, and may issue either in its own name or in the name of the Company,
any or all of the Securities issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee or the Authenticating
Agent; and, upon the order of such successor entity instead of the Company and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee or the Authenticating Agent shall authenticate and
deliver any Securities which previously shall have been signed and delivered by
the officers of the Company to the Trustee or the Authenticating Agent for
authentication, and any Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee or the Authenticating
Agent for that purpose. All the Securities
64
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Indentures had been issued at
the date of the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, shall receive an officer's certificate and, at the Trustee's option, an
Opinion of Counsel, as conclusive evidence that any consolidation, merger,
conveyance or transfer, and any assumption, permitted or required by the terms
of this Article Ten complies with the provisions of this Article Ten.
ARTICLE ELEVEN
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.08) and not theretofore canceled, or
(b) all the Securities not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay at maturity or upon redemption all of the Securities (other
than any Securities which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.08) not theretofore
canceled or delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to such date of maturity or
redemption date, as the case may be, but excluding, however, the amount of any
moneys for the payment of principal of, and premium, if any, or interest on the
Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 11.04, or (2) paid to any state or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in either
case the Company shall also pay or cause to be paid all other sums payable
hereunder by the Company, then this Indenture shall cease to be of further
effect except that the provisions of Sections 2.05, 2.07, 2.08, 3.01, 3.02,
3.04, 6.06, 6.10 and 11.04 hereof shall survive until such Securities shall
mature and be paid. Thereafter, Sections 6.10 and 11.04 shall survive, and the
Trustee, on demand of the Company accompanied by any Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfac-
65
tion of and discharging this Indenture, the Company, however, hereby agreeing to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee in connection with this Indenture or the
Securities.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Securities for the payment of
which such moneys or U.S. Government Obligations have been deposited with the
Trustee, of all sums due and to become due thereon for principal, premium, if
any, and interest.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof, other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture, all
moneys then held by any paying agent of the Securities (other than the Trustee)
shall, upon demand of the Company, be repaid to it or paid to the Trustee, and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of, and premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of Securities
for three years after the date upon which the principal of, and premium, if any,
or interest on such Securities, as the case may be, shall have become due and
payable, shall be repaid to the Company by the Trustee or such paying agent on
written demand; and the holder of any of the Securities shall thereafter look
only to the Company for any payment which such holder may be entitled to
collect, and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
66
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its respective obligations with respect to any series of
Securities on the 91st day after the applicable conditions set forth below have
been satisfied with respect to any series of Securities at any time after the
applicable conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be
deposited irrevocably with the Trustee or the
Defeasance Agent (as defined below) as trust funds in
trust, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of
the Securities of such series (i) money in an amount,
or (ii) U.S. Government Obligations which through the
payment of interest and principal in respect thereof
in accordance with their terms will provide, not
later than one day before the due date of any
payment, money in an amount, or (iii) a combination
of (i) and (ii), sufficient, in the opinion (with
respect to (ii) and (iii)) of a nationally recognized
firm of independent public accountants expressed in
a written certification thereof delivered to the
Trustee and the Defeasance Agent, if any, to pay and
discharge each installment of principal (including
any mandatory sinking fund payments) of, and
interest and premium, if any, on, the outstanding
Securities of such series on the dates such
installments of principal, interest or premium are
due;
(2) such deposit will not cause the Trustee to have any
conflicting interest with respect to other securities
of the Company;
(3) if the Securities of such series are then listed
on any national securities exchange, the Company
shall have delivered to the Trustee and the Defea-
sance Agent, if any, an Opinion of Counsel to the
effect that the exercise of the option under this
Section 11.05 would not cause such Securities to
be delisted from such exchange;
(4) no Event of Default or event which with notice or
lapse of time would become an Event of Default with
respect to the Securities of such series shall have
occurred and be continuing on the date of such
deposit or on such later date specified in this
Indenture in the case of certain events in
bankruptcy, insolvency or reorganization of the
Company;
(5) such defeasance will not result in a breach or
violation of, or constitute a default under, the
67
Indenture or any other agreement or instrument to
which the Company is a party or by which it is
bound; and
(6) the Company shall have delivered to the Trustee and
the Defeasance Agent, if any, an Opinion of Counsel
to the effect that holders of the Securities of such
series will not recognize income, gain or loss for
United States federal income tax purposes as a result
of the exercise of the option under this Section
11.05 and will be subject to United States federal
income tax on the same amount and in the same manner
and at the same times as would have been the case if
such option had not been exercised, and, in the case
of the Securities of such series being Discharged,
such opinion shall be accompanied by a private letter
ruling to that effect received from the United States
Internal Revenue Service, a revenue ruling pertaining
to a comparable form of transaction to that effect
published by the United States Internal Revenue
Service, or otherwise a change in applicable Federal
income tax law occurring after the date of the
Indenture.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Securities of such series and to have satisfied all the obligations
under this Indenture relating to the Securities of such series (and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
the same), except (A) the rights of holders of Securities of such series to
receive, from the trust fund described in clause (1) above, payment of the
principal of and the interest and premium, if any, on such Securities when such
payments are due; (B) the Company's obligations with respect to such Securities
under Sections 2.07, 2.08, 5.02 and 11.04; and (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act hereunder. In the event
such a Defeasance Agent is appointed pursuant to this section, the following
conditions shall apply:
1. The Trustee shall have approval rights over the
document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's rights
and responsibilities;
2. The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient
68
money and/or U. S. Government Obligations to meet
the applicable conditions set forth in this Sec-
tion 11.05; and
3. The Trustee shall determine whether the Company shall
be deemed to have been Discharged from its respective
obligations with respect to any series of Securities.
If the amount of money and U.S. government obligations due on
deposit is insufficient to pay amounts due on the Securities at the time of
acceleration resulting from an Event of Default, the Company shall remain liable
in respect of such amounts.
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 12.01. Indenture and Securities Solely Corpo-
rate Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture, or
in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation of the Company, either directly or through the Company or any
successor corporation of the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Securities.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS.
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee
69
or officer of any corporation that shall at the time be the
lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by appropriate
authority of its Board of Directors and delivered to the Trustee may surrender
any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company, as the case may be, and as
to any successor corporation.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the purpose)
to the Company, Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North
Carolina 27410, Attention: Chief Financial Officer. Any notice, direction,
request or demand by any Securityholder to or upon the Trustee shall be deemed
to have been sufficiently given or made, for all purposes, if given or made in
writing at the office of the Trustee, addressed to the Trustee, First Union
National Bank, 230 S. Tryon Street, 9th Floor, Charlotte, North Carolina
28288-1179, Attention: Corporate Trust Department.
Section 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion of the Company provided for in
this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this
70
Indenture shall include (1) a statement that the person making such certificate
or opinion has read such covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are based; (3) a statement
that, in the opinion of such person, such person has made such examination or
investigation as is necessary to enable such person to express an informed
opinion as to whether or not such covenant or condition has been complied with;
and (4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
SECTION 13.07. Legal Holidays.
In any case where the date of payment of interest on or
principal of the Securities will be in New York, New York, Charlotte, North
Carolina or in Greensboro, North Carolina a legal holiday or a day on which
banking institutions are authorized by law to close, the payment of such
interest on or principal of the Securities need not be made on such date but may
be made on the next succeeding Business Day, with the same force and effect as
if made on the date of payment and no interest shall accrue for the period from
and after such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with another provision included in this Indenture
which is required to be included in this Indenture by any of Sections 310 to
317, inclusive, of the Trust Indenture Act of 1939 (to the extent applicable),
such required provision shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities of any series shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall
71
not affect any other provisions of this Indenture or of such Securities, but
this Indenture and such Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company, as the case may be, will remain liable for all
such obligations. Subject to the foregoing, the Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
ARTICLE FOURTEEN
REDEMPTION OF SECURITIES
SECTION 14.01. Applicability of Article.
The provisions of this Article shall be applicable to the
Securities of any series which are redeemable before their maturity or to any
sinking fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 2.03 for Securities of such series.
SECTION 14.02. Notice of Redemption; Selection of Secu-
rities.
In case the Company shall desire to exercise the right to
redeem all, or, as the case may be, any part of the Securities of any series in
accordance with their terms, it shall fix a date for redemption and shall mail a
notice of such redemption at least 30 and not more than 60 days prior to the
date fixed for redemption to the holders of Securities of such series so to be
redeemed as a whole or in part at their last addresses as the same appear on the
Security register. Such mailing shall be by first class mail. The notice if
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the holder receives such notice. In any case, failure
to give such notice by mail or any defect in the notice to the holder of any
Security of a series designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Security
of such series.
Each such notice of redemption shall specify the CUSIP number
of the Securities to be redeemed, the date fixed for redemption, the redemption
price at which Securities of such
72
series are to be redeemed, the place or places of payment, that payment will be
made upon presentation and surrender of such Securities, that interest accrued
to the date fixed for redemption will be paid as specified in said notice, and
that on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue. If less than all the Securities of such series
are to be redeemed the notice of redemption shall specify the numbers of the
Securities of that series to be redeemed. In case any Security of a series is to
be redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Security, a new Security
or Securities of that series in principal amount equal to the unredeemed portion
thereof will be issued.
Prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the redemption date all the Securities so called for redemption at the
appropriate redemption price, together with accrued interest to the date fixed
for redemption.
If all, or less than all, the Securities of a series are to be
redeemed, the Company will give the Trustee notice not less than 45 or 60 days,
respectively, prior to the redemption date as to the aggregate principal amount
of Securities of that series to be redeemed and the Trustee shall select, in
such manner as in its sole discretion it shall deem appropriate and fair, the
Securities of that series or portions thereof (in integral multiples of $1,000,
except as otherwise set forth in the applicable form of Security) to be
redeemed.
SECTION 14.03. Payment of Securities Called for
Redemption.
If notice of redemption has been given as provided in Section
14.02, the Securities or portions of Securities of the series with respect to
which such notice has been given shall become due and payable on the date and at
the place or places stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption, and on and
after said date (unless the Company shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities of any series so called for
redemption shall cease to accrue. On presentation and surrender of such
Securities at a place of payment specified in said notice, the said Securities
or the specified portions thereof shall be paid and redeemed by the Company at
the applicable redemption price, together with interest accrued thereon to the
date fixed for redemption.
73
Upon presentation of any Security of any series redeemed in
part only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Company, a
new Security or Securities of such series of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
74
First Union National Bank hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective authorized officers, as of the
day and year first above written.
UNIFI, INC.
By /s/ Willis C. Moore, III
______________________________
Name: Willis C. Moore, III
Title: Senior V.P. & CFO
FIRST UNION NATIONAL BANK,
as Trustee
By /s/ S. Schwartz
_____________________________
Name: Shannon Schwartz
Title: Asst. Vice President
75
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
On the 5th day of February, 1998, before me personally came Willis C.
Moore, III, to me known, who, being by me duly sworn, did depose and say that he
resides at Greensboro, North Carolina; that he is a Senior Vice President and
Chief Financial Officer of Unifi, Inc., one of the parties described in and
which executed the above instrument; and that he signed his name thereto by
authority of the board of directors of such corporation.
/s/ Cheryl Smith
----------------------------
Notary Public
[NOTARIAL SEAL] June 30, 2001
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
On the 5th day of February, 1998, before me personally came Shannon
Schwartz, to me known, who, being by me duly sworn, did depose and say that she
resides at Charlotte, North Carolina; that she is an Assistant Vice President of
First Union National Bank, one of the parties described in and which executed
the above instrument; and that such execution was by authority of the board of
directors of said corporation.
/s/ Cheryl Smith
----------------------------
Notary Public
[NOTARIAL SEAL] June 30, 2001
72
Exhibit 4.3
CERTIFIED COPY OF CORPORATE RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
UNIFI, INC.
I hereby certify that I am the duly elected and qualified Secretary of
Unifi, Inc., a corporation organized and existing under the laws of the State
of New York; that the following resolutions were duly adopted by a Consent to
Action Without Meeting of the Board of Directors of Unifi, Inc., effective as
of December 31, 1997; and that such resolutions are in full force and effect
and have not been amended or rescinded:
RESOLUTIONS REGARDING OFFERING OF NOTES
NOW, THEREFORE, BE IT RESOLVED, that the Corporation may issue and sell
its debt securities in an aggregate amount up to $300,000,000, which
amount may be increased to up to $400,000,000 in the discretion of the
Executive Committee of this Board of Directors (the "Executive
Committee"), with the Notes to have such terms as may be approved by the
Executive Committee, which committee may take all actions and shall have
the full power and authority of the Board of Directors:
(i) to determine and establish one or more series of Notes and to
determine for any such series of Notes: (a) the amount and specific
title of such series of Notes; (b) whether the series of Notes are
senior notes or subordinated notes; (c) the aggregate principal
amount of such series of Notes to be offered and sold; (d) the date
or dates on which such series of Notes will be issued; (e) the date
or dates on which such series of Notes will mature; (f) the rate or
rates per annum or the method for determining such rate or rates, if
any, at which such series of Notes will bear interest (which may be
fixed or floating), and the dates or dates from which such interest
shall accrue; (g) the times at which any such interest will be
payable and the record date or dates for interest payable on any
such date, (h) the denominations in which such series of are
authorized to be issued; (i) the currency, currencies or currency
units in which payment of the principal of (and premium, if any) and
interest, if any, on the Notes of that series shall be payable, if
other than the currency of the United States of America; (j) any
provisions relating to the mandatory or optional redemption of such
series of Notes by the Corporation or the holder; (k) whether such
series of Notes will be original issue discount; (l) any sinking
fund to be provided in connection with such series of Notes; (m) the
place or places at which the Corporation will make payments of
principal (and premium, if any) and interest, if any, with respect to
such series of Notes and the method of such payment; (n) the person
or persons who, from time to time, will serve as paying agent,
calculation agent, registrar or transfer agent with respect to such
series of Notes, which may or may not be the same person and which
may or may not maintain a place of business in the City of New York;
(o) the method of and date for sale and delivery of such series of
Notes; (p) whether such series of Notes will be sold to an agent as
principal or through an agent as agent for the Corporation, or
whether the Corporation will sell such series of Notes directly on
its own behalf; (q) the fee or commission to be paid in connection
with any such sale; (r) the aggregate principal amount of such series
of Notes which may be authenticated and delivered at any such time;
(s) any terms by which such series of may be convertible into Common
Stock or other securities of the Corporation; (t) any provisions
relating to the conversion or exchange of the series of Notes into
Notes of another series; (u) any additional covenants and events of
default and the remedies with respect to such series of Notes not set
forth in the applicable Indenture for such Notes; (v) whether such
series of Notes will be issued in book-entry form and represented
by one or more global securities, and any depositary with respect to
such global securities; and (w) any other term and provisions of the
series of Notes required by or consistent with the provisions of the
applicable Indenture for such Notes of such series; and
(ii) to authorize and approve (a) the selection of underwriters,
dealers or agents for such Notes, if any, which underwriters, dealers
or agents may be affiliates of the Corporation, and the form of any
underwrite purchase or distribution agreement for such Notes, its
terms and conditions and the execution and delivery thereof, (b) the
form of trust indenture, or any indenture supplemental to any existing
trust indenture, as the case may be, to be used with respect to the
issuance and sale of such Notes, its terms and conditions, and the
execution and delivery thereof, (c) the form of such Notes, and the
execution and delivery thereof to the trustee for authentication and
delivery; (d) the form of any registration rights agreement for such
Notes, its terms and conditions and the execution and delivery
thereof, (e) the appointment of trustees, registrars, transfer agents
and paying agents with respect to such Notes and the designation of
the office
or agency of the Corporation where any series of the Notes may be
presented for registration, transfer, exchange and payment; (f) the
listing of such Notes in the New York Stock Exchange, Inc. and any
other United States or international stock exchange or exchanges and,
in connection therewith, the filing of all requisite listing
applications, fee agreements, papers and documents and the payment of
all fees as deemed necessary or desirable; and (g) any and all
actions and documents required to complete the issuance, sale and
delivery of any such Notes, their terms and conditions and the
execution and delivery thereof, and
RESOLVED FURTHER, that, subject to the terms and provisions of any
indenture pursuant to which any series of Notes may be issued, any of the
Chairman of the Board, President and Chief Executive Officer, the Senior
Vice President and Chief Financial Officer, or any Executive Vice
President (each, a "Designated Officer") hereby is authorized and
empowered to execute and deliver the Notes or other certificates
evidencing the Notes in such form as the Executive Committee shall
determine and that the Secretary hereby is authorized and empowered to
attest any Notes or certificate so executed; and
RESOLVED FURTHER, that the net proceeds from the sale of the Notes may be
used to repay a portion of the Corporation's long-term revolving bank
credit facility and/or for general corporate purposes, which may include
capital expenditures for possible acquisitions, expansion of the
Corporation's facilities, purchase of additional texturing equipment and
working capital needs, as is determined by the Executive Committee; and
Private Placement Exchange Offer
- --------------------------------
RESOLVED FURTHER, that the Notes be offered and sold pursuant to an
exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act"), in accordance with Section 4(2) thereof, or such
other exemption as the proper officers of the Corporation deem appropriate,
based on the advice of counsel to the Corporation; and
RESOLVED FURTHER, that the Corporation is hereby authorized to issue a
second series of debt securities in like principal amount and with terms
identical in all material respects to the Notes (the "Exchange Notes"),
which Exchange Notes shall be registered under the Securities Act and
shall be issued and exchanged for the Notes (the "Exchange Offer") and the
Executive Committee is hereby authorized to set the terms thereof in the
same manner as provided above with regards to the Notes; and
RESOLVED FURTHER, that if, upon consummation of the Exchange Offer, any
person acting as distribution agent for the Notes (an "Initial Purchaser")
holds Notes acquired by it as part of its initial distribution thereof the
Corporation is hereby authorized to issue and deliver to such Initial
Purchaser upon the written request of such Initial Purchaser, in exchange
for the Notes held by such Initial Purchaser (the "Private Exchange
Offer"), a third series of debt securities (the "Private Exchange Notes")
in like principal amount and identical in all material respects to the
Notes, but excluding any provisions relating to the Exchange Offer or the
payment of additional interest in connection therewith, and the Executive
Committee is hereby authorized to set the terms thereof in the same manner
as provided above with regard to the Notes; and
RESOLVED FURTHER, that the Corporation may execute and deliver and perform
a Registration Rights Agreement obligating the Corporation to issue
the Exchange Notes and effect the Exchange Offer and obligating the
Corporation to issue the Private Exchange Notes and effect the Private
Exchange Offer, as appropriate, all as shall be approved and directed by
the Executive Committee, and
RESOLVED FURTHER, that the Corporation prepare, execute and file a
Registration Statement on Form S-4, or such other form as shall be
appropriate, and any and all exhibits and other documents relating
thereto, under the Securities Act relating to the proposed Exchange Offer
(the "Exchange Registration Statement"), and that the Executive Committee
is hereby authorized to approve the form of the Exchange Registration
Statement, and the officers of the Corporation are hereby authorized to
prepare, execute and file the Exchange Registration Statement and any
amendment or amendments thereto (including any pre-effective or post-
effective amendments) as they deem necessary or desirable or as shall be
required by the Securities and Exchange Commission (the "Commission"),
and the President and Chief Executive Officer, the Senior Vice President
and Chief Financial Officer, and any Executive Vice President, one and
each of them, hereby is authorized to execute the same on behalf of the
Corporation; and
RESOLVED FURTHER, that if the Exchange Offer is not permitted by law, or
if the designated officer of the Corporation deem it necessary or
desirable pursuant to the Registration Rights Agreement, or otherwise,
the Corporation shall prepare, execute and file a Registration Statement
on Form S-3, or such other form as shall be appropriate, and any and all
exhibits and other documents relating thereto, under the Securities Act
to register resales of the Notes by the holders thereof (the "Shelf
Registration Statement"), and that the Executive Committee is hereby
authorized to approve the form Shelf
Registration Statement, and the officers of the Corporation are hereby
authorized to prepare, execute and file the Shelf Registration Statement
and any amendment or amendments thereto including any pre-effective or
post-effective amendments) as they deem necessary or desirable or as
shall be required by the Commission, and the President, the Senior Vice
President and Chief Financial Officer, and any Executive Vice President,
one and each of them, hereby is authorized to execute the same on behalf
of the Corporation; and
RESOLVED FURTHER, that Willis C. Moore, III, Senior Vice President and
Chief Financial Officer of the Corporation, and R. Douglas Harmon of
Smith Helms Mulliss & Moore, L.L.P., special counsel to the Corporation,
are hereby appointed and designated as the persons duly authorized to
receive communications and notices from the Commission with respect to the
Exchange Registration Statement and the Shelf Registration Statement and
to exercise powers given to such person under the rules and regulations of
the Commission; and
RESOLVED FURTHER, that the signature of any officers or directors of the
corporation required by law to be affixed to the Exchange Registration
Statement or the Shelf Registration Statement, or to any amendment thereof,
may be affixed by said officer or director personally or by an attorney-
in-fact duly constituted in writing by said officer or director to sign
his name thereto; and
RESOLVED FURTHER, that William T. Kretzer and Willis C. Moore, III hereby
are appointed attorneys-in-fact for, and each of them with full power to
act without the other hereby is authorized and empowered to sign the
Exchange Registration Statement or the Shelf Registration Statement and any
amendment or amendments (including any pre-effective or post-effective
amendments) thereto on behalf of the Corporation and any of the following,
to wit: the Principal Executive Officer, the Principal Financial Officer,
the Principal Accounting Officer, and any other officer of the
Corporation; and
RESOLVED FURTHER, that Willis C. Moore, III is hereby designated as Agent
for Service of the Corporation with all such powers as are provided by the
Rules and Regulations of the Commission; and
RESOLVED FURTHER, that the officers of the Corporation hereby are
authorized for and on behalf of the Corporation to do any and all acts and
things necessary or appropriate for the completion of the Exchange
Registration Statement or the Shelf Registration Statement and thereafter
for the continuation of the effectiveness thereof; and
State Qualification and Broker/Dealer Registration
- --------------------------------------------------
RESOLVED FURTHER, that it is desirable and in the best interest of the
Corporation that its securities be qualified or registered for sale in
various states; that the President and Chief Executive Officer or the
Senior Vice President and Chief Financial Officer or the Secretary of the
Corporation are hereby authorized to determine the states in which
appropriate action shall be taken to qualify or register for sale all or
such part of the securities of the Corporation as said officers may deem
advisable; that said officers are hereby authorized to perform on behalf
of the Corporation any and all such actions as they may deem necessary or
advisable in order to comply with the applicable laws of any such states,
and in connection therewith to execute and file all requisite papers and
documents, reports, surety bonds, irrevocable consents and appointments of
attorneys for service of process and the execution of such officers of
any such paper or document or the doing by them of any act in connection
with the foregoing matter shall conclusively establish their authority
therefor from the Corporation and approval and ratification of the
Corporation of the papers and documents so executed and the action so
taken; and
RESOLVED FURTHER, that if the securities or Blue Sky laws of any states of
the United States of America in which the designated officers of the
Corporation deem it necessary or advisable to qualify or register for sale
all or any part of the securities of the Corporation, or any authority
administering such laws, requires a prescribed form of preamble, preambles,
resolution or resolutions relating to such sale or to any application,
statement, instrument or other document connected therewith, each such
preamble or resolution is hereby adopted by this Board of Directors
and the Secretary of the Corporation is hereby authorized and directed
to certify the adoption of any such preamble or resolution as though the
same was presented to the directors and to insert all such preambles and
resolutions in the minute book of the Corporation immediately following
the minutes of this meeting; and
RESOLVED FURTHER, that if it should be necessary or is desirable and in
the best interest of the Corporation that it be registered as a broker/
dealer in various states for the purpose of selling the Notes, the
President and Chief Executive Officer, the Senior Vice President and
Chief Financial Officer, and the Secretary are hereby authorized to
determine the states in which appropriate action will be taken to
register; that said officers are hereby authorized to perform on behalf
of the Corporation any and all such acts as they may deem necessary or
advisable in order to comply with
the applicable laws of any such states, and in connection therewith
to execute and file all requisite papers and documents, including, but
not limited to, applications, reports, surety bonds, irrevocable consents
and appointments of attorneys for service of process; and the execution
by such officers of any such paper or document or the doing by them of
any act in connection with the foregoing matters shall conclusively
establish their authority therefore from the Corporation and the approval
and ratification by the Corporation of the papers and documents so
executed and the action so taken; and
Miscellaneous
- -------------
RESOLVED FURTHER, that the President and Chief Executive Officer, the
Senior Vice President and Chief Financial Officer, and the Secretary of
the Corporation are hereby authorized and directed to obtain from such
creditors of the Corporation as they may deem necessary, all such waivers,
consents or amendments under the Corporation's loan agreements and other
contracts as they may deem necessary or advisable to permit the
consummation of the transactions contemplated by the foregoing
resolutions; and
RESOLVED FURTHER, that the President and Chief Executive Officer, the
Senior Vice President and Chief Financial Officer, and such other officers
of the Corporation as may be designated by the Executive Committee, be
and they hereby are authorized, empowered and directed to do or cause
to be done any and all such other acts and things, to execute and deliver
any and all such agreements, documents, papers and instrument, and to
take any and all steps deemed by them to be necessary or desirable to
carry out the purpose and intent of and to consummate any of the actions
contemplated by the foregoing resolutions.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of
Unifi, Inc., as of the 5th day of February, 1998.
/s/ C. Clifford Frazier, Jr.
-----------------------------
C. Clifford Frazier, Jr.
Secretary
(CORPORATE SEAL)
Exhibit 4.4
CONSENT TO ACTION WITHOUT A
MEETING OF THE EXECUTIVE COMMITTEE OF
THE BOARD OF DIRECTORS OF UNIFI, INC.
Pursuant to the provisions of Section 708 of the New York Business
Corporation Law and the By-Laws of Unifi, Inc. (the "Corporation"), the
Executive Committee of the Board of Directors of the Corporation hereby adopts
the resolutions set forth below and consents in writing to taking the action
adopting said resolutions without the holding of a meeting:
6 1/2% NOTES DUE 2008, SERIES B
WHEREAS, the Board of Directors of this Corporation, by resolutions
adopted by Consent to Action Without a Meeting dated December 31, 1997
(the "Board Resolutions") authorized the Executive Committee of the Board
of Directors (the "Executive Committee") to take all actions in connection
with the proposed issue by the Corporation of certain of its debt
securities; and
WHEREAS, by resolutions adopted by Consent to Action Without a Meeting
dated February 2, 1998, the Executive Committee approved certain actions
related to the private offer and sale of $250,000,000 in aggregate
principal amount of the Corporation's 6 1/2 Notes due 2008 (the "Existing
Notes"); and
WHEREAS, the sale of the Existing Notes to the Initial Purchasers was
consummated on February 5, 1998; and
WHEREAS, pursuant to the terms of the Existing Notes, and the related
Registration Rights Agreement, dated February 5, 1998 (the "Registration
Rights Agreement"), among the Corporation, Credit Suisse First Boston
Corporation and Invemed Associates, Inc. (the "Initial Purchasers"), the
Corporation agreed to issue under the Indenture dated February 5, 1998
(the "Indenture") between the Corporation and First Union National Bank,
as trustee (the "Trustee"), a second series of debt securities in the
aggregate principal amount of $250,000,000 with terms identical in all
respects to the Existing Notes (the "New Notes"), which New Notes would
be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and exchanged for the Existing Notes;
NOW, THEREFORE, BE IT RESOLVED, that $250,000,000 aggregate principal
amount of debt securities, designated as the 6 1/2% Notes due 2008,
Series B, shall be offered and exchanged for the Existing Notes pursuant
to the Registration Rights Agreement; and
FURTHER RESOLVED, that the interest rate on the New Notes shall be 6 1/2%
per annum, that interest shall accrue from February 5, 1998, shall be
payable semi-annually on February 1 and August 1, commencing August 1,
1998, to holders of record at the close of business on the preceding
January 15 and July 15, respectively, and shall be calculated based on
a 360-day year consisting of twelve 30-day months; and
FURTHER RESOLVED, that the New Notes shall be eligible for redemption by
the Corporation at any time prior to the maturity date at a redemption
price together with accrued interest to the date fixed for redemption equal
to the greater of (i) 100% of their principal amount or (ii) the sum of the
present values of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
applicable treasury yield plus 20 basis points and that the designated
officers of the Corporation are authorized to deliver to the Trustee (as
defined below) a certificate calculating such amount and on which the
Trustee may rely; and
FURTHER RESOLVED, that the New Notes shall not be entitled to any sinking
fund; and
FURTHER RESOLVED, that the proper officers of the Corporation are hereby
authorized and empowered to execute and file with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form
S-4 (or such other form as such officers, upon advice of counsel, may
determine to be necessary or appropriate) under the Securities Act (the
"Registration Statement"), to execute and file all such other instruments
and documents, to make all such payments, and to do all such other acts
and things in connection with said Registration Statement, including the
execution and filing of such amendment or amendments (including any
pre-effective or post-effective amendments) thereto as they may deem
necessary or advisable to effect such filings and to procure the
effectiveness of said Registration Statement (and any such pre-effective
or post-effective amendments) and to make such supplements to the
Prospectus forming a part of said Registration Statement as may be
required or otherwise as they may deem advisable; and
FURTHER RESOLVED, that William T. Kretzer and Willis C. Moore, III, be,
and each of them with full power to act without the other hereby is,
authorized and empowered to sign the Registration Statement and any
amendment or amendments thereto (including any pre-effective or post-
effective amendments) on behalf of and as attorneys for the Corporation
and on behalf of and as attorneys for any of the following, to wit: the
Principal Executive Officer, the Principal Financial Officer, the
Principal Accounting Officer and any other officer of the Corporation; and
FURTHER RESOLVED, that Willis C. Moore, III, is hereby designated as Agent
for Service of the Corporation with all such powers as are provided by the
Rules and Regulations of the Commission; and
FURTHER RESOLVED, that the draft Registration Statement, in substantially
the form attached hereto as Exhibit A, including the Prospectus contained
therein, is hereby approved in all respects, subject to such changes as
the proper officers of the Corporation shall deem necessary or advisable;
and
FURTHER RESOLVED, that the selection of First Union National Bank as
Exchange Agent for the exchange of New Notes for Existing Notes, as
described in the Registration Statement, is hereby approved in all
respects, and the proper officers of the Corporation are
hereby authorized to enter into such agreements with the Exchange Agent
and to pay such fees to the Exchange Agent as they shall deem appropriate;
and
FURTHER RESOLVED, that the designated officers of the Corporation hereby
are authorized to execute and deliver to the Trustee any and all documents,
papers and instruments which such officers may deem necessary or desirable
in connection with the Indenture; and
FURTHER RESOLVED, that designated officers of the Corporation hereby are
authorized and empowered in their discretion to execute and attest,
manually or in facsimile, and to deliver to the Trustee under the
Indenture, and the Trustee hereby is requested, upon satisfaction of the
conditions specified in the Indenture, or upon the written order, to date,
authenticate (by manual execution) and deliver to a designated officer of
the Corporation in an aggregate principal amount of $250,000,000 one or
more Global Securities (collectively a "New Global Note") registered in the
name of the Depository Trust Company ("DTC") or its nominee and dated the
date of authentication as provided in the Indenture, such New Global Note,
to be substantially in the form attached hereto as Exhibit B with such
changes therein, additions thereto and deletions therefrom as may be
approved by the officers executing the same, such approval and their
authority therefore to be conclusively evidenced by their execution
thereof; and
FURTHER RESOLVED, that the designated officers of the Corporation hereby
are authorized to file with the Trustee such written orders, certificates
and other documents and requests as may be necessary to obtain the
authentication and delivery of the New Global Note upon initial issuance
and upon subsequent transfers, substitutions and exchanges; and
FURTHER RESOLVED, that the New Global Note shall be signed on behalf of
the Corporation by a designated officer of the Corporation, under the
corporate seal of the Corporation, attested by the Secretary of the
Corporation, provided that the signature of any such officer upon the
New Global Note may be in facsimile or may be imprinted or otherwise
reproduced on the New Global Note, the Corporation hereby adopting as
binding upon it the facsimile signature of any person who shall be any
such officer of the Corporation at the time of the execution of the
New Global Note, notwithstanding the fact that at the time the New Global
Note shall be authenticated or delivered or disposed of, he shall have
ceased to be such officer of the Corporation; and
FURTHER RESOLVED, that, without limiting the generality of the preceding
resolution, the Corporation hereby initially adopts as and for its
signature on the New Global Note authorized to be executed on his behalf
pursuant to the provisions of these resolutions the facsimile signatures
of William T. Kretzer, President and Chief Executive Officer, and Willis
C. Moore, III, Senior Vice President and Chief Financial Officer, when
used and imprinted on the New Global Note, and the Corporation hereby
adopts as and for its corporate seal a facsimile thereof when used and
imprinted on the New Global Note; and
FURTHER RESOLVED, that the Trustee hereby is appointed Paying Agent of the
Corporation for the payment of the principal of and interest on the New
Notes at the corporate trust office of the Trustee in the City of
Charlotte, State of North Carolina, or such other location as may be
designated by the Executive Committee, hereby is designated as the office
or agency of the Corporation where the New Notes may be presented for
payment in accordance with their respective terms as provided in the New
Notes and the Indenture; and
FURTHER RESOLVED, that if, pursuant to the Indenture, New Notes represented
by the New Global New Notes are exchanged for New Notes in definitive
form, the Trustee hereby is appointed agent of the Corporation with the
title of Registrar for the registration of New Notes and for the
registration of transfers of New Notes or for exchanges of New Notes as
provided in the Indenture, and that the Trustee hereby is authorized (a)
to keep appropriate books for the registration of transfers of New Notes
entitled to registration upon presentation for such purposes, (b) to
register or cause to be registered New Notes therein, and (c) to permit
the transfer of New Notes thereon, as provided in the Indenture and under
such reasonable regulations as the Corporation and the Registrar may
prescribe; and
FURTHER RESOLVED, that if, pursuant to the Indenture, New Notes represented
by the New Global Notes are exchanged for Notes in definitive form the
Trustee is hereby authorized and directed in its capacity as Trustee to
authenticate (by manual execution) and issue from time to time without
further action or approval by or on behalf of the Corporation, a
replacement New Note in replacement New Note in replacement of any New Note
reported lost, stolen or destroyed, upon receipt of an affidavit of loss
and bond of indemnity in form and amount and with corporate surety
satisfactory to the Trustee in each instance protecting it and the
Corporation; and
FURTHER RESOLVED, that the Trustee shall be entitled to receive
compensation for all services to be rendered by it on behalf of the
Corporation in accordance with the foregoing resolutions and the Indenture
and to be reimbursed for all reasonable expenses necessarily incurred and
actually disbursed by it in connection with such duties; and
FURTHER RESOLVED, that, pursuant to the Board Resolutions and if required
by the Registration Rights Agreement, the Corporation is hereby authorized
and directed to issue under the Indenture a third series of debt securities
in the aggregate principal amount of $250,000,000 with terms identical in
all respects to the Existing Notes (the "Private Exchange Notes"), but
excluding provisions relating to the matters described in Section 6 of the
Registration Rights Agreement, which Private Exchange Notes shall be issued
and exchanged for the Existing Notes; and
FURTHER RESOLVED, that the designated officers of this Corporation are
hereby authorized and directed to do any and all things necessary or
appropriate to carry into effect the foregoing resolutions, and the
Secretary of the Corporation is hereby directed to attest and affix the
corporate seal, as may be necessary, to such document or documents as
executed by a designated officer pursuant to the foregoing resolutions.
This Consent is effective the 30th day of March, 1998, and may be signed
in counterparts.
/s/ G. Allen Mebane
-------------------------------------
G. Allen Mebane
/s/ William T. Kretzer
-------------------------------------
William T. Kretzer
/s/ Jerry W. Eller
-------------------------------------
Jerry W. Eller
/s/ G. Alfred Webster
-------------------------------------
G. Alfred Webster
$250,000,000
UNIFI, INC.
6 1/2% Notes due 2008
REGISTRATION RIGHTS AGREEMENT
February 5, 1998
Credit Suisse First Boston Corporation
Invemed Associates, Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue New York, New York 10010-3629
Dear Sirs:
Unifi, Inc., a New York corporation (the "Company"), proposes to issue and
sell to Credit Suisse First Boston Corporation and Invemed Associates, Inc.
(collectively, the "Initial Purchasers"), upon the terms set forth in a purchase
agreement of even date herewith (the "Purchase Agreement"), $250,000,000
aggregate principal amount of its 6 1/2% Notes due 2008 (the "Initial
Securities"). The Initial Securities will be issued pursuant to an Indenture,
dated as of February 5, 1998 (the "Indenture"), among the Company and First
Union National Bank (the "Trustee"). As an inducement to the Initial Purchasers,
the Company agrees with the Initial Purchasers, for the benefit of the holders
of the Initial Securities (including, without limitation, the Initial
Purchasers), the Exchange Securities (as defined below) and the Private Exchange
Securities (as defined below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall, at its own cost, prepare
and, not later than 90 days after (or if the 90th day is not a business day, the
first business day thereafter) the date of original issue of the Initial
Securities (the "Issue Date"), file with the Securities and Exchange Commission
(the "Commission") a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to a proposed offer (the "Registered
Exchange Offer") to the Holders of Transfer Restricted Securities (as defined in
Section 6 hereof) who are not prohibited by any law or policy of the Commission
from participating in the Registered Exchange Offer, to issue and deliver to
such Holders, in exchange for the Initial Securities, a like aggregate principal
amount of debt securities (the "Exchange Securities") of the Company issued
under the Indenture and identical in all material respects to the Initial
Securities (except for the transfer restrictions relating to the Initial
Securities and the provisions relating to the matters described in Section 6
hereof) that would be registered under the Securities Act. The Company shall use
its best efforts to cause such Exchange Offer Registration Statement to become
effective under the Securities Act within 180 days (or if the 180th day is not a
business day, the first business day thereafter) after the Issue Date of the
Initial Securities and shall keep the Exchange Offer Registration Statement
effective for not less than 30 days (or longer, if required by applicable law)
after the date notice of the Registered Exchange Offer is mailed to the Holders
(such period being called the "Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offer, the Company will be
entitled to close the Registered Exchange Offer 30 days after the commencement
thereof provided that the Company has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of Transfer Restricted Securities (as defined in Section 6
hereof) electing to exchange the Initial Securities for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the meaning
of the Securities Act, acquires the Exchange Securities in the ordinary course
of such Holder's business and has no arrangements with any person to participate
in the distribution of the Exchange Securities and is not prohibited by any law
or policy of the Commission from participating in the Registered Exchange Offer)
to trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States.
The Company acknowledges that, pursuant to current interpretations by the
Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (as "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and (c) Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell
Exchange Securities acquired in exchange for Initial Securities constituting any
portion of an unsold allotment is required to deliver a prospectus containing
the information required by Items 507 and 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such sale.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them
-2-
(unless such period is extended pursuant to Section 3(j) below) and (ii) the
Company shall make such prospectus and any amendment or supplement thereto,
available to any broker-dealer for use in connection with any resale of any
Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Initial Securities acquired by it as part of its initial
distribution, the Company, simultaneously with the delivery of the Exchange
Securities pursuant to the Registered Exchange Offer, shall issue and deliver to
such Initial Purchaser upon the written request of such Initial Purchaser, in
exchange (the "Private Exchange") for the Initial Securities held by such
Initial Purchaser, a like principal amount of debt securities of the Company
issued under the Indenture and identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States, but excluding
provisions relating to the matters described in Section 6 hereof) to the Initial
Securities (the "Private Exchange Securities"). The Initial Securities, the
Exchange Securities and the Private Exchange Securities are herein collectively
called the "Securities".
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date notice thereof is
mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York,
which may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer or
the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Securities validly tendered and not
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
-3-
(y) deliver to the Trustee for cancellation all the Initial Securities
so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to each
Holder of the Initial Securities, Exchange Securities or Private Exchange
Securities, as the case may be, equal in principal amount to the Initial
Securities of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Securities will not be subject
to the transfer restrictions set forth in the Indenture and that, to the extent
required by applicable law or otherwise, all the Securities will vote and
consent together on all matters as one class and that none of the Securities
will have the right to vote or consent as a class separate from one another on
any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Initial Securities surrendered in exchange therefor or, if no interest has been
paid on the Initial Securities, from the date of original issue of the Initial
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such Holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Initial Securities that were acquired as a result of market-making
activities or other trading activities and that it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Securities.
Notwithstanding any other provisions hereof, the Company will ensure that
(i) any Exchange Offer Registration Statement and any amendment thereto and any
prospectus forming part thereof any supplement thereto complies in all material
respects with the Securities Act and the rules and regulations thereunder, (ii)
any Exchange Offer Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (iii) any prospectus forming part of
any Exchange Offer Registration Statement, and any supplement to such
prospectus, does not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
-4-
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect a Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offer is not consummated within
210 days of the Issue Date, (iii) any Initial Purchaser so requests with respect
to the Initial Securities (or the Private Exchange Securities) not eligible to
be exchanged for Exchange Securities in the Registered Exchange Offer and held
by it following consummation of the Registered Exchange Offer or (iv) any Holder
(other than an Exchanging Dealer) is not eligible to participate in the
Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable (but in
no event more than 30 days after so required or requested pursuant to this
Section 2) file with the Commission and thereafter shall use its best
efforts to cause to be declared effective a registration statement (the
"Shelf Registration Statement" and, together with the Exchange Offer
Registration Statement, a "Registration Statement") on an appropriate form
under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined in Section 6 hereof) by the Holders
thereof from time to time in accordance with the methods of distribution
set forth in the Shelf Registration Statement and Rule 415 under the
Securities Act (hereinafter, the "Shelf Registration"); provided, however,
that no Holder (other than an Initial Purchaser) shall be entitled to have
the Securities held by it covered by such Shelf Registration Statement
unless such Holder agrees in writing to be bound by all the provisions of
this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years (or for such longer period
if extended pursuant to Section (j) below) from the date of its
effectiveness or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are no longer restricted securities (as defined in
Rule 144 under the Securities Act, or any successor rule thereof). The
Company shall be deemed not to have used its best efforts to keep the Shelf
Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities
covered thereby not being able to offer and sell such Securities during
that period, unless (x) such action is required by applicable law or (y)
such action is a material financing, acquisition or other corporate
transaction which the Board of Directors of the Company shall have
determined in good faith is in the best interests of the Company and the
holders of its outstanding Common Stock, and (A) the Company thereafter
promptly complies with the requirements of Section 3(j) hereof and
-5-
(B) the Company complies with its obligations, if any, to pay Additional
Interest (as defined in Section 6 hereof.)
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original
offering) is participating in the Registered Exchange Offer or the Shelf
Registration Statement, the Company shall use its best efforts to reflect
in each such document, when so filed with the Commission, such comments as
such Initial Purchaser reasonably may propose; (ii) include the information
set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement and
include the information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if
requested by an Initial Purchaser, include the information required by
Items 507 and 508 of Regulation S-K under the Securities Act, as
applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement; (iv) include within the prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
staff of the Commission with respect to the potential "underwriter" status
of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of Exchange Securities received by such broker-dealer in the Registered
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the Commission or
such positions or policies, in the reasonable judgment of the Initial
Purchasers based upon advice of counsel (which may be in house counsel),
represent the prevailing views of the staff of the Commission, and (v) in
the case
-6-
of a Shelf Registration Statement, include the names of the Holders who
propose to sell Securities pursuant to the Shelf Registration Statement, as
selling security holders.
(b) The Company shall give written notice to the Initial Purchasers,
the Holders of the Securities and any Participating Broker-Dealer from whom
the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offer (which notice
pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction
to suspend the use of the prospectus until the requisite changes have been
made):
(i) when the Registration Statement of any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in order
that the Registration Statement or the prospectus do not contain an
untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in light of the circumstances
under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder
so requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
-7-
(e) The Company shall deliver to each Exchanging Dealer and each
Initial Purchaser, and to any other Holder who so requests, without charge,
at least one copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if any Initial Purchaser or any such Holder requests, all
exhibits thereto (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including
each preliminary prospectus) included in the Shelf Registration Statement
and any amendment or supplement thereto as such person may reasonably
request. The Company consents, subject to the provisions of this Agreement,
to the use of the prospectus or any amendment or supplement thereto by each
of the selling Holders of the Securities in connection with the offering
and sale of the Securities covered by the prospectus, or any amendment or
supplement thereto, included in the Shelf Registration Statement.
(g) the Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Company consents,
subject to the provisions of this Agreement, to the use of the prospectus
or any amendment or supplement thereto by any Initial Purchaser, if
necessary, any Participating Broker-Dealer and such other persons required
to deliver a prospectus following the Registered Exchange Offer in
connection with the offering and sale of the Exchange Securities covered by
the prospectus, or any amendment or supplement thereto, included in such
Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities, pursuant to any
Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Securities included therein and their respective
counsel in connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky" laws of
such states of the United States as any Holder of the Securities reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the
Securities covered by such Registration Statement; provided, however, that
the Company shall not be required to (i) qualify generally to do business
in any jurisdiction where it is not then so qualified or (ii) take any
action which would subject it to general service of process or to taxation
in any jurisdiction where it is not then so subject.
(i) If The Depository Trust Company is at any time unwilling or unable
to continue as depository for permanent global securities, in fully
registered form, representing the Securities, the Company shall cooperate
with the Holders of the Securities
-8-
to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request a reasonable period of
time prior to sales of the Securities pursuant to such Registration
Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Company
is required to maintain an effective Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any
other required document so that, as thereafter delivered to Holders of the
Securities or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
If the Company notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made,
then the Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and the
period of effectiveness of the Shelf Registration Statement provided for in
Section 2(b) above and the Exchange Offer Registration Statement provided
for in Section 1 above shall each be extended by the number of days from
and including the date of the giving of such notice to and including the
date when the Initial Purchasers, the Holders of the Securities and any
known Participating Broker-Dealer shall have received such amended or
supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Initial
Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, and provide the applicable trustee with printed
certificates for the Initial Securities, the Exchange Securities or the
Private Exchange Securities, as the case may be, in a form eligible for
deposit with The Depository Trust Company.
(l) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make generally
available to its security holders (or otherwise provide in accordance with
Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11 (a) of the Securities Act, no later than 45 days
after the end of a 12 month period (or 90 days, if such period is a fiscal
year) beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of the Registration Statement, which
statement shall cover such 12-month period.
(m) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing
such changes, if
-9-
any, as shall be necessary for such qualification. In the event that such
qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to
the applicable provisions of the Indenture.
(n) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities as
the Company may from time to time reasonably require for inclusion in the
Shelf Registration Statement, and the Company may exclude from such
registration the Securities of any Holder that unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
(o) The Company shall enter into such customary agreements (including,
if requested, an underwriting agreement in customary form) and take all
such other action, if any, as any Holder of the Securities shall reasonably
request in order to facilitate the disposition of the Securities pursuant
to any Shelf Registration.
(p) In the case of any Shelf Registration, the Company shall (i) make
reasonably available for inspection by the Holders of the Securities, any
underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained
by the Holders of the Securities or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and (ii) cause the Company's officers, directors, employees,
accountants and auditors to supply all relevant information reasonably
requested by the Holders of the Securities or any such underwriter,
attorney, accountant or agent in connection with the Shelf Registration
Statement, in each case as shall be reasonably necessary to enable such
persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and, on behalf or the other parties, by one
counsel designated by and on behalf of such other parties as described in
Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if requested
by any Holder of Securities covered thereby, shall cause (i) its counsel to
deliver an opinion and updates thereof relating to the Securities in
customary form addressed to such Holders and the managing underwriters, if
any, thereof and dated, in the case of the initial opinion, the effective
date of such Shelf Registration Statement (it being agreed that the matters
to be covered by such opinion shall include, without limitation, the due
incorporation and good standing of the Company and its subsidiaries; the
qualification of the Company and its subsidiaries to transact business as
foreign corporations; the due authorization, execution and delivery of the
relevant agreements of the type referred to in Section 3(o) hereof, the
due authorization, execution, authentication and issuance, and the validity
and enforceability, of the applicable Securities, the absence of material
legal or governmental proceedings involving the Company and its
subsidiaries; the absence of governmental
-10-
approvals required to be obtained in connection with the Shelf Registration
Statement, the offering and sale of the applicable Securities, or any
agreement of the type referred to in Section 3(o) hereof; the compliance as
to form of such Shelf Registration Statement and any documents incorporated
by reference therein and of the Indenture with the requirements of the
Securities Act and the Trust Indenture Act, respectively; and, as of the
date of the opinion and as of the effective date of the Shelf Registration
Statement or most recent post-effective amendment thereto, as the case may
be, the absence from such Shelf Registration Statement and the prospectus
included therein, as then amended or supplemented, and from any documents
incorporated by reference therein of an untrue statement of a material fact
or the omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the
case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the
Exchange Act); (ii) its officers to execute and deliver all customary
documents and certificates and updates thereof requested by any
underwriters of the applicable Securities and (iii) its independent public
accountants to provide to the selling Holders of the applicable Securities
and any underwriter therefor a comfort letter in customary form and
covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested by any
Initial Purchaser or any known Participating Broker-Dealer, the Company
shall cause (i) its counsel to deliver to such Initial Purchaser or such
Participating Broker-Dealer a signed opinion in the form set forth in
Section 6(c) of the Purchase Agreement with such changes as are customary
in connection with the preparation of a Registration Statement and (ii) its
independent public accountants to deliver to such Initial Purchaser or such
Participating Broker-Dealer a comfort letter, in customary form, meeting
the requirements as to the substance thereof as set forth in Sections 6(a)
and (f) of the Purchase Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Initial Securities by Holders to the
Company (or to such other Person as directed by the Company) in exchange
for the Exchange Securities or the Private Exchange Securities, as the case
may be, the Company shall mark, or caused to be marked, on the Initial
Securities so exchanged, or otherwise caused to be noted on the Initial
Securities register, that such Initial Securities are being canceled in
exchange for the Exchange Securities or the Private Exchange Securities, as
the case may be; in no event shall the Initial Securities be marked as paid
or otherwise satisfied.
(t) The Company will use its best efforts to (a) if the Initial
Securities have been rated prior to the initial sale of such Initial
Securities, confirm such ratings will apply to the Securities covered by a
Registration Statement, or (b) if the Initial Securities were
-11-
not previously rated, cause the Securities covered by a Registration
Statement to be rated with the appropriate rating agencies, if so requested
by Holders of a majority in aggregate principal amount of Securities
covered by such Registration Statement, or by the managing underwriters, if
any.
(u) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an
underwriting syndicate of selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Rules") of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
Holder of such Securities or as an underwriter, a placement or sales agent
or a broker or dealer in respect thereof, or otherwise, the Company will
assist such broker-dealer in complying with the requirements of such Rules,
including, without limitation, by (i) if such Rules, including Rule 2720,
shall so require, engaging a "qualified independent underwriter" (as
defined in Rule 2720) to participate in the preparation of the Registration
Statement relating to such Securities, to exercise usual standards of due
diligence in respect thereto and, if any portion of the offering
contemplated by such Registration Statement is an underwritten offering or
is made through a placement or sales agent, to recommend the yield of such
Securities, (ii) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section 5
hereof and (iii) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of
the Rules.
(v) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 1
through 3 hereof, whether or not the Registered Exchange Offer or a Shelf
Registration is filed or becomes effective, and, in the event of a Shelf
Registration, shall (unless the Initial Purchasers are the sole Holders of the
Securities covered thereby) bear or reimburse the Holders of the Securities
covered thereby for the reasonable fees and disbursements of one firm of counsel
designated by the Holders of a majority in principal amount of the Initial
Securities covered thereby to act as counsel for the Holders of the Initial
Securities in connection therewith. The Company shall not bear any fees or
expenses incurred by the Initial Purchasers (including fees or expenses of
counsel for the Initial Purchasers) in connection with the Registered Exchange
Offer.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Holder of
the Securities, any participating Broker-Dealer and each person, if any,
who controls such Holder or such Participating Broker-Dealer within the
meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons
-12-
are referred to collectively as the "Indemnified Parties") from and against
any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of
the Securities) to which each Indemnified Party may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in a Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf Registration,
or arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
such loss, claim, damage, liability or action in respect thereof, provided,
however, that (i) the Company shall not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating
to a Shelf Registration in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein and, (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to a Shelf
Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or
Participating Broker-Dealer from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities concerned, to the
extent that a prospectus relating to such Securities was required to be
delivered by such Holder or Participating Broker-Dealer under the
Securities Act in connection with such purchase and any such loss, claims,
damage or liability of such Holder or Participating Broker-Dealer results
from the fact that there was not sent or given to such person, at or prior
to the written confirmation of the sale of such Securities to such person,
a copy of the final prospectus if the Company had previously furnished
copies thereof to such Holder or Participating Broker-Dealer; provided
further, however, that this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such Indemnified Party.
The Company shall also indemnify underwriters, their officers and directors
and each person who controls such underwriters within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities, if
requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act from and against any losses, claims, damages or liabilities or
any actions in respect thereof, to which the Company or any such
controlling person may become subject under the Securities Act, the
Exchange Act or
-13-
otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus relating to a Shelf Registration, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion therein; and,
subject to the limitation set forth immediately preceding this clause,
shall reimburse, as incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Holder may otherwise have to the
Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section
5 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
Section 5, notify the indemnifying party of the commencement thereof, but
the omission so to notify the indemnifying party will not, in any event,
relieve the indemnifying party from any obligations to any indemnified
party, except to the extent such indemnifying party is prejudiced thereby.
In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section 5 for any legal
or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the
defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release
of such indemnified party from all liability on any claims that are the
subject matter of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilites (or actions in
-14-
respect thereof) referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified
party on the other from the exchange of the Securities, pursuant to the
Registered Exchange Offer, or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as
any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Holder or such other
indemnified party, as the case may be, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilites
referred to in the first sentence of the subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any
other provision of this Section 5(d), the Holders of the Securities shall
not be required to contribute any amount in excess of the amount by which
the net proceeds received by such Holders from the sale of the Securities
pursuant to a Registration Statement exceeds the amount of damages which
such Holders have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this paragraph (d), each person, if any, who controls an indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the
same rights to contribution as such indemnified party, and each person, if
any, who controls the Company within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of
this Agreement or any investigation made by or on behalf of any indemnified
party.
6. Additional Interest Under Certain Circumstances.
(a) Additional interest (the "Additional Interest") with respect to
the Initial Securities shall be assessed as follows if any of the following
events occur (each such event in clauses (i) through (iii) below a
"Registration Default"):
-15-
(i) If by May 6, 1998, neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement has been filed
with the Commission;
(ii) If by August 4, 1998, neither the Registered Exchange Offer is
consummated nor, if required in lieu thereof, the Shelf Registration
Statement is declared effective by the Commission; or
(iii) If after either the Exchange Offer Registration Statement or
the Shelf Registration Statement is declared effective, (A) such
Registration Statement thereafter ceases to be effective during the periods
specified herein, or (B) such Registration Statement or the related
prospectus ceases to be usuable (except as permitted in paragragh (b)) in
connection with resales of Transfer Restricted Securities during the
periods specified herein because either (1) any event occurs as a result of
which the related prospectus forming part of such Registration Statement
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or (2) it shall be
necessary to amend such Registration Statement or supplement the related
prospectus to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Interest shall accrue on the Initial Securities over and
above the interest set forth in the title of the Securities from and
including the date on which any such Registration Default shall occur to
but excluding the date on which all such Registration Defaults have been
cured, at a rate of 0.50% per annum.
(b) A Registration Default referred to in Section 6(a)(iii)(B) hereof
shall be deemed not to have occurred and be continuing in relation to a
Shelf Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Shelf Registration Statement to
incorporate annual audited financial information with respect to the
Company where such post-effective amendment is not yet effective and needs
to be declared effective to permit Holders to use the related prospectus or
(y) other material events with respect to the Company that would need to be
described in such Shelf Registration Statement or the related prospectus
and, (ii) in the case of clause (y), the Company is proceeding promptly and
in good faith to amend or supplement such Shelf Registration Statement and
related prospectus to described such events; provided, however, that in any
case if such Registration Default occurs for a continuous period in excess
of 60 days. Additional Interest shall be payable in accordance with the
above paragraph from the day such Registration Default occurs until such
Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause (i),
(ii) or (iii) of Section 6(a) above will be payable in cash on the regular
interest payment dates with respect to the Initial Securities. The amount
of Additional Interest will be determined by
16
multiplying the applicable Additional Interest rate by the principal
amount of the Initial Securities, multiplied by a fraction, the numerator
to which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i)
the date on which such Transfer Restricted Security has been exchanged by a
person other than a broker-dealer for a freely transferable Exchange
Security in the Registered Exchange Offer, (ii) following the exchange by a
broker-dealer in the Registered Exchange Offer of a Initial Security for an
Exchange Security, the date on which such Exchange Security is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Initial Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which
such Initial Security is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act.
7. Rules 144 and 144A. The Company shall use its best efforts to file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Initial Securities, make
publicly available other information so long as necessary to permit sales of
their Securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any Holder of Initial Securities may reasonable
request, all to the extent required from time to time to enable such Holder to
sell Initial Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A ( including the
requirements of Rule 144(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Initial Securities identified to the
Company by the Initial Purchasers upon request. Upon the request of any Holder
of Initial Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements. Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Company
to register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted Securities
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering ("Managing Underwriters") will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities to be included in such offering.
No person may participate in any underwritten registration hereunder unless
such person (i) agrees to sell such person's Transfer Restricted Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
17
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except by the Company and the
written consent of the Holders of a majority in principal amount of the
Securities affected by such amendment, modification , supplement, waivers,
or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery; certified or
registered mail, return receipt requested; facsimile transmission; or air
courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212)325-8278
Attention: Transactions Advisory Group
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693
Attention: Howard S. Lanznar
(3) if to the Company, at its address as follows:
Unifi, Inc.
7201 West Friendly Avenue
Greensboro, North Carolina 27410
Attention: Willis C. Moore, III
18
with a copy to:
Smith Helms Mulliss & Moore, L.L.P.
201 North Tryon Street
Charlotte, North Carolina 28202
Attention: R. Douglas Harmon
All such notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and the day after delivery to an overnight air courier, if sent by
overnight air courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their
19
holdings of such Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(j) Submission to Jurisdiction. The Company hereby submits to the
non-exclusive jurisdiction of the federal and state courts in the Borough of
Manhattan in the city of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.
20
If the foregoing is in accordance with your understanding of our
agreement kindly sign and return to us one of counterparts hereof, whereupon it
will become a binding agreement between the Company and the Purchasers in
accordance with its terms.
Very truly yours,
UNIFI, Inc.
By: /s/ William C. Morris
-----------------------
Its: Senior V.P. and CFO
---------------------
CREDIT SUISSE FIRST BOSTON CORPORATION
/s/Andrew R. Taussig
- ---------------------
By: Andrew R. Taussig
Its: Managing Director
INVEMED ASSOCIATES, INC.
By: /s/ Cynthia N. Kepner
------------------------
Its: Exec. V.P.
----------------------
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The
Letter of Transmittal states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were
acquired by such broker-dealer as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of
180 days after the Expiration Date (as defined herein), it will make this
Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
A-1
ANNEX B
Each broker-dealer that receives Exchange Securities for its account in
exchange for Securities, where such Initial Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
B-1
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to the Exchange Offer and any
broker-dealer that participates in a distribution of such Exchange Securities
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal state that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Securities), other than commissions or concessions of any
broker-dealer, and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
C-1
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
---------------------------------------------
Address:
---------------------------------------------
--------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as result of market-making activities or other trading activities,
it acknowledges that it will deliver a prospectus in connection with any resale
of such Exchange Securities; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A NOMINEE OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") . THIS SECURITY IS NOT EXCHANGEABLE
FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Unless this certificate is presented by an authorized representative of the
Depositary to the issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of the Depositary
(and any payment is made to Cede & Co. or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
REGISTERED $
NUMBER
CUSIP
NUMBER 904677 AE 1 SEE REVERSE FOR CERTAIN DEFINITIONS
AND ADDITIONAL PROVISIONS
UNIFI, INC.
6 1/2% NOTE DUE 2008, SERIES B
UNIFI, INC., a company duly organized and existing under the laws of the
State of New York (herein called the "Company," which term includes any
successor Company under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to CEDE & CO., or its registered assigns,
the principal sum of ___________ MILLION DOLLARS on February 1, 2008, and to pay
interest on said principal sum, semi-annually in arrears on February 1 and
August 1 of each year, commencing August 1, 1998, at the rate of 6 1/2% per
annum. The interest so payable, and punctually paid or duly provided for, on any
interest payment date will be paid to the person in whose name this Note (or one
or more predecessor Notes evidencing all or a portion of the same debt as this
Note) is registered at the close of business on January 15 or July 15,
respectively, preceding such interest payment date. Interest shall be calculated
based on a 360-day year consisting of twelve 30-day months.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
at this place.
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee or an authenticating agent on behalf of the Trustee by
manual signature, this Note shall not be entitled to any benefit under such
Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by manual or facsimile signature under its corporate seal or a
facsimile thereof.
Attest: UNIFI, INC.
_____________________________ By:_________________________________
Secretary Willis C. Moore, III
Senior Vice President and
Chief Financial Officer
[CORPORATE SEAL]
2
CERTIFICATE OF AUTHENTICATION
The undersigned, as Trustee, certifies that this is one of the
Securities of the series designated therein referred to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
Dated: __________, 1998
By:___________________________________
Authorized Signatory
Title:________________________________
3
[Reverse Side of Note]
UNIFI, INC.
6 1/2% NOTE DUE 2008, SERIES B
This Note is one of a duly authorized series of Securities of the
Company unlimited in aggregate principal amount issued and to be issued under an
Indenture dated as of February 5, 1998 (herein called the "Indenture"), between
the Company and First Union National Bank (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights thereunder of the Company, the Trustee and the holders of
the Notes, and the terms upon which the Notes are, and are to be, authenticated
and delivered. This Note is one of the Notes designated as the Company's 6 1/2%
Notes due 2008, Series B (herein called the "Notes"), which are unsecured
obligations of the Company and are limited in aggregate principal amount to
$250,000,000. First Union National Bank initially has been appointed Security
Registrar, Authenticating Agent and Paying Agent in connection with the Notes.
The summary of the terms of this Note contained herein does not purport
to be complete and is qualified by reference to the Indenture. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control. All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
The Notes are redeemable in whole or in part at any time at the option
of the Company at a redemption price, plus accrued interest to the date of
redemption, equal to the greater of (i) 100% of the principal amount of such
Notes or (ii) the sum of the present values of the remaining scheduled payments
of principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the applicable Treasury Yield (as defined in the Indenture) plus 20 basis
points.
"Treasury Yield" means, with respect to any redemption date applicable
to the Notes, the rate per annum equal to the semiannual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means, with respect to the Notes, the United
States Treasury security selected by an Independent Investment Banker as having
a maturity comparable to the remaining term of the Notes that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Independent Investment Banker" means, with respect to the Notes offered
hereby, Credit Suisse First Boston Corporation or, if such firm is unwilling or
unable to select the applicable
4
Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date
applicable to the Notes, (i) the average of the applicable Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such applicable Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue for the Notes (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means, with respect to the Notes offered
hereby, Credit Suisse First Boston Corporation; PROVIDED HOWEVER, that if the
foregoing shall cease to be a primary United States Government securities dealer
in New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
Notice of redemption will be sent by first-class mail at least 30 days
but not more than 60 days before the redemption date to each holder whose Notes
are to be redeemed at the holder's registered address. On and after the
redemption date, interest ceases to accrue on Notes or portions thereof called
for redemption.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note may be registered on the Security Register
of the Company relating to the Notes, upon surrender of this Note for
registration of transfer at the office or agency of the Company designated by it
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee or
the Security Registrar duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in fully registered form without interest
coupons in denominations of $1,000 and any integral multiple in excess thereof.
As provided in the Indenture, and subject to certain limitations therein set
forth, Notes are exchangeable for a like aggregate principal amount of Notes of
different authorized denominations, as requested by the holder surrendering the
same.
5
The principal of and interest on the Notes are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the office or agency of the
Company in New York, New York or such other places that the Company shall
designate as provided in the Indenture; PROVIDED, HOWEVER, that interest may be
paid, at the option of the Company, by check mailed to the person entitled
thereto at his address last appearing on the Security Register of the Company
relating to the Notes. Any interest not punctually paid or duly provided for
shall be payable as provided in the Indenture.
If any interest payment date or maturity date for a Note falls on a day
that is not a Business Day, the interest payment date or maturity date will be
the following day that is a Business Day, and the payment of interest or
principal will be made on such next Business Day as if it were made on the date
such payment was due, and no additional interest will accrue on the amount so
payable for the period from and after such interest payment date or maturity
date.
No service charge will be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the absolute owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not this Note be overdue, and neither the Company, the Trustee nor
any such agent shall be affected by notice to the contrary.
If an Event of Default (as defined in the Indenture) shall occur with
respect to the Notes, the principal of all the Notes may be declared due and
payable in the manner and with the effect provided in the Indenture. Upon an
Event of Default, the Depositary will exchange the Global Security for
certificated notes in definitive form, which it will distribute to its
Participants and which will bear the legends appearing on the face of this Note.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Notes under the Indenture at any
time by the Company with the consent of the holders of not less than a majority
of the aggregate principal amount of the Notes then outstanding and all other
Securities then outstanding issued under the Indenture and affected by such
amendment and modification. The Indenture also contains provisions permitting
the holders of a majority in aggregate principal amount of the Notes then
outstanding and all other Securities then outstanding issued under the Indenture
and affected thereby, on behalf of the holders of all such Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the holder of this Note shall be conclusive and binding upon such
holder and upon all future holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
Without the consent of any holder of a Note, the Indenture or the Notes may be
amended or supplemented
6
to cure any ambiguity, defect or inconsistency or to make any change that would
not adversely affect the legal rights or benefits to the holders of the Notes or
that does not adversely affect the legal rights under the Indenture of any such
holder, including certain other such changes specified in the Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or any predecessor or successor Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
Subject to certain conditions set forth in the Indenture, the Company at
any time may terminate some or all of the obligations of the Company under the
Notes and the Indenture if the Company irrevocably deposits in trust with the
Trustee cash or U.S. Government Obligations, or a combination thereof, for the
payment of principal and interest on the Notes in accordance with the terms of
the Indenture.
The Notes shall be dated the date of their authentication.
The Notes are being issued by means of a book-entry system with no
physical distribution of certificates to be made except as provided in the
Indenture. The book-entry system maintained by the Depositary will evidence
ownership of the Notes, with transfers of ownership effected on the records of
the Depositary and its participants pursuant to rules and procedures established
by the Depositary and its participants. The Company will recognize Cede & Co.,
as nominee of the Depositary, while the registered owner of the Notes, as the
owner of the Notes for all purposes, including payment of principal and
interest, notices and voting. Transfer of principal and interest to participants
of the Depositary will be the responsibility of the Depositary, and transfer of
principal and interest to beneficial owners of the Notes by participants of the
Depositary will be the responsibility of such participants and other nominees of
such beneficial owners. The Company will not be responsible or liable for such
transfers or payments or for maintaining, supervising or reviewing the records
maintained by the Depositary, its participants or persons acting through such
participants.
Transfers of Notes in Europe may be effected through the facilities of
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear system, in accordance with the rules and procedures established by
such depositary.
7
THE INDENTURE, THE REGISTRATION RIGHTS AGREEMENT AND THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
----------
8
The following abbreviations, when used in the inscription on the face of
the within Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT -- _________ Custodian _________
(Cust) (Minor)
under Uniform Gifts to Minors
Act __________ (State)
Additional abbreviations may also be used though not in
the above list.
----------
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Name and Address of Assignee, including zip code, must be printed or
typewritten.)
_____________________________________________________________________ the within
Note, and all rights thereunder, hereby irrevocably constituting and appointing
_____________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated:__________________
_________________________________________________
NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Note in every particular, without
alteration or enlargement or any change whatever and must be guaranteed.
9
EXHIBIT 5.1
SMITH HELMS MULLISS & MOORE, L.L.P.
April 2, 1998
Unifi, Inc.
7201 West Friendly Avenue
Greensboro, North Carolina 27419
RE: REGISTRATION STATEMENT ON FORM S-4 RELATED TO OFFER TO EXCHANGE
6 1/2% NOTES DUE 2008,
SERIES B, FOR ANY AND ALL 6 1/2% NOTES DUE 2008
Ladies and Gentlemen:
We have acted as special counsel to Unifi, Inc., a New York corporation
(the "Corporation"), in connection with the registration under the Securities
Act of 1933, as amended, pursuant to the Registration Statement on Form S-4 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission") on April 2, 1998, of $250,000,000 aggregate principal amount of
the Corporation's 6 1/2% Notes due 2008, Series B (the "New Notes"). The New
Notes are to be offered pursuant to an exchange offer (the "Exchange Offer") for
a like principal amount of the Corporation's issued and outstanding 6 1/2% Notes
due 2008 (the "Existing Notes") and are issued as a single series under an
Indenture, dated as of February 5, 1998, as supplemented by resolutions of the
Executive Committee of the Corporation's Board of Directors dated March 30, 1998
(the "Indenture"), by and between the Corporation and First Union National Bank,
as trustee (the "Trustee"). This opinion letter is Exhibit 5.1 to the
Registration Statement.
As such counsel, we have examined and are familiar with originals or
photocopies or certified copies of such records of the Corporation, certificates
of officers of the Corporation, and public officials, and such other documents
as we have deemed relevant or necessary as the basis for the opinions set forth
below. In such examination, we have assumed the legal capacity of natural
persons, the genuineness of all signatures on, and the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified copies or photocopies and the
authenticity of the originals of such copies. We have relied upon statements of
fact contained in documents that we have examined in connection with our
representation of the Corporation. We have also relied on an opinion of counsel
licensed to practice law in the State of New York as to matters of law in that
State.
Based on the foregoing, and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth below, we are of the
opinion that when (i) the Registration Statement becomes effective and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended,
and (ii) the New Notes have been duly executed by the Corporation and
authenticated by the Trustee in accordance with the provisions of the Indenture
and have been delivered against receipt of the Existing Notes in accordance with
the terms of the Exchange Offer, then the New Notes will be valid and binding
obligations of the Corporation entitled to the benefits of the Indenture and
enforceable against the Corporation in accordance with their terms, except to
the extent that the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
now or hereafter in effect relating to creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
We are licensed to practice law in the State of North Carolina and the
United States of America. In rendering this opinion, we are not expressing an
opinion as to the laws of any jurisdiction other than the State of North
Carolina and the United States of America, and we assume no responsibility as to
the applicability of the laws of any other jurisdiction.
We hereby consent (1) to be named in the Registration Statement and in the
prospectus contained therein as attorneys who passed upon the legality of the
New Notes and (2) to the filing of a copy of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ SMITH HELMS MULLISS & MOORE, L.L.P.
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND COMPUTATION OF PROFORMA RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN 000, EXCEPT RATIOS)
SIX
MONTHS
FISCAL YEAR ENDED ENDED
----------------------------------------------------------------------- -------
PROFORMA
6/27/93 6/26/94 6/25/95 6/30/96 6/29/97 6/29/97 (1) 12/28/97
-------- -------- -------- -------- -------- ----------- -------
Net income........................ $136,644 $ 76,492 $116,171 $ 72,479 $115,665 $ 115,665 $55,908
Add: Income tax expense........... 82,924 60,344 69,439 44,939 58,617 58,617 30,683
Extraordinary loss........... -- -- -- 5,898 -- -- --
Cumulative effect of
change in accounting...... -- -- -- -- -- -- 4,636
-------- -------- -------- -------- -------- ----------- -------
Consolidated pretax income from
continuing operations........... 219,568 136,836 185,610 123,316 174,282 174,282 91,227
Add: Losses in less-than-50%
equity investees with no debt
guarantees...................... 1,026 -- -- -- 399 399 593
Less: Share of undistributed
pre-tax earnings in
less-than-50%-owned equity
affiliates...................... -- (490) (649) -- -- -- (9,730)
Add: Interest charges............. 26,364 18,926 16,242 15,789 13,630 13,630 10,101
Less: Interest capitalized during
the period...................... -- -- -- -- (813) (813) (3,076)
-------- -------- -------- -------- -------- ----------- -------
Earnings as defined............. $246,958 $155,272 $201,203 $139,105 $187,498 $ 187,498 $89,115
-------- -------- -------- -------- -------- ----------- -------
-------- -------- -------- -------- -------- ----------- -------
Interest charges.................. $ 26,364 $ 18,926 $ 16,242 $ 15,789 $ 12,817 $ 14,334 $ 7,025
Interest capitalized during the
period.......................... -- -- -- -- 813 1,082 3,076
-------- -------- -------- -------- -------- ----------- -------
Fixed charges................... $ 26,364 $ 18,926 $ 16,242 $ 15,789 $ 13,630 $ 15,416 $10,101
-------- -------- -------- -------- -------- ----------- -------
-------- -------- -------- -------- -------- ----------- -------
Ratio of earnings to fixed
charges....................... 9.4x 8.2x 12.4x 8.8x 13.8x 12.2x 8.8x
-------- -------- -------- -------- -------- ----------- -------
-------- -------- -------- -------- -------- ----------- -------
PROFORMA
12/28/97 (1)
------------
Net income........................ $ 55,908
Add: Income tax expense........... 30,683
Extraordinary loss........... --
Cumulative effect of
change in accounting...... 4,636
------------
Consolidated pretax income from
continuing operations........... 91,227
Add: Losses in less-than-50%
equity investees with no debt
guarantees...................... 593
Less: Share of undistributed
pre-tax earnings in
less-than-50%-owned equity
affiliates...................... (9,730)
Add: Interest charges............. 10,101
Less: Interest capitalized during
the period...................... (3,076)
------------
Earnings as defined............. $ 89,115
------------
------------
Interest charges.................. $ 7,423
Interest capitalized during the
period.......................... 3,485
------------
Fixed charges................... $ 10,908
------------
------------
Ratio of earnings to fixed
charges....................... 8.2x
------------
------------
- ---------------
(1) Utilizing interest rate of 6.704%.
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Unifi, Inc. for the
registration of $250,000,000 6 1/2% Notes Due 2008 and to the incorporation by
reference therein of our report dated July 15, 1997, with respect to the
consolidated financial statements of Unifi, Inc. incorporated by reference in
its Annual Report (Form 10-K) for the year ended June 29, 1997 and the related
financial statement schedule included therein, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Greensboro, North Carolina
March 31, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF
1939, AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)_______
-------------------------
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 56-0900030
(State of incorporation if I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
-------------
(Name, address and telephone number, including
area code, of trustee's agent for service)
UNIFI, INC.
(Exact name of obligor as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation or organization)
11-2165495
(I.R.S. employer identification no.)
Willis C. Moore, III
Senior Vice President and Chief Executive Officer
7201 West Friendly Avenue
Greensboro, North Carolina 27410
(336) 316-5664
(Address, including zip code, of principal executive offices)
---------------------------------
US $250,000,000
UNIFI, Inc.
6 1/2% Notes due 2008, Series B
(Title of the indenture securities)
-----------------------------------
Item 1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with the obligor and underwriters.
If the obligor or any underwriter for the obligor is an affiliate of
the trustee, describe each such affiliation.
None. Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer this Item 2, the
answer to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
Items 3-15.
Not applicable
Item 16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank as
now in effect, which contain the authority to commence business and a grant of
powers to exercise corporate trust powers.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents specified in
exhibits (1) or (2) above.
4. A copy of the existing By-laws of First Union National Bank, or
instruments corresponding thereto.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included on signature page of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
8. Inapplicable.
2
9. Inapplicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union National Bank, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina, on the 30th day of March, 1998.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ S. Schwartz
Name: Shannon Schwartz
Title: Assistant Vice President
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended,
and in connection with the proposed issuance by UNIFI, Inc. of its 6 1/2 Notes
Due 2008, Series B, First Union National Bank as the trustee herein named,
hereby consents that reports of examinations of said Trustee by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ S. Schwartz
----------------------------------
Name: Shannon Schwartz
Title: Assistant Vice President
Dated: March 30, 1998
3
ARTICLES OF ASSOCIATION OF
FIRST UNION NATIONAL BANK
Charter No. 22693
As Restated Effective February 26, 1998
Charter No. 22693
FIRST UNION NATIONAL BANK
ARTICLES OF ASSOCIATION
-----------------------
(as restated effective February 26, 1998)
For the purpose of organizing an Association to carry on the business of banking
under the laws of the United States, the undersigned do enter into the following
Articles of Association:
FIRST. The title of this Association shall be FIRST UNION NATIONAL BANK.
SECOND. The main office of the Association shall be in Charlotte, County of
Mecklenburg, State of North Carolina. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not less
than five nor more than twenty-five directors, the exact number of directors
within such minimum and maximum limits to be fixed and determined from time to
time by resolution of a majority of the full Board of Directors or by resolution
of the shareholders at any annual or special meeting thereof. Unless otherwise
provided by the laws of the United States, any vacancy in the Board of Directors
for any reason, including an increase in the number thereof, may be filled by
action of the Board of Directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the Board of
Directors may designate, on the day of each year specified therefor in the
By-Laws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the Board of
Directors.
Nominations for election to the Board of Directors may be made by the Board
of Directors or by any stockholder of any outstanding class of capital stock of
the bank entitled to vote for election of directors. Nominations, other than
those made by or on behalf of the existing management of the bank, shall be made
in writing and shall be delivered or mailed to the President of the bank and to
the Comptroller of the Currency, Washington, D.C., not less than 14 days nor
more than 50 days prior to any meeting of stockholders called for the election
of directors, provided, however, that if less than 21 days' notice of the
meeting is given to shareholders, such nomination shall be mailed or delivered
to the President of the Bank and to the Comptroller of the Currency not later
than the close of business on the seventh day following the day on which the
notice of meeting was mailed. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the total number of shares of capital stock of the bank that will
be voted for each proposed nominee; (d) the name and residence address of the
notifying shareholder; and (e) the number of shares of capital stock of the bank
owned by the notifying shareholder. Nominations not made in accordance herewith
may, in his discretion, be disregarded by the Chairman of the meeting, and upon
his instructions, the vote tellers may disregard all votes cast for each such
nominee.
FIFTH.
(a) General. The amount of capital stock of this Association shall be (I)
25,000,000 shares of common stock of the par value of twenty dollars ($20.00)
each (the "Common Stock") and (ii) 160,540 shares of preferred stock of the par
value of one dollar ($ 1. 00) each (the "Non-Cumulative Preferred Stock"),
having the rights, privileges and preferences set forth below, but said capital
stock may be increased or decreased from time to time in accordance with the
provisions of the laws of the United States.
(b) Terms of the Non-Cumulative Preferred Stock.
1. General. Each share of Non-Cumulative Preferred Stock shall be identical
in all respects with the other shares of Non-Cumulative Preferred Stock. The
authorized number of shares of Non-Cumulative Preferred Stock may from time
to time be increased or decreased (but not below the number then
outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred
Stock redeemed by the Association shall be canceled and shall revert to
authorized but unissued shares of Non-Cumulative Preferred Stock.
2. Dividends.
(a) General. The holders of Non-Cumulative Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors, but only out of funds legally available therefor,
non-cumulative cash dividends at the annual rate of $83.75 per share,
and no more, payable quarterly on the first days of December, March,
June and September, respectively, in each year with respect to the
quarterly dividend period (or portion thereof) ending on the day
preceding such respective dividend payment date, to shareholders of
record on the respective date, not exceeding fifty days preceding such
dividend payment date, fixed for that purpose by the Board of Directors
in advance of payment of each particular dividend. Notwithstanding the
foregoing, the cash dividend to be paid on the first dividend payment
date after the initial issuance of Non-Cumulative Preferred Stock and
on any dividend payment date with respect to a partial dividend period
shall be $83.75 per share multiplied by the fraction produced by
dividing the number of days since such initial issuance or in such
partial dividend period, as the case may be, by 360.
(b) Non-cumulative Dividends. Dividends on the shares of Non-cumulative
Stock shall not be cumulative and no rights shall accrue to the holders
of shares of Non-Cumulative Preferred Stock by reason of the fact that
the Association may fail to declare or pay dividends on the shares of
Non-Cumulative Preferred Stock in any amount in any quarterly dividend
period, whether or not the earnings of the Association in any quarterly
dividend period were sufficient to pay such dividends in whole or in
part, and the Association shall have no obligation at any time to pay
any such dividend.
(c) Payment of Dividends. So long as any share of Non-Cumulative
Preferred Stock remains outstanding, no dividend whatsoever shall be
paid or declared and no distribution made on any junior stock other
than a dividend payable in junior stock, and no shares of junior stock
shall be purchased, redeemed or otherwise acquired for consideration by
the Association, directly or indirectly (other than as a result of a
reclassification of junior stock, or the exchange or conversion of one
junior stock for or into another junior stock, or other than through
the use of the proceeds of a substantially contemporaneous sale of
other junior stock), unless all dividends on all shares of
non-cumulative Preferred Stock and non-cumulative Preferred Stock
ranking on a parity as to dividends with the shares of Non-Cumulative
Preferred Stock for the most recent dividend period ended prior to the
date of such payment or declaration shall have been paid in full and
all dividends on all shares of cumulative Preferred Stock ranking on a
parity as to dividends with the shares of Non-Cumulative Stock
(notwithstanding that dividends on such stock are cumulative) for all
past dividend periods shall have been paid in full. Subject to the
foregoing, and not otherwise, such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors may be
declared and paid on any junior stock from time to time out of any
funds legally available therefor, and the Non-Cumulative Preferred
Stock shall not be entitled to participate in any such dividends,
whether payable in cash, stock or otherwise. No dividends shall be paid
or declared upon any shares of any class or series of stock of the
Association ranking on a parity (whether dividends on such stock are
cumulative or non-cumulative) with the Non-Cumulative Preferred Stock
in the payment of dividends for any period unless at or prior to the
time of such payment or declaration all dividends payable on the
Non-cumulative Preferred Stock for the most recent dividend period
ended prior to the date of such payment or declaration shall have been
paid in full. When dividends are not paid in full, as aforesaid, upon
the Non-Cumulative Preferred Stock and any other series of Preferred
Stock ranking on a parity as to dividends (whether dividends on such
stock are cumulative or non-cumulative) with the Non-Cumulative
Preferred Stock, all dividends declared upon the Non-Cumulative
Preferred Stock and any other series of Preferred Stock ranking on a
parity as to dividends with the Non-Cumulative Preferred Stock shall be
declared pro rata so that the amount of dividends declared per share on
the Non-cumulative Preferred Stock and such other Preferred Stock shall
in all cases bear to each other the same ratio that accrued dividends
per share on the Non-Cumulative Preferred Stock (but without any
accumulation in respect of any unpaid dividends for prior dividend
periods on the shares of Non-Cumulative Stock) and such other Preferred
Stock bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or
payments on the Non-Cumulative Preferred Stock which may be in arrears.
3. Voting. The holders of Non-Cumulative Preferred Stock shall not have
any right to vote for the election of directors or for any other
purpose.
4. Redemption.
(a) Optional Redemption. The Association, at the option of the Board of
Directors, may redeem the whole or any part of the shares of
Non-Cumulative Preferred Stock at the time outstanding, at any time or
from time to time after the fifth anniversary of the date of original
issuance of the Non-Cumulative Preferred Stock, upon notice given as
hereinafter specified, at the redemption price per share equal to
$1,000 plus an amount equal to the amount of accrued and unpaid
dividends from the immediately preceding dividend payment date (but
without any accumulation for unpaid dividends for prior dividend
periods on the shares of Non-Cumulative Preferred Stock) to the
redemption date.
(b) Procedures. Notice of every redemption of shares of Non-Cumulative
Preferred Stock shall be mailed by first class mail, postage prepaid,
addressed to the holders of record of the shares to be redeemed at
their respective last addresses as they shall appear on the books of
the Association. Such mailing shall be at least 10 days and not more
than 60 days prior to the date fixed for redemption. Any notice which
is mailed in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the shareholder receives such
notice, and failure duly to give such notice by mail, or any defect in
such notice, to any holder of shares of Non-Cumulative Preferred Stock
designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares of Non-Cumulative
Preferred Stock.
In case of redemption of a part only of the shares of Non-Cumulative
Preferred Stock at the time outstanding the redemption may be either
pro rata or by lot or by such other means as the Board of Directors of
the Association in its discretion shall determine. The Board of
Directors shall have full power and authority, subject to the
provisions herein contained, to prescribe the terms and conditions upon
which shares of the Non-Cumulative Preferred Stock shall be redeemed
from time to time.
If notice of redemption shall have been duly given, and, if on or
before the redemption date specified therein, all funds necessary for
such redemption shall have been set aside by the Association, separate
and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares called for redemption, so as to be and
continue to be available therefor, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, all shares so called for redemption shall
no longer be deemed outstanding on and after such redemption date, and
all rights with respect to such shares shall forthwith on such
redemption date cease and terminate, except only the right of the
holders thereof to, receive the amount payable on redemption thereof,
without interest.
If such notice of redemption shall have been duly given or if the
Association shall have given to the bank or trust company hereinafter
referred to irrevocable authorization promptly to give such notice,
and, if on or before the redemption date specified therein, the funds
necessary for such redemption shall have been deposited by the
Association with such bank or trust company in trust for the pro rata
benefit of the holders of the shares called for redemption, then,
notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from and
after the time of such deposit, all shares so called for redemption
shall no longer be deemed to be outstanding and all rights with respect
to such shares shall forthwith cease and terminate, except only the
right of the holders thereof to receive from such bank or trust company
at any time after the time of such deposit the funds so deposited,
without interest. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of
America or any state thereof, shall have capital, surplus and undivided
profits aggregating at least $50,000,000 according to its last
published statement of condition, and shall be identified in the notice
of redemption. Any interest accrued on such funds shall be paid to the
Association from time to time. In case fewer than all the shares of
Non-Cumulative Preferred Stock represented by a stock certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
Any funds so set aside or deposited, as the case may be, and unclaimed
at the end of the relevant escheat period under applicable state law
from such redemption date shall, to the extent permitted by law, be
released or repaid to the Association, after which repayment the
holders of the shares so called for redemption shall look only to the
Association for payment thereof.
5. Liquidation.
(a) Liquidation Preference. In the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Association, the
holders of Non-cumulative Preferred Stock shall be entitled, before any
distribution or payment is made to the holders of any junior stock, to
be paid in full an amount per share equal to an amount equal to $1,000
plus an amount equal to the amount of accrued and unpaid dividends per
share from the immediately preceding dividend payment date (but without
any accumulation for unpaid dividends for prior dividend periods on the
shares of Non-cumulative Preferred Stock) per share to such
distribution or payment date (the "liquidation amount").
In the event of any involuntary liquidation, dissolution or winding up
of the affairs of the Association, then, before any distribution or
payment shall be made to the holders of any junior stock, the holders
of Non-Cumulative Preferred Stock shall be entitled to be paid in full
an amount per share equal to the liquidation amount.
If such payment shall have been made in full to all holders of shares
of Non-Cumulative Preferred Stock, the remaining assets of the
Association shall be distributed among the holders of junior stock,
according to their respective rights and preferences and in each case
according to their respective numbers of shares.
(b) Insufficient Assets. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available
assets of the Association are insufficient to pay such liquidation
amount on all outstanding shares of Non-cumulative Preferred Stock,
then the holders of Non-Cumulative Preferred Stock shall share ratably
in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled.
(c) Interpretation. For the purposes of this paragraph 5, the
consolidation or merger of the Association with any other corporation
or association shall not be deemed to constitute a liquidation,
dissolution or winding up of the Association.
6. Preemptive Rights. The Non-Cumulative Preferred Stock is not entitled
to any preemptive, subscription, conversion or exchange rights in
respect of any securities of the Association.
7. Definitions. As used herein with respect to the Non-Cumulative
Preferred Stock, the following terms shall have the following meanings:
(a) The term "junior stock" shall mean the Common Stock and any other
class or series of shares of the Association hereafter authorized over
which the Non-Cumulative Preferred Stock has preference or priority in
the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Association.
(b) The term "accrued dividends", with respect to any share of any
class or series, shall mean an amount computed at the annual dividend
rate for the class or series of which the particular share is a part,
from, if such share is cumulative, the date on which dividends on such
share became cumulative to and including the date to which such
dividends are to be accrued, less the aggregate amount of all dividends
theretofore paid thereon and, if such share is noncumulative, the
relevant date designated to and including the date to which such
dividends are accrued, less the aggregate amount of all dividends
theretofore paid with respect to such period.
(c) The term "Preferred Stock" shall mean all outstanding shares of all
series of preferred stock of the Association as defined in this Article
Fifth of the Articles of Association, as amended, of the Association.
8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock,
or any interest therein, may be sold, pledged, transferred or otherwise
disposed of without the prior written consent of the Association. The
foregoing restriction shall be stated on any certificate for any shares
of Non-Cumulative Preferred Stock.
9. Additional Rights. The shares of Non-Cumulative Preferred Stock shall
not have any relative, participating, optional or other special rights
and powers other than as set forth herein.
SIXTH. The Board of Directors shall appoint one of its members President of
this Association, who shall be Chairman of the Board, unless the Board appoints
another director to be the Chairman. The Board of Directors shall have the power
to appoint one or more Vice Presidents; and to appoint a cashier or such other
officers and employees as may be required to transact the business of this
Association.
The Board of Directors shall have the power to define the duties of the
officers and employees of the Association, to fix the salaries to be paid to
them; to dismiss them, to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all By-Laws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the location
of the main office to any other place within the limits of Charlotte, North
Carolina, without the approval of the shareholders but subject to the approval
of the Comptroller of the Currency; and shall have the power to establish or
change the location of any branch or branches of the Association to any other
location, without the approval of the shareholders but subject to the approval
of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time,
place, and purpose of every annual and special meeting of the shareholders shall
be given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
TENTH. Each director and executive officer of this Association shall be
indemnified by the association against liability in
any proceeding (including without limitation a proceeding brought by or on
behalf of the Association itself) arising out of his status as such or his
activities in either of the foregoing capacities, except for any liability
incurred on account of activities which were at the time taken known or believed
by such person to be clearly in conflict with the best interests of the
Association. Liabilities incurred by a director or executive officer of the
Association in defending a proceeding shall be paid by the Association in
advance of the final disposition of such proceeding upon receipt of an
undertaking by the director or executive officer to repay such amount if it
shall be determined, as provided in the last paragraph of this Article Tenth,
that he is not entitled to be indemnified by the Association against such
liabilities.
The indemnity against liability in the preceding paragraph of this Article
Tenth, including liabilities incurred in defending a proceeding, shall be
automatic and self-operative.
Any director, officer or employee of this Association who serves at the
request of the Association as a director, officer, employee or agent of a
charitable, not-for-profit, religious, educational or hospital corporation,
partnership, joint venture, trust or other enterprise, or a trade association,
or as a trustee or administrator under an employee benefit plan, or who serves
at the request of the Association as a director, officer or employee of a
business corporation in connection with the administration of an estate or trust
by the Association, shall have the right to be indemnified by the Association,
subject to the provisions set forth in the following paragraph of this Article
Tenth, against liabilities in any manner arising out of or attributable to such
status or activities in any such capacity, except for any liability incurred on
account of activities which were at the time taken known or believed by such
person to be clearly in conflict with the best interests of the Association, or
of the corporation, partnership, joint venture, trust, enterprise, Association
or plan being served by such person.
In the case of all persons except the directors and executive officers of
the Association, the determination of whether a person is entitled to
indemnification under the preceding paragraph of this Article Tenth shall be
made by and in the sole discretion of the Chief Executive Officer of the
Association. In the case of the directors and executive officers of the
Association, the indemnity against liability in the preceding paragraph of this
Article Tenth shall be automatic and self-operative.
For purposes of this Article Tenth of these Articles of Association only,
the following terms shall have the meanings indicated:
(a) "Association" means First Union National Bank and its direct and
indirect wholly-owned subsidiaries.
(b) "Director" means an individual who is or was a director of the
Association.
(c) "Executive officer" means an officer of the Association who by
resolution of the Board of Directors of the Association has been determined to
be an executive officer of the Association for purposes of Regulation O of the
Federal Reserve Board.
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses, including counsel fees and expenses,
incurred with respect to a proceeding.
(e) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(f) "Proceeding" means any threatened, pending, or completed claim,
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
The Association shall have no obligation to indemnify any person for an
amount paid in settlement of a proceeding unless the Association consents in
writing to such settlement.
The right to indemnification herein provided for shall apply to persons who
are directors, officers, or employees of banks or other entities that are
hereafter merged or otherwise combined with the Association only after the
effective date of such merger or other combination and only as to their status
and activities after such date.
The right to indemnification herein provided for shall inure to the benefit
of the heirs and legal representatives of any person entitled to such right.
No revocation of, change in, or adoption of any resolution or provision in
the Articles of Association or By-laws of the Association inconsistent with,
this Article Tenth shall adversely affect the rights of any director, officer,
or employee of the Association with respect to (i) any proceeding commenced or
threatened prior to such revocation, change, or adoption, or (ii) any proceeding
arising out of any act or omission occurring prior to such revocation, change,
or adoption, in either case, without the
written consent of such director, officer, or employee.
The rights hereunder shall be in addition to and not exclusive of any other
rights to which a director, officer, or employee of the Association may be
entitled under any statute, agreement, insurance policy, or otherwise.
The Association shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, or employee of the
Association, or is or was serving at the request of the Association as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, trade association, employee benefit plan, or other enterprise,
against any liability asserted against such director, officer, or employee in
any such capacity, or arising out of their status as such, whether or not the
Association would have the power to indemnify such director, officer, or
employee against such liability, excluding insurance coverage for a formal order
assessing civil money penalties against an Association director or employee.
Notwithstanding anything to the contrary provided herein, no person shall
have a right to indemnification with respect to any liability (i) incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by an individual or individuals in the
form of payments to the Association, (ii) to the extent such person is entitled
to receive payment therefor under any insurance policy or from any corporation,
partnership, joint venture, trust, trade association, employee benefit plan, or
other enterprise other than the Association, or (iii) to the extent that a court
of competent jurisdiction determines that such indemnification is void or
prohibited under state or federal law.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of holders of a
greater amount of stock is required by law, and in that case, by the vote of the
holders of such greater amount.
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Bank Organization and Structure, 3-8
Washington, D.C. 20219-0001
February 20, 1998 OCC Control Nr. 97-ML-02-0050
Mr. Robert L. Andersen
Assistant General Counsel
First Union Corporation
301 South College Street
Charlotte, North Carolina 28288-0630
Dear Mr. Andersen:
This letter is the official certification of the Office of the Comptroller of
the Currency for the merger of First Union National Bank, Charlotte, North
Carolina, Charter Nr. 15650, into and under the charter and title of First Union
National Bank, Avondale, Pennsylvania, Charter Nr. 22693, with the resulting
bank located in Charlotte, North Carolina, effective February 26, 1998.
This letter also serves as the official authorization for First Union National
Bank, Charter Nr. 22693, to operate its former head office in Avondale,
Pennsylvania as a branch at the following location:
Popular Name : Avondale Branch
Certificate Nr : 111588A
Address : 102 Pennsylvania Avenue
Avondale, Pennsylvania
Branch authorizations previously granted to First Union National Bank, Charter
Nr. 15650 automatically convey to the resulting bank and will not be reissued.
Please furnish a copy of this certificate to personnel responsible for branch
administration. In the event of questions, please contact Senior Licensing
Analyst Cindy L. Hausch-Booth at (202) 874-5060.
Sincerely,
/s/ Richard T. Erb
Richard T. Erb
Licensing Manager [SEAL OF THE COMPTROLLER
OF THE CURRENCY]
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Bank Organization and Structure, 3-8
Washington, D.C. 20219-0001
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that the document hereto attached is a true and correct copy, as recorded in
this Office, of the Charter Certificate for "First Union National Bank,"
Charlotte, North Carolina, (Charter No. 22693).
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents
at the Treasury Department in the City
of Washington and District of Columbia,
this 4th day of March, 1998.
/s/ Eugene A. Ludwig
--------------------
Comptroller of the Currency
[SEAL OF THE COMPTROLLER
OF THE CURRENCY]
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Bank Organization and Structure, 3-8
Washington, D.C. 20219-0001
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324,
et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody
and control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No.
22693) is a National Banking Association formed under the laws of the United
States and is authorized thereunder to transact the business of banking on the
date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents
at the Treasury Department in the City
of Washington and District of Columbia,
this 4th day of March, 1998.
/s/ Eugene A. Ludwig
--------------------
Comptroller of the Currency
[SEAL OF THE COMPTROLLER
OF THE CURRENCY]
[LOGO]
Comptroller of the Currency
Administrator of National Banks
Bank Organization and Structure, 3-8
Washington, D.C. 20219-0001
Certificate of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324,
et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody
and control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No.
22693) was granted, under the hand and seal of the Comptroller, the right to act
in all fiduciary capacities authorized under the provisions of the Act of
Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the
authority so granted remains in full force and effect on the date of the
Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents
at the Treasury Department in the City
of Washington and District of Columbia,
this 4th day of March, 1998.
/s/ Eugene A. Ludwig
--------------------
Comptroller of the Currency
[SEAL OF THE COMPTROLLER
OF THE CURRENCY]
BY-LAWS OF
FIRST UNION NATIONAL BANK
Charter No. 22693
As Restated Effective February 26, 1998
BY-LAWS OF
FIRST UNION NATIONAL BANK
ARTICLE I
Meetings of Shareholders
Section 1.1 Annual Meeting. The annual meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday of April in
each year, commencing with the year 1998, except that the Board of Directors
may, from time to time and upon passage of a resolution specifically setting
forth its reasons, set such other date for such meeting during the month of
April as the Board of Directors may deem necessary or appropriate; provided,
however, that if an annual meeting would otherwise fall on a legal holiday, then
such annual meeting shall be held on the second business day following such
legal holiday. The holders of a majority of the outstanding shares entitled to
vote which are represented at any meeting of the shareholders may choose persons
to act as Chairman and as Secretary of the meeting.
Section 1.2 Special Meetings. Except as otherwise specifically provided
by statute, special meetings of the shareholders may be called for any purpose
at any time by the Board of Directors or by any three or more shareholders
owning, in the aggregate, not less than ten percent of the stock of the
Association. Every such special meeting, unless otherwise provided by law, shall
be called by mailing, postage prepaid, not less than ten days prior to the date
fixed for such meeting, to each shareholder at his address appearing on the
books of the Association, a notice stating the purpose of the meeting.
Section 1.3 Nominations for Directors. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the President of the Bank and to the Comptroller of the Currency,
Washington, D. C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors, provided however,
that if less than 21 days' notice of such meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the Bank and to the
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the bank owned by the notifying
shareholder. Nominations not made in accordance herewith may, in his discretion,
be disregarded by the chairman of the meeting, and upon his instructions, the
vote tellers may disregard all votes cast for each such nominee.
Section 1.4 Judges of Election. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election at
any meeting of shareholders; to act as judges and tellers with respect to all
votes by ballot at such meeting and to file with the Secretary of the meeting a
Certificate under their hands, certifying the result thereof.
Section 1.5 Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Association shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
Section 1.6 Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
Directors
Section 2.1 Board of Directors. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
Section 2.2 Number. The Board shall consist of not less than five nor
more than twenty-five directors, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of a
majority of the full Board or by resolution of the shareholders at any meeting
thereof; provided, however, that a majority of the full Board of Directors may
not increase the number of directors to a number which, (1) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less, and (2) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
Section 2.3 Organization Meeting. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appointing officers of the Association
for the succeeding year. Such meeting shall be held as soon thereafter as
practicable. If, at the time fixed for such meeting, there shall not be a quorum
present, the directors present may adjourn the meeting from time to time, until
a quorum is obtained.
Section 2.4 Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place and time as may be designated by
resolution of the Board of Directors. Upon adoption of such resolution, no
further notice of such meeting dates or the places or times thereof shall be
required. Upon the failure of the Board of Directors to adopt such a resolution,
regular meetings of the Board of Directors shall be held, without notice, on the
third Tuesday in February, April, June, August, October and December, commencing
with the year 1997, at the main office or at such other place and time as may be
designated by the Board of Directors. When any regular meeting of the Board
would otherwise fall on a holiday, the meeting shall be held on the next
business day unless the Board shall designate some other day.
Section 2.5 Special Meetings. Special meetings of the Board of
Directors may be called by the President of the Association, or at the request
of three (3) or more directors. Each member of the Board of Directors shall be
given notice stating the time and place, by telegram, letter, or in person, of
each such special meeting.
Section 2.6 Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a less number
may adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
Section 2.7 Vacancies. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose.
Section 2.8 Advisory Boards. The Board of Directors may appoint
Advisory Boards for each of the states in which the Association conducts
operations. Each such Advisory Board shall consist of as many persons as the
Board of Directors may determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior officers of the
Association in such state with regard to the best interests of the Association
and to perform such other duties as the Board of Directors may lawfully
delegate. The senior officer in such state, or such officers as directed by such
senior officer, may appoint advisory boards for geographic regions within such
state and may consult with the State Advisory Boards prior to such appointments.
ARTICLE III
Committees of the Board
Section 3.1 The Board of Directors, by resolution adopted by a majority
of the number of directors fixed by these By-Laws, may designate two or more
directors to constitute an Executive Committee and other committees, each of
which, to the extent authorized by law and provided in such resolution, shall
have and may exercise all of the authority of the Board of Directors and the
management of the Association. The designation of any committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or any member of the Board of Directors by law. The Board of Directors
reserves to itself alone the power to act on (1) dissolution, merger or
consolidation, or disposition of substantially all corporate property, (2)
designation of committees or filling vacancies on the Board of Directors or on a
committee of the Board (except as hereinafter provided), (3) adoption, amendment
or repeal of By-laws, (4) amendment or repeal of any resolution of the Board
which by its terms is not so amendable or repealable, and (5) declaration of
dividends, issuance of stock, or recommendations to stockholders of any action
requiring stockholder approval.
The Board of Directors or the Chairman of the Board of Directors of the
Association may change the membership of any committee at any time, fill
vacancies therein, discharge any committee or member thereof either with or
without cause at any
time, and change at any time the authority and responsibility of any such
committee.
A majority of the members of any committee of the Board of Directors
may fix such committee's rules of procedure. All action by any committee shall
be reported to the Board of Directors at a meeting succeeding such action,
except such actions as the Board may not require to be reported to it in the
resolution creating any such committee. Any action by any committee shall be
subject to revision, alteration, and approval by the Board of Directors, except
to the extent otherwise provided in the resolution creating such committee;
provided, however, that no rights or acts of third parties shall be affected by
any such revision or alteration.
ARTICLE IV
Officers and Employees
Section 4.1 Officers. The officers of the Association may be a Chairman
of the Board, a Vice Chairman of the Board, one or more Chairmen or Vice
Chairmen (who shall not be required to be directors of the Association), a
President, one or more Vice Presidents, a Secretary, a Cashier or Treasurer, and
such other officers, including officers holding similar or equivalent titles to
the above in regions, divisions or functional units of the Association, as may
be appointed by the Board of Directors. The Chairman of the Board and the
President shall be members of the Board of Directors. Any two or more offices
may be held by one person, but no officer shall sign or execute any document in
more than one capacity.
Section 4.2 Election, Term of Office, and Qualification. Each officer
shall be chosen by the Board of Directors and shall hold office until the annual
meeting of the Board of Directors held next after his election or until his
successor shall have been duly chosen and qualified, or until his death, or
until he shall resign, or shall have been disqualified, or shall have been
removed from office.
Section 4.2(a) Officers Acting as Assistant Secretary. Notwithstanding
Section 1 of these By-laws, any Senior Vice President, Vice President, or
Assistant Vice President shall have, by virtue of his office, and by authority
of the By-laws, the authority from time to time to act as an Assistant Secretary
of the Bank, and to such extent, said officers are appointed to the office of
Assistant Secretary.
Section 4.3 Chief Executive Officer. The Board of Directors shall
designate one of its members to be the President of this Association, and the
officer so designated shall be an ex officio member of all committees of the
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
Section 4.4 Duties of Officers. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors may
delegate to the Chief Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law, the charter, and
these By-laws, and to appoint other employees, prescribe their duties, and to
dismiss them. Notwithstanding such delegation of authority, any officer or
employee also may be dismissed at any time by the Board of Directors.
Section 4.5 Other Employees. The Board of Directors may appoint from
time to time such tellers, vault custodians, bookkeepers, and other clerks,
agents, and employees as it may deem advisable for the prompt and orderly
transaction of the business of the Association, define their duties, fix the
salary to be paid them, and dismiss them. Subject to the authority of the Board
of Directors, the Chief Executive Officer or any other officer of the
Association authorized by him, may appoint and dismiss all such tellers, vault
custodians, bookkeepers and other clerks, agents, and employees, prescribe their
duties and the conditions of their employment, and from time to time fix their
compensation.
Section 4.6 Removal and Resignation. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of Directors
may be dismissed in accordance with the provisions of the preceding Section 4.5.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Chief Executive Officer of the Association. Any such
resignation shall become effective upon its being accepted by the Board of
Directors, or the Chief Executive Officer.
ARTICLE V
Fiduciary Powers
Section 5.1 Capital Management Group. There shall be an area of this
Association known as the Capital Management Group which shall be responsible for
the exercise of the fiduciary powers of this Association. The Capital Management
Group shall consist of four service areas: Fiduciary Services, Retail Services,
Investments and Marketing. The Fiduciary Services unit shall consist of personal
trust, employee benefits, corporate trust and operations. The General Office for
the Fiduciary Services
unit shall be located in Charlotte, N.C., with City Trust Offices located in
such cities within the State of North Carolina as designated by the Board of
Directors.
Section 5.2 Trust Officers. There shall be a General Trust Officer of
this Association whose duties shall be to manage, supervise and direct all the
activities of the Capital Management Group. Further, there shall be one or more
Senior Trust Officers designated to assist the General Trust Officer in the
performance of his duties. They shall do or cause to be done all things
necessary or proper in carrying out the business of the Capital Management Group
in accordance with provisions of applicable law and regulation.
Section 5.3 Capital Management/General Trust Committee. There shall be
a Capital Management/General Trust Committee composed of not less than four (4)
members of the Board of Directors or officers of this Association who shall be
appointed annually or from time to time by the Board of Directors of the
Association. The General Trust Officer shall serve as an ex-officio member of
the Committee. Each member shall serve until his successor is appointed. The
Board of Directors or the Chairman of the Board may change the membership of the
Capital Management/General Trust Committee at any time, fill vacancies therein,
or discharge any member thereof with or without cause at any time. The Committee
shall counsel and advise on all matters relating to the business or affairs of
the Capital Management Group and shall adopt overall policies for the conduct of
the business of the Capital Management Group including but not limited to:
general administration, investment policies, new business development, and
review for approval of major assignments of functional responsibilities. The
Committee shall meet at least quarterly or as called for by its Chairman or any
three (3) members of the Committee. A quorum shall consist of three (3) members.
In carrying out its responsibilities, the Capital Management/General Trust
Committee shall review the actions of all officers, employees and committees
utilized by this Association in connection with the activities of the Capital
Management Group and may assign the administration and performance of any
fiduciary powers or duties to any of such officers or employees or to the
Investment Policy Committee, Personal Trust Administration Committee, Account
Review Committee, Corporate and Institutional Accounts Committee, or any other
committees it shall designate. One of the methods to be used in the review
process will be the thorough scrutiny of the Report of Examination by the Office
of the Comptroller of the Currency and the reports of the Audit Division of
First Union Corporation, as they relate to the activities of the Capital
Management Group. These reviews shall be in addition to reviews of such reports
by the Audit Committee of the Board of Directors. The Chairman of the Capital
Management/ General Trust Committee shall be appointed by the Chairman of the
Board of Directors. He shall cause to be recorded in appropriate minutes all
actions taken by the Committee. The minutes shall be signed by its Secretary and
approved by its Chairman. Further, the Committee shall summarize all actions
taken by it and shall submit a report of its proceedings to the Board of
Directors at its next regularly scheduled meeting following a meeting of the
Capital Management/General Trust Committee. As required by Section 9.7 of
Regulation 9 of the Comptroller of the Currency, the Board of Directors retains
responsibility for the proper exercise of the fiduciary powers of this
Association.
The Fiduciary Services unit of the Capital Management Group will
maintain a list of securities approved for investment in fiduciary accounts and
will from time to time provide the Capital Management/General Trust Committee
with current information relative to such list and also with respect to
transactions in other securities not on such list. It is the policy of this
Association that members of the Capital Management/General Trust Committee
should not buy, sell or trade in securities which are on such approved list or
in any other securities in which the Fiduciary Services unit has taken, or
intends to take, a position in fiduciary accounts in any circumstances in which
any such transaction could be viewed as a possible conflict of interest or could
constitute a violation of applicable law or regulation. Accordingly, if any such
securities are owned by any member of the Capital Management/General Trust
Committee at the time of appointment to such Committee, the Capital Management
Group shall be promptly so informed in writing. If any member of the Capital
Management/General Trust Committee intends to buy, sell, or trade in any such
securities while serving as a member of the Committee, he should first notify
the Capital Management Group in order to make certain that any proposed
transaction will not constitute a violation of this policy or of applicable law
or regulation.
Section 5.4 Investment Policy Committee. There shall be an Investment
Policy Committee composed of not less than seven (7) officers and/or employees
of this Association who shall be appointed annually or from time to time by the
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any two (2) members of the
Committee. A quorum shall consist of five (5) members. The Investment Policy
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All actions
taken by the Investment Policy Committee shall be recorded in appropriate
minutes, signed by the Secretary thereof, approved by its Chairman and submitted
to the Capital Management/General Trust Committee at its next ensuing regular
meeting for its review and approval.
Section 5.5 Personal Trust Administration Committee. There shall be a
Personal Trust Administration Committee composed of not less than five (5)
officers, who shall be appointed annually or from time to time by the Board of
Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any three (3) members of the Committee. A
quorum shall consist of three (3) members. The Personal Trust Administration
Committee shall exercise such fiduciary powers and perform such duties as may be
assigned to it by the Capital Management/General Trust Committee. All
action taken by the Personal Trust Administration Committee shall be recorded in
appropriate minutes signed by the Secretary thereof, approved by its Chairman,
and submitted to the Capital Management/General Trust Committee at its next
ensuing regular meeting for its review and approval.
Section 5.6 Account Review Committee. There shall be an Account Review
Committee composed of not less than four (4) officers and/or employees of this
Association, who shall be appointed annually or from time to time by the Board
of Directors. Each member shall serve until his successor is appointed. Meetings
shall be called by the Chairman or any two (2) members of the Committee. A
quorum shall consist of three (3) members. The Account Review Committee shall
exercise such fiduciary powers and perform such duties as may be assigned to it
by the Capital Management/General Trust Committee. All actions taken by the
Account Review Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and submitted to the Capital
Management/ General Trust Committee at its next ensuing regular meeting for its
review and approval.
Section 5.7 Corporate and Institutional Accounts Committee. There shall
be a Corporate and Institutional Accounts Committee composed of not less than
five (5) officers and/or employees of this Association, who shall be appointed
annually, or from time to time, by the Capital Management/General Trust
Committee and approved by the Board of Directors. Meetings may be called by the
Chairman or any two (2) members of the Committee. A quorum shall consist of
three (3) members. The Corporate and Institutional Accounts Committee shall
exercise such fiduciary powers and duties as may be assigned to it by the
General Trust Committee. All actions taken by the Corporate and Institutional
Accounts Committee shall be recorded in appropriate minutes, signed by the
Secretary thereof, approved by its Chairman and made available to the General
Trust Committee at its next ensuing regular meeting for its review and approval.
ARTICLE VI
Stock and Stock Certificates
Section 6.1 Transfers. Shares of stock shall be transferable on the
books of the Association, and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder by
such transfer shall, in proportion to his shares, succeed to all rights and
liabilities of the prior holder of such shares.
Section 6.2 Stock Certificates. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice President
(which may be engraved, printed, or impressed), and shall be signed manually or
by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant
Cashier, or any other officer appointed by the Board of Directors for that
purpose, to be known as an Authorized Officer, and the seal of the Association
shall be engraved thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
ARTICLE VII
Corporate Seal
Section 7.1 The President, the Cashier, the Secretary, or any Assistant
Cashier, or Assistant Secretary, or other officer thereunto designated by the
Board of Directors shall have authority to affix the corporate seal to any
document requiring such seal, and to attest the same. Such seal shall be
substantially in the following form.
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Fiscal Year. The fiscal year of the Association shall be
the calendar year.
Section 8.2 Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, notices,
applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and
other instruments or documents may be signed, executed, acknowledged, verified,
delivered or accepted in behalf of the Association by the Chairman of the Board,
the Vice Chairman of the Board, any Chairman or Vice Chairman, the President,
any Vice President or Assistant Vice President, the Secretary or any Assistant
Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant
Treasurer, or any officer holding similar or equivalent titles to the above in
any regions, divisions or functional units of the Association, or, if in
connection with the exercise of fiduciary powers of the Association, by any of
said officers or by any Trust Officer or Assistant Trust Officer (or equivalent
titles); provided, however, that where required, any such instrument shall be
attested by one of said officers other than the officer executing such
instrument. Any such instruments may also be executed, acknowledged, verified,
delivered or accepted in behalf
of the Association in such other manner and by such other officers as the Board
of Directors may from time to time direct. The provisions of this Section 8.2
are supplementary to any other provision of these By-laws.
Section 8.3 Records. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier, or other officer appointed to act as Secretary of the
meeting.
ARTICLE IX
By-laws
Section 9.1 Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
Section 9.2 Amendments. The By-laws may be amended, altered or
repealed, at any regular or special meeting of the Board of Directors, by a vote
of a majority of the whole number of Directors.
Exhibit A
First Union National Bank
Article X
Emergency By-laws
In the event of an emergency declared by the President of the United
States or the person performing his functions, the officers and employees of
this Association will continue to conduct the affairs of the Association under
such guidance from the directors or the Executive Committee as may be available
except as to matters which by statute require specific approval of the Board of
Directors and subject to conformance with any applicable governmental directives
during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the
Executive Committee shall have the power, in the absence or disability of any
officer, or upon the refusal of any officer to act, to delegate and prescribe
such officer's powers and duties to any other officer, or to any director, for
the time being.
Section 2. In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these By-laws, any
two or more available members of the then incumbent Executive Committee shall
constitute a quorum of that Committee for the full conduct and management of the
affairs and business of the Association in accordance with the provisions of
Article II of these By-laws; and in addition, such Committee shall be empowered
to exercise all of the powers reserved to the General Trust Committee under
Section 5.3 of Article V hereof. In the event of the unavail- ability, at such
time, of a minimum of two members of the then incumbent Executive Committee, any
three available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Association in
accordance with the foregoing provisions of this section. This By-law shall be
subject to implementation by resolutions of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-laws (other than
this section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by an interim Executive Committee acting
under this section that it shall be to the advantage of this Association to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-laws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or
disaster, the Chief Executive Officer of this Association cannot be located by
the then acting Head Officer or is unable to assume or to continue normal
executive duties, then the authority and duties of the Chief Executive Officer
shall, without further action of the Board of Directors, be automatically
assumed by one of the following persons in the order designated:
Chairman
President
Division Head/Area Administrator - Within this officer class, officers
shall take seniority on the basis of length of service in such office
or, in the event of equality, length of service as an officer of the
Association.
Any one of the above persons who in accordance with this resolution
assumes the authority and duties of the Chief Executive Officer shall continue
to serve until he resigns or until five-sixths of the other officers who are
attached to the then acting Head Office decide in writing he is unable to
perform said duties or until the elected Chief Executive Officer of this
Association, or a person higher on the above list, shall become available to
perform the duties of Chief Executive Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and that
anyone accepting such certification may continue to consider it in force until
notified in writing of a change, said notice of change to carry the signatures
of three officers of the Association.
Alternate Locations
The offices of the Association at which its business shall be conducted
shall be the main office thereof in each city which is designated as a City
Office (and branches, if any), and any other legally authorized location which
may be leased or
acquired by this Association to carry on its business. During an emergency
resulting in any authorized place of business of this Association being unable
to function, the business ordinarily conducted at such location shall be
relocated elsewhere in suitable quarters, in addition to or in lieu of the
locations heretofore mentioned, as may be designated by the Board of Directors
or by the Executive Committee or by such persons as are then, in accordance with
resolutions adopted from time to time by the Board of Directors dealing with the
exercise of authority in the time of such emergency, conducting the affairs of
this Association. Any temporarily relocated place of business of this
Association shall be returned to its legally authorized location as soon as
practicable and such temporary place of business shall then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this Association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions, the
Raleigh office, located in Raleigh, North Carolina, shall automatically and
without further action of this Board of Directors, become the "Acting Head
Office of this Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage
or disaster, both the General Office of this Association and the said Raleigh
Office of this Association are unable to carry on their functions, then and in
such case, the Asheville Office of this Association, located in Asheville, North
Carolina, shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh Office nor
the Asheville Office can carry on their functions, then the Greensboro Office of
this Association, located in Greensboro, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association"; and if neither the Raleigh Office, the Asheville Office, nor the
Greensboro Office can carry on their functions, then the Lumberton Office of
this Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association". The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
Legal Title of Bank: First Union National Bank Call Date: 12/31/97 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-1
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 04885
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
ASSETS //////////////////////
1. Cash and balances due from depository institutions
(from Schedule RC-A): //////////////////////
a. Noninterest-bearing balances and currency and coin (1)............................ 0081 5,350,509 1.a.
b.Interest-bearing balances (2)...................................................... 0071 527,082 1.b.
2. Securities: //////////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A)........................ 1754 1,679,050 2.a.
b.Available-for-sale securities (from Schedule RC-B, column D)....................... 1773 16,948,015 2.b.
3. Federal funds sold and securities purchased under agreements to resell................ 1350 2,626,508 3.
4. Loans and lease financing receivables //////////////////////
a. Loans and leases, net of unearned income
(from Schedule RC-C) .................................. RCFD 2122 83,315,758 ////////////////////// 4.a.
b.LESS: Allowance for loan and lease losses..................RCFD 3123 1,005,217 ////////////////////// 4.b.
c. LESS: Allocated transfer risk reserve.....................RCFD 3128 0 ////////////////////// 4.c.
d.Loans and leases, net of unearned income, //////////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c)........ ...................... 2125 82,310,541 4.d.
5. Trading assets (from Schedule RC-D).................................................. 3545 3,322,404 5.
6. Premises and fixed assets (including capitalized leases)............................. 2145 2,167,626 6.
7. Other real estate owned (from Schedule RC-M)......................................... 2150 70,835 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) ........................................................... 2130 181,970 8.
9. Customers' liability to this bank on acceptances outstanding......................... 2155 761,776 9.
10. Intangible assets (from Schedule RC-M)............................................... 12143 2,539,719 10.
11. Other assets (from Schedule RC-F).................................................... 12160 6,508,589 11.
12. Total assets (sum of items 1 through 11)............................................. 12170 124,994,624 12.
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
Legal Title of Bank: First Union National Bank Call Date: 12/31/97 ST-BK: 37-0351 FFIEC 031
Address: Two First Union Center Page RC-2
City, State, Zip: Charlotte, NC 28288-0201
FDIC Certificate #: 04885
Schedule RC--Continued
Dollar Amount in Thousands Bil Mil Thou
LIABILITIES
////////////////////////////////////////
13. Deposits:
///////////////////////////////////////
a.In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I).................................... RCON 2200 79,161,386 13.a.
(1) Noninterest-bearing (1).......................RCON 6631 15,696,570 ///////////////////// 13.a.(1)
(2) Interest-bearing..............................RCON 6636 63,464,816 ///////////////////// 13.a.(2)
b.In foreign offices, Edge and Agreement subsidiaries, and IBFs /////////////////////
(from Schedule RC-E, part II).............................................. 2200 11,656,207 13.b.
(1) Noninterest-bearing...........................RCFN 6631 0 ///////////////////// 13.b.(1)
(2) Interest-bearing..............................RCFN 6636 11,656,207 ///////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase...... RCFD 2800 13,333,348 14.
15. a.Demand notes issued to the U.S. Treasury..................................... RCON 2840 258,807 15.a.
b.Trading liabilities (from Schedule RC-D)..................................... RCFD 3548 3,030,911 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under /////////////////////
capitalized leases):............................................................ /////////////////////
a. With a remaining maturity of one year or less............................... RCFD 2332 2,092,679 16.a.
b.With a remaining maturity of more than one year through three years.......... RCFD A547 325,781 16.b.
c. With a remaining maturity of more than three years.......................... RCFD A548 58,347 16.c.
17. Not applicable.................................................................. /////////////////////
18. Bank's liability on acceptances executed and outstanding........................ RCFD 2920 761,776 18.
19. Subordinated notes and debentures (2)........................................... RCFD 3200 2,347,834 19.
20. Other liabilities (from Schedule RC-G).......................................... RCFD 2930 2,480,990 20.
21. Total liabilities (sum of items 13 through 20).................................. RCFD 2948 115,508,066 21.
22. Not applicable.................................................................. /////////////////////
EQUITY CAPITAL /////////////////////
23. Perpetual preferred stock and related surplus................................... RCFD 3838 0 23.
24. Common stock.................................................................... RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock)........................ RCFD 3839 6,695,493 25.
26. a.Undivided profits and capital reserves........................................ RCFD 3632 2,498,515 26.a.
b.Net unrealized holding gains (losses) on available-for-sale securities........ RCFD 8434 209,755 26.b.
27. Cumulative foreign currency translation adjustments............................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)............................... RCFD 3210 9,486,558 28.
29. Total liabilities and equity capital (sum of items 21 and 28)................... RCFD 3300 124,994,624 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1996............................................ RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work) 8 = No external
audit work
- -----------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
LETTER OF TRANSMITTAL
UNIFI, INC.
OFFER FOR ALL OUTSTANDING
6 1/2% NOTES DUE 2008
IN EXCHANGE FOR
6 1/2% NOTES DUE 2008, SERIES B
PURSUANT TO THE PROSPECTUS, DATED , 1998
- ------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- ------------------------------------------------------------------------------
Delivery To: First Union National Bank, Exchange Agent
By Mail:
First Union National Bank
Corporate Trust Reorganization Dept.
1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28288
Attention: Mr. Mike Klotz
By Overnight Courier or Hand:
First Union National Bank
Corporate Trust Reorganization Dept.
1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262
Attention: Mr. Mike Klotz
By Facsimile in New York:
704-590-7628
Confirm by Telephone:
704-590-7408
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1998 (the "Prospectus"), of Unifi, Inc., a New York
corporation (the "Company"), and this Letter of Transmittal (the "Letter"),
which together constitute the Company's offer (the "Exchange Offer") to
exchange an aggregate principal amount of up to $250,000,000 of its 6 1/2%
Notes due 2008, Series B, which have been registered under the Securities Act
of 1933, as amended (the "New Notes"), of the Company for a like principal
amount of the issued and outstanding 6 1/2% Notes due 2008 (the "Existing
Notes") of the Company from the holders thereof.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. The New Notes will bear interest from the most
recent date to which interest has been paid on the Existing Notes or, if no
interest has been paid on the Existing Notes, from February 5, 1998.
Accordingly, if the relevant record date for interest payment occurs after the
consummation of the Exchange Offer registered holders of New Notes on such
record date will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from February 5, 1998.
If, however, the relevant record date for interest payment occurs prior to the
consummation of the Exchange Offer registered holders of Existing Notes on such
record date will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from February 5, 1998.
Existing Notes accepted for exchange will cease to accrue interest from and
after the date of consummation of the Exchange Offer. Holders of Existing Notes
whose Existing Notes are accepted for exchange will not receive any payment in
respect of interest on such Existing Notes otherwise payable on any interest
payment date the record date for which occurs on or after consummation of the
Exchange Offer.
This Letter is to be completed by a holder of Existing Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Existing Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus and an Agent's
Message (as defined herein) is not delivered. Holders of Existing Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Existing Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their
Existing Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Existing Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Existing Notes should be listed on a separate signed schedule affixed hereto.
- ------------------------------------------------------------------------------------------------------
DESCRIPTION OF EXISTING 1 2 3
NOTES
- ----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF AGGREGATE
REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OF OLD NOTE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------
* Need not be completed if Existing Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Existing Notes represented by the Existing Notes
indicated in column 2. See Instruction 2. Existing Notes tendered must be
in denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
- -----------------------------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-------------------------------------
Account Number Transaction Code Number
------------- ------------------
By crediting Existing Notes to the Exchange Agent's Account at the Book
Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the Holder
of Existing Notes acknowledges and agrees to be bound by the terms of this
Letter, the participant in ATOP confirms on behalf of itself and the
beneficial owners of such Existing Notes all provisions of this Letter
applicable to it and such beneficial owners as if it had completed the
information required herein and executed and transmitted this Letter to
the Exchange Agent.
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------
Window Ticket Number (if any)
----------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------
Name of Institution which guaranteed delivery
---------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
-------------- --------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.:
Name:
--------------------------------------------------------------------
Address:
------------------------------------------------------------------
---------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Existing Notes, it represents that the Existing
Notes to be exchanged for New Notes were acquired by it as a result of
market-making or other trading activities and acknowledges that it will deliver
a prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended.
2
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Existing Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Existing Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Existing Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Existing
Notes tendered hereby and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same are accepted by
the Company. The undersigned hereby further represents that any New Notes
acquired in exchange for Existing Notes tendered hereby will have been acquired
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the undersigned, that neither the holder of such
Existing Notes nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and that
neither the holder of such Existing Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made
in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued in exchange for the Existing Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such New
Notes. However, the Company does not intend to request the SEC to consider, and
the SEC has not considered the Exchange Offer in the context of a no-action
letter and there can be no assurance that the staff of the SEC would make a
similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. If any holder is an affiliate of
the Company or is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive New Notes for its own account in exchange for Existing Notes,
it represents that the Existing Notes to be exchanged for the New Notes were
acquired by it as a result of market-making or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Existing Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Existing Notes for any Existing Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Existing Notes, please credit the account indicated above
maintained at the Book-Entry Transfer Facility. Similarly, unless otherwise
indicated in the box entitled "Special Delivery Instructions" below, please
send the New Notes (and, if applicable, substitute certificates representing
Existing Notes for any Existing Notes not exchanged) to the undersigned at the
address shown above in the box entitled "Description of the Existing Notes."
3
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Existing Notes not exchanged
and/or New Notes are to be issued in the name of and sent to someone other
than the person or persons whose signature(s) appear(s) on this Letter
above, or if Existing Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue: New Notes and/or Existing Notes to:
Name(s)
------------------------------------------------------
(PLEASE PRINT)
Address
-----------------------------------------------------
-------------------------------------------------------------
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Existing Notes delivered by book-entry transfer to
the Book-Entry Transfer Facility account set forth below.
------------------------------------------------------------
(Book-Entry Transfer Facility)
(Account Number, if applicable)
=========================================================================
=========================================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Existing Notes not exchanged
and/or New Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) on this Letter above or to such
person or persons at an address other than shown in the box entitled
"Description of Existing Notes" on this Letter above.
Mail: New Notes and/or Existing Notes to:
Name
-----------------------------------------------------------
(PLEASE TYPE OR PRINT)
----------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
---------------------------------------------------------
----------------------------------------------------------------
(ZIP CODE)
========================================================================
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
HEREOF (TOGETHER WITH THE CERTIFICATES FOR EXISTING NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
4
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated: , 1998
------------------------ -----------------------------
x , 1998
------------------------ -----------------------------
x , 1998
------------------------ -----------------------------------
Signature(s) of Owner Date
Area Code and Telephone Number
---------------------------------------
If a holder is tendering any Existing Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Existing Notes or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, officer or other person
acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):
--------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Type or Print)
Capacity:
-------------------------------------------------------------------
Address:
--------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed
by an Eligible Institution:
---------------------------------------------
(Authorized Signature)
-------------------------------------------------------------------------
(Title)
-------------------------------------------------------------------------
(Name and Firm)
Date: , 1998
------------
5
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE
EXCHANGE OFFER FOR THE 6 1/2% NOTES DUE 2008 IN EXCHANGE FOR THE
6 1/2% NOTES DUE 2008 OF UNIFI, INC.
1. Delivery of This Letter and Notes; Guaranteed Delivery Procedures.
This letter is to be completed by noteholders either if certificates are
to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange Offer
Book-Entry Transfer" section of the Prospectus and an Agent's Message is not
delivered. Certificates for all physically tendered Existing Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed
and duly executed Letter (or manually signed facsimile hereof) and any other
documents required by this Letter, must be received by the Exchange Agent at
the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Existing Notes tendered hereby must be in denominations of principal
amount of $1,000 and any integral multiple thereof. The term "Agent's Message"
means a message transmitted to the Book-Entry Facility and received by the
Exchange Agent and forming a part of the Book-Entry Confirmation, which states
that the Book-Entry Transfer Facility has received an express acknowledgement
from the tendering Participant that such Participant has received and agrees to
be bound by this Letter and that the Company may enforce this Letter against
such Participant.
Noteholders whose certificates for Existing Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Existing Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through
an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
must receive from such Eligible Institution a properly completed and duly
executed Letter (or a facsimile thereof or Agent's Message in lieu thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the
Company (by telegram, telex, facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Existing Notes and the
amount of Existing Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Existing Notes, or a Book-Entry
Confirmation, and any other documents required by the Letter will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Existing Notes, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required
by this Letter, are received by the Exchange Agent within three NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Existing Notes and all other
required documents is at the election and risk of the tendering holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Existing Notes are sent by mail, it is suggested that
the mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (Not Applicable to Noteholders who Tender by Book-Entry
Transfer).
If less than all of the Existing Notes evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Existing Notes to be tendered in the box above
entitled "Description of Existing Notes Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Existing Notes will be sent
to such tendering holder, unless otherwise provided in the appropriate box on
this Letter, promptly after the Expiration Date. ALL OF THE EXISTING NOTES
DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS
OTHERWISE INDICATED.
3. Signatures on This Letter; Bond Powers and Endorsements; Guarantee of
Signatures.
If this Letter is signed by the registered bolder of the Existing Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Existing Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the
Existing Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Notes
are to be issued, or any untendered Existing Notes are to be reissued, to a
person other than the registered holder, then endorsements of any
6
certificates transmitted hereby or separate bond powers are required.
Signatures on such certificate(s) must be guaranteed by an Eligible
Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
ENDORSEMENTS ON CERTIFICATES FOR EXISTING NOTES OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A
MEMBER OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST
COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE EXISTING NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF EXISTING NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH EXISTING NOTES)
WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR
"SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. Special Issuance and Delivery Instructions.
Tendering holders of Existing Notes should indicate in the applicable box
the name and address to which New Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Existing Notes not exchanged are to
be issued or sent, if different form the name or address of the person signing
this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Holders tendering Existing Notes by book-entry transfer may request
that Existing Notes not exchanged be credited to such account maintained at the
Book-Entry Transfer Facility as such noteholder may designate hereon. If no
such instructions are given, such Existing Notes not exchanged will be returned
to the name or address of the person signing this Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a tendering holder whose
Existing Notes are accepted for exchange must provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual,
is his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
delivery to such tendering holder of New Notes may be subject to backup
withholding in an amount equal to 31% of all reportable payments made after the
exchange. If withholding results in an overpayment of taxes, a refund may be
obtained.
Exempt holders of Existing Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"W-9 Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Existing Notes
must provide its correct TIN by completing the Substitute Form W-9 set forth
below, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN) and that (i) the holder is exempt from backup withholding, or
(ii) the holder has not been notified by the Internal Revenue Service that such
holder is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Existing Notes is a nonresident alien or foreign entity not
subject to backup withholding, such holder must give the Company a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Existing Notes are in more than one name or are not in
the name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a
TIN, check the box in Part 2 of the Substitute Form W-9 and write "applied for"
in lieu of its TIN. Note: Checking this box and writing "applied for" on the
form means that such holder has already applied for a TIN or that such holder
intends to apply for one in the near future. If such holder does not provide
its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
7
6. Transfer Taxes.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Existing Notes to it or its order pursuant to the Exchange Offer.
If however, New Notes and/or substitute Existing Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Existing Notes tendered hereby, or if
tendered Existing Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Existing Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE EXISTING NOTES SPECIFIED IN THIS
LETTER.
7. Waiver of Conditions.
The Company reserves the absolute right to waive satisfaction of any or
all conditions enumerated in the Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Existing
Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Existing Notes nor shall any of them incur any liability for failure to give
any such notice.
9. Mutilated, Lost, Stolen or Destroyed Existing Notes.
Any holder whose Existing Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
11. Incorporation of Letter of Transmittal.
This Letter shall be deemed to be incorporated in and acknowledged and
accepted by any tender through the Book-Entry Transfer Facility's ATOP
procedures by any Participant on behalf of itself and the beneficial owners of
any Existing Notes so tendered.
8
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: FIRST UNION NATIONAL BANK
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN
TIN IN THE BOX AT RIGHT AND -----------------
CERTIFY BY SIGNING AND DATING Social Security Number
Form W-9 BELOW OR
Employer Identification Number
Department of the Treasury Part 2 -- TIN Applied for [ ]
Internal Revenue Service ==============================================================
CERTIFICATION -- Under the penalties of perjury, I certify
that:
OR
(1) The number shown on this form is my correct Taxpayer
Identification Number
Payor's Request for Taxpayer (or I am waiting for a number to be issued to me),
Identification Number ("TIN")
and Certification (2) I am not subject to backup withholding either because: (a)
I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I am
subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding, and (3)
Any other information provided on this form is true and
correct.
CERTIFICATION INSTRUCTIONS -- You must cross out item
(2) of the above certification if you have been notified by the
IRS that you are subject to backup withholding because of
underreporting of interest or dividends on your tax return and
you have not been notified by the IRS that you are no longer
subject to backup withholding.
Sign Here Signature
------------------------------------------------------------
Date ------------ , 19---
Name:
------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31
percent of all reportable payments made to me thereafter will be withheld until
I provide a number.
- -------------------------------- ---------------------------------
Signature Date
9
NOTICE OF GUARANTEED DELIVERY FOR
UNIFI, INC.
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Unifi, Inc. (the "Company") made pursuant to the
Prospectus, dated , 1998 (the "Prospectus"), if certificates for the
outstanding 6 1/2% Notes due 2008 of the Company (the "Existing Notes") are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Company prior to 5:00 p.m., New York City time, on the Expiration
Date of the Exchange Offer. Such form may be delivered or transmitted by
telegram, telex, facsimile transmission, mail or hand delivery to First Union
National Bank (the "Exchange Agent") as set forth below. In addition, in order
to utilize the guaranteed delivery procedure to tender Existing Notes pursuant
to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
Delivery To: First Union National Bank, Exchange Agent
By Mail:
First Union National Bank
Corporate Trust Reorganization Dept.
1525 West W.T. Harris Blvd., 3C 3
Charlotte, North Carolina 28288
Attention: Mr. Mike Klotz
By Hand/Federal Express/UPS:
First Union National Bank
Corporate Trust Reorganization Dept.
1525 West W.T. Harris Blvd., 3C 3
Charlotte, North Carolina 28262
Attention: Mr. Mike Klotz
By Facsimile:
704-590-7628
Confirm by Telephone:
704-590-7408
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Existing Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Existing Notes Tendered:* $ ---------------
- ---------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
Certificate Nos. (if available): If Existing Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide
- --------------- account number.
Total Principal Amount Represented by Existing
Notes Certificate(s):
$ --------------- Account Number: ---------------
- -----------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
- ------------------------------------------------------------------------------
PLEASE SIGN HERE
x ---------------------------------- ----------------------
x ---------------------------------- ----------------------
Signature(s) of Owner(s) or Authorized Signatory Date
Area Code and Telephone Number: ----------------------
Must be signed by the holder(s) of Existing Notes as their name(s)
appear(s) on certificates for Existing Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): -----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Capacity: -----------------------------------------------
Address(es): -----------------------------------------------
-----------------------------------------------
-----------------------------------------------
2
GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
principal amount of Existing Notes tendered hereby in proper form for transfer,
or timely confirmation of the book-entry transfer of such Existing Notes into
the Exchange Agent's account at The Depository Trust Company pursuant to the
procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures"
section of the Prospectus, together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) with any
required signature guarantee and any other documents required by the Letter of
Transmittal, will be received by the Exchange Agent at the address set forth
above, no later than three New York Stock Exchange trading days after the date
of execution hereof.
- ---------------------------------- ----------------------------------
Name of Firm Authorized Signature
- ---------------------------------- ----------------------------------
Address Title
- ---------------------------------- Name: -----------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. ----------------- Dated: -----------------------------
NOTE: DO NOT SEND CERTIFICATES FOR EXISTING NOTES WITH THIS FORM. CERTIFICATES
FOR EXISTING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
UNIFI, INC.
OFFER FOR ALL OUTSTANDING
6 1/2% NOTES DUE 2008
IN EXCHANGE FOR
6 1/2% NOTES DUE 2008, SERIES B
To: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Unifi, Inc. (the "Company") is offering, upon and subject to the terms and
conditions set forth in the Prospectus, dated , 1998 (the "Prospectus"),
and the enclosed Letter of Transmittal (the "Letter of Transmittal"), to
exchange (the "Exchange Offer") its 6 1/2% Notes due 2008, Series B, which have
been registered under the Securities Act of 1933, as amended, for its
outstanding 6 1/2% Notes due 2008 (the "Existing Notes"). The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the Registration Rights Agreement dated February 5, 1998, by and among the
Company and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Existing
Notes regarding the Exchange Offer. For your information and for forwarding to
your clients for whom you hold Existing Notes registered in your name or in the
name of your nominee, or who hold Existing Notes registered in their own names,
we are enclosing the following documents:
1. Prospectus dated , 1998;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Existing Notes are not immediately available or time will
not permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Existing Notes registered in your name or the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to First Union National Bank, the Exchange
Agent for the Existing Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , , 1998, UNLESS EXTENDED BY THE
COMPANY (THE "EXPIRATION DATE"). EXISTING NOTES TENDERED PURSUANT TO THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Existing Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Existing Notes wish to tender, but it is impracticable for
them to forward their certificates for Existing Notes prior to the expiration
of the Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Existing Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all transfer taxes
applicable to the exchange of Existing Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to First
Union National Bank, the Exchange Agent for the Existing Notes, at its address
and telephone number set forth on the front of the Letter of Transmittal.
Very truly yours,
UNIFI, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER
OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY
MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
UNIFI, INC.
OFFER FOR ALL OUTSTANDING
6 1/2% NOTES DUE 2008
IN EXCHANGE FOR
6 1/2% NOTES DUE 2008, SERIES B
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1998
(the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Unifi, Inc. (the
"Company") to exchange its 6 1/2% Notes due 2008, Series B, which have been
registered under the Securities Act of 1933, as amended (the "New Notes"), for
its outstanding 6 1/2% Notes due 2008 (the "Existing Notes"), upon the terms
and subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
February 5, 1998, by and among the Company and the initial purchasers referred
to therein.
This material is being forwarded to you as the beneficial owner of the
Existing Notes carried by us in your account but not registered in your name. A
TENDER OF SUCH EXISTING NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD
AND PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender
on your behalf the Existing Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Existing Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City time, on , , 1998, unless extended
by the Company. Any Existing Notes tendered pursuant to the Exchange Offer may
be withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Existing Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer -- Certain
Conditions to the Exchange Offer."
3. Any transfer taxes incident to the transfer of Existing Notes from
the holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
, , 1998, unless extended by the Company.
If you wish to have us tender your Existing Notes, please so instruct us
by completing, executing and returning to us the instruction form on the back
of this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION
ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER EXISTING NOTES.
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Unifi, Inc.
with respect to its Existing Notes.
This will instruct you to tender the Existing Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
[ ] Please tender the Existing Notes held by you for my account as indicated
below:
AGGREGATE PRINCIPAL AMOUNT
OF EXISTING NOTES
---------------------------
$
6 1/2% Notes due 2008 .........
[ ] Please do not tender any Existing Notes
held by you for my account.
Dated: , 1998
----------- ------------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
----------------------------------------
---------------------------------------
Please print name(s) here
--------------------------------------
--------------------------------------
Address(es)
-------------------------------------
Area Code and Telephone Number
--------------------------------------------
Tax Identification or Social Security No(s).
None of the Existing Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Existing Notes held by
us for your account.
2
