EXHIBIT 10(k)(ii)
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ALBANY INTERNATIONAL CORP.
AND CERTAIN SUBSIDIARIES PARTY HERETO
AS
GUARANTORS
$150,000,000
5.34% SENIOR NOTES DUE OCTOBER 25, 2017
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NOTE AGREEMENT
AND
GUARANTY
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Dated as of October 25, 2005
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TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES 1
2. PURCHASE AND SALE OF NOTES 1
3. CONDITIONS OF CLOSING 2
3A. Execution and Delivery of Documents 2
3B. Opinion of Purchaser's Special Counsel 3
3C. Purchase Permitted By Applicable Laws 3
3D. Payment of Fees 4
4. PREPAYMENTS 4
4A. Required Prepayments 4
4B. Optional Prepayment With Yield-Maintenance Amount 4
4C. Notice of Optional Prepayment 4
4D. Prepayment in Connection with a Pro Rata Prepayment Event 5
4E. Partial Payments Pro Rata 6
4F. Retirement of Notes 6
5. AFFIRMATIVE COVENANTS 6
5A. Financial Statements 6
5B. Information Required by Rule 144A 8
5C. Notices of Material Events 8
5D. Inspection of Property; Books and Records 9
5E. [Intentionally Omitted] 9
5F Covenant to Secure Note Equally 9
5G. Maintenance of Properties; Compliance with Laws 10
5H. Insurance 10
5I. ERISA 10
5J. Payment of Notes and Maintenance of Office 10
5K. Environmental Laws 10
5L. Use of Proceeds 11
5M. Further Assurances 11
5N. Existence; Conduct of Business 11
5O. Payment of Obligations 11
6. NEGATIVE COVENANTS 12
6A. Subsidiary Indebtedness 11
6B. Negative Pledge 12
6C. Consolidations, Mergers and Sales of Assets 12
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6D. Transactions with Affiliates 15
6E. Restricted Payments 15
6F. Limitations on Sale-Leasebacks 15
6G. Investments, Loans, Advances, Guarantees and Acquisitions 16
6H. Leverage Ratio 17
6I. Interest Coverage Ratio 17
6J. Lines of Business 17
6K. Terrorism Sanctions Regulations 17
7. EVENTS OF DEFAULT 17
7A. Acceleration 17
7B. Rescission of Acceleration 20
7C. Notice of Acceleration or Rescission 21
7D. Other Remedies 21
8. REPRESENTATIONS, COVENANTS AND WARRANTIES 21
8A. Organization; Authorization; Enforceability 21
8B. Financial Statements 21
8C. Actions Pending 22
8D. Outstanding Indebtedness 22
8E. Title to Properties 22
8F. Taxes 22
8G. Conflicting Agreements and Other Matters 22
8H. Offering of Notes 23
8I. Use of Proceeds 23
8J. ERISA 24
8K. Governmental Consent 24
8L. Compliance with Laws 24
8M. Environmental Compliance 24
8N. Utility Company Status 24
8O. Investment Company Status 25
8P. Rule 144A 25
8Q. Disclosure 25
8R. Foreign Assets Control Regulations, Etc. 25
8S. Subsidiaries 26
8T. Solvency 26
9. REPRESENTATIONS OF THE PURCHASER 26
9A. Nature of Purchase 26
9B. Source of Funds 26
10. AI GUARANTY AGREEMENT 28
10A. Guarantied Obligations 28
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10B. Payments and Performance 28
10C. Releases 28
10D. Waivers 29
10E. Marshaling 30
10F. Immediate Liability 31
10G. Primary Obligations 31
10H. No Reduction or Defense 31
10I. Subordination 33
10J. No Election 33
10K. Severability 34
10L. Appropriations 34
10M. Other Enforcement Rights 34
10N. Invalid Payments 34
10O. No Waivers or Election of Remedies; Expenses; etc. 34
10P. Restoration of Rights and Remedies 35
10Q. No Setoff or Counterclaim 35
10R. Further Assurances 35
10S. Survival 35
10T. Acknowledgment of Common Interests; etc. 35
10U. Conversion of Currencies 35
11. DEFINITIONS; ACCOUNTING MATTERS 35
11A. Yield-Maintenance Terms 36
11B. Other Terms 37
11C. Accounting and Legal Principles, Terms and Determinations 47
12. MISCELLANEOUS 47
12A. Note Payments 47
12B. Expenses 48
12C. Consent to Amendments 48
12D. Form, Registration, Transfer and Exchange of Notes; Lost Notes 49
12E. Persons Deemed Owners; Participations 49
12F. Survival of Representations and Warranties; Entire Agreement 49
12G. Successors and Assigns 50
12H. Notices 50
12I. Payments Due on Non-Business Days 50
12J. Governing Law 50
12K. Consent to Jurisdiction; Waiver of Immunities 50
12L. Severability 51
12M. Descriptive Headings 51
12N. Counterparts 51
12O. Independence of Covenants 51
12P. Waiver Of Jury Trial 51
12Q. Independent Investigation 52
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EXHIBITS
A Form Of Note
B Form Of Guarantor Joinder
C Form Of Opinion
D Form Of Indemnification, Subrogation and Contribution Agreement
SCHEDULES
1A Guarantors
6A Debt
6B Liens
6D Certain Affiliate Matters
6G Subsidiary Information and Ownership
8C Litigation
8G Contractual Restrictions
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ALBANY INTERNATIONAL CORP.
1373 Broadway
Albany, NY 12204
As of October 25, 2005
TO EACH OF THE PURCHASERS NAMED ON
THE ATTACHED PURCHASER SCHEDULE
Ladies and Gentlemen:
The undersigned, ALBANY INTERNATIONAL CORP., a Delaware corporation (the
"Company") hereby agrees with each Purchaser as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
(a) The Company has authorized the issue of its senior promissory notes in
the aggregate principal amount of $150,000,000, to be dated the date of issue
thereof, to mature October 25, 2017, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become due
and payable at the rate of 5.34% per annum and on overdue payments at the rate
specified therein, and to be substantially in the form of Exhibit A attached
hereto. The term "Notes" as used herein shall include each such senior
promissory note delivered pursuant to any provision of this Agreement and each
such senior promissory note delivered in substitution or exchange for any other
Note pursuant to any such provision.
(b) To induce the Purchasers to enter into this Agreement, and to induce
them to purchase the Notes from the Company in accordance with the terms hereof,
the obligations of the Company hereunder and under the Notes are fully and
unconditionally guaranteed by the Guarantors, as provided in the AI Guaranty
Agreement. As of the Date of Closing, the Company owns the percentage of
outstanding shares of each Guarantor as set forth on Schedule 6G, and, as a
result, each Guarantor will receive a direct financial and economic benefit from
the indebtedness to be incurred by the Company.
2. PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to each
Purchaser and, subject to the terms and conditions herein set forth, each
Purchaser agrees to purchase from the Company, Notes in the aggregate principal
amount set forth opposite such Purchaser's name on the Purchaser Schedule hereto
at 100% of such aggregate principal amount. The Company will deliver to each
Purchaser, at the offices of Prudential Capital Group at 1114
Avenue of the Americas, 30th Floor, New York, NY 10036, one or more Notes
registered in its name, evidencing the aggregate principal amount of Notes to be
purchased by such Purchaser and in the denomination or denominations specified
in the Purchaser Schedule attached hereto, against payment of the purchase price
thereof by transfer of immediately available funds for credit to the Company's
account established at such bank as shall be identified in a written instruction
of the Company, delivered to each Purchaser not later than 1 Business Days prior
to the Date of Closing, which shall be October 25, 2005 or any other date on or
before October 31, 2005 upon which the parties hereto may mutually agree (herein
called the "Closing" or the "Date of Closing").
3. CONDITIONS OF CLOSING. The obligation of each Purchaser to purchase and
pay for the Notes to be purchased by it hereunder is subject to the
satisfaction, on or before the Date of Closing, of the following conditions:
3A. Execution and Delivery of Documents. Such Purchaser shall have
received the following, each to be dated the Date of Closing unless otherwise
indicated:
(i) the Note(s) to be purchased by such Purchaser.
(ii) a favorable opinion of (a) Cleary Gottlieb Steen & Hamilton LLP,
special counsel to the Company and Guarantors, satisfactory to each
Purchaser and substantially in the form of Exhibit C-1 attached hereto and
as to such other matters as a Purchaser may reasonably request and (b)
Charles Silva, General Counsel of the Company, satisfactory to each
Purchaser and substantially in the form of Exhibit C-2 attached hereto and
as to such other matters as a Purchaser may reasonably request. The
Company and Guarantors hereby direct each such counsel to deliver such
opinion, agree that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees that each
Purchaser will and hereby is authorized to rely on such opinion.
(iii) the Certificate of Incorporation of the Company and each Guarantor,
each certified as of a recent date by the Secretary of State (or
equivalent official) of the jurisdiction of each such Person's
organization or incorporation.
(iv) the Bylaws of the Company and each Guarantor certified by their
respective Secretaries.
(v) an incumbency certificate signed by the Secretary or an Assistant
Secretary and one other officer of the Company and each Guarantor
certifying as to the names, titles and true signatures of the officers of
the Company or each Guarantor authorized to sign this Agreement and the
Notes, or the AI Guaranty Agreement and the Indemnity, Subrogation and
Contribution Agreement (as the case may be), and the other documents to be
delivered hereunder.
(vi) a certificate of the Secretary of the Company and each Guarantor (A)
attaching resolutions of the Board of Directors of such Person evidencing
approval of the transactions
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contemplated by this Agreement and the issuance of the Notes, or the AI
Guaranty Agreement and the Indemnity, Subrogation and Contribution
Agreement (as the case may be), and the execution, delivery and
performance thereof, and authorizing certain officers to execute and
deliver the same, and certifying that such resolutions were duly and
validly adopted and have not since been amended, revoked or rescinded, and
(B) certifying that no dissolution or liquidation proceedings as to the
Company or such Guarantor have been commenced or are contemplated.
(vii) an Officer's Certificate on behalf of the Company and each Guarantor
certifying that (A) the representations and warranties contained in
Paragraph 8 shall be true on and as of the Date of Closing, except to the
extent of changes caused by the transactions herein contemplated and (B)
there shall exist on the Date of Closing no Event of Default or Default.
(viii) corporate and tax good standing certificates as to the Company and
each Guarantor, from their respective jurisdiction of organization or
incorporation.
(ix) Certified copies of Requests for Information or Copies (Form UCC 11)
or equivalent reports listing all effective financing statements which
name the Company or any Guarantor (under its present name and previous
names) as debtor and which are filed in the offices of the Secretaries of
State (or equivalent official) of their respective jurisdiction of
organization or incorporation, together with copies of such financing
statements.
(x) such additional documents or certificates with respect to such legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by such Purchaser.
3B. Opinion of Purchaser's Special Counsel. Such Purchaser shall have
received from special counsel for it in connection with this transaction, a
favorable opinion satisfactory to such Purchaser as to such matters incident to
the matters herein contemplated, as it may reasonably request.
3C. Purchase Permitted By Applicable Laws. The purchase of and payment for
the Notes to be purchased by such Purchaser on the Date of Closing on the terms
and conditions herein provided (including the use of the proceeds of such Notes
by the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and shall not
subject such Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation.
3D. Payment of Fees. The Company shall have paid to the Purchasers their
pro rata shares of a structuring fee in the aggregate amount of $30,000.
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4. PREPAYMENTS. The Notes shall be subject to prepayment with respect to
the required prepayments specified in Paragraph 4A and the optional prepayments
permitted by Paragraph 4B.
4A. Required Prepayments. Until the Notes shall be paid in full, the
Company shall apply to the prepayment of the Notes, without Yield-Maintenance
Amount, the sum of $50,000,000 on October 25 in each of the years 2013 and 2015,
inclusive, and such principal amounts of the Notes, together with interest
thereon to the prepayment dates, shall become due on such prepayment dates;
provided that upon any partial prepayment of the Notes pursuant to Paragraph 4B
or purchase of the Notes pursuant to Paragraph 4E, the principal amount of each
required prepayment of the Notes becoming due under this Paragraph 4A on and
after the date of such prepayment or purchase shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase. The remaining principal amount of the
Notes, together with interest accrued thereon, shall become due on the maturity
date of the Notes.
4B. Optional Prepayment With Yield-Maintenance Amount. The Notes shall be
subject to prepayment, in whole at any time or from time to time in part (in
multiples of $1,000,000 and integral multiples of $100,000 in excess thereof) at
the option of the Company, at 100% of the principal amount so prepaid plus
interest thereon to the prepayment date and the Yield-Maintenance Amount, if
any, with respect to each Note. Any partial prepayment of the Notes pursuant to
this Paragraph 4B shall be applied in satisfaction of required payments of
principal on a pro rata basis.
4C. Notice of Optional Prepayment. The Company shall give the holder of
each Note irrevocable written notice of any prepayment pursuant to Paragraph 4B
not less than 5 Business Days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to Paragraph 4B. Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, with respect thereto, shall become due and
payable by the Company on such prepayment date. The Company shall, on or before
the day on which it gives written notice of any prepayment pursuant to Paragraph
4B, give telephonic notice of the principal amount of the Notes to be prepaid
and the prepayment date to each holder which shall have designated a recipient
of such notices in the Purchaser Schedule attached hereto or by notice in
writing to the Company.
4D. Prepayment in Connection with a Pro Rata Prepayment Event. (a) The
Company will, at least 10 Business Days prior to any Pro Rata Prepayment Event,
give written notice of such Pro Rata Prepayment Event to each holder of Notes.
Such notice shall contain and constitute an offer to make a Pro Rata Prepayment,
as described in clause (b) below.
(b) The offer contemplated by clause (a) above shall be an irrevocable
offer to make a Pro Rata Prepayment on a date specified in such offer (the
"Proposed Prepayment Date") not less than thirty (30) days and not more than
sixty (60) days after the date of the applicable Pro
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Rata Prepayment Event. Each such notice shall specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid, and the interest to be paid on
the prepayment date with respect to such principal amount being prepaid.
(c) A holder of Notes may accept the offer to prepay made pursuant to this
Paragraph 4D by causing a notice of such acceptance with respect thereto to be
delivered to the Company not later than the 5th Business Day following the date
of such holder's receipt of the applicable offer. A failure by a holder of the
Notes to timely respond to an offer to prepay made pursuant to this paragraph
shall be deemed to constitute an irrevocable rejection of such offer by such
holder.
(d) Prepayment of the Notes to be prepaid pursuant to this Paragraph 4D
shall be at 100% of the principal amount of such Notes, together with interest
on such Notes accrued to the date of prepayment (and without any
Yield-Maintenance Amount). The prepayment shall be made on the Proposed
Prepayment Date.
(e) Each offer to prepay the Notes pursuant to this paragraph shall be
accompanied by an Officer's Certificate and dated the date of such offer,
specifying:
(i) in reasonable detail, the nature and date or proposed date of
the Pro Rata Prepayment Event to which it relates;
(ii) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this paragraph;
(iii) the principal amount of each Note offered to be prepaid;
(iv) the last date upon which the offer can be accepted or rejected,
and setting forth the consequences of failing to provide an acceptance or
rejection, as provided in clause (c) of this paragraph; and
(v) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date.
(f) Notwithstanding the foregoing, if the Company gives advance notice of
a Pro Rata Prepayment Event which does not actually occur for any reason and
such non-occurrence is not in violation of the applicable terms of the Revolving
Credit Agreement (including, without limitation, the abandonment by the Company
or a Subsidiary of the applicable sale, transfer or other disposition of
property, or abandonment of the incurrence of Indebtedness, which was
anticipated to trigger such Pro Rata Prepayment Event), then, the Company shall
deliver to each Significant Holder a notice to such effect not later than 10
Business Days prior to applicable Proposed Prepayment Date, including a
certification from a Financial Officer that such Pro Rata Prepayment Event will
not occur and that such non-occurrence is not in violation of the terms of the
Revolving Credit Agreement and has not been postponed or re-scheduled, and upon
timely
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receipt of such notice and certification, no Pro Rata Prepayment shall be
required in respect of such cancelled Pro Rata Prepayment Event pursuant to this
Paragraph 4D.
(g) Any partial prepayment of the Notes pursuant to this Paragraph 4D will
be applied in satisfaction of required payments of principal on a pro rata
basis.
4E. Partial Payments Pro Rata. Upon any partial prepayment of the Notes
pursuant to Paragraph 4A, 4B or 4D, the principal amount so prepaid shall be
allocated to all Notes at the time outstanding in proportion to the respective
outstanding principal amounts thereof.
4F. Retirement of Notes. The Company shall not, and shall not permit the
Subsidiaries or their Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than by prepayment pursuant to
Paragraph 4A, 4B or 4D or upon acceleration of such final maturity pursuant to
Paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Company, its Subsidiaries or its Affiliates shall
have offered to prepay or otherwise retire or purchase or otherwise acquire, as
the case may be, the same proportion of the aggregate principal amount of Notes
held by each other holder of Notes at the time outstanding upon the same terms
and conditions. Any Notes so prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any Subsidiaries or Affiliates shall not be
deemed to be outstanding for any purpose under this Agreement.
5. AFFIRMATIVE COVENANTS. So long as any Note or amount owing under this
Agreement shall remain unpaid, the Company covenants and agrees that:
5A. Financial Statements. The Company will deliver to each Significant
Holder in duplicate:
(i) no later than the earlier of (i) 10 days after the date that the
Company is required to file a report on Form 10-Q with the Securities and
Exchange Commission in compliance with the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(whether or not the Company is so subject to such reporting requirements),
and (ii) 45 days after the end of each of the first three fiscal quarters
of each fiscal year of the Company, its consolidated balance sheet and
related statements of income, retained earnings and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, all certified by one of
its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Company and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP,
subject to normal year-end audit adjustments and the absence of footnotes;
(ii) no later than the earlier of (i) 10 days after the date that
the Company is required to file a report on Form 10-K with the Securities
and Exchange Commission in
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compliance with the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (whether or not the Company is
so subject to such reporting requirements), and (ii) 90 days after the end
of each fiscal year of the Company, its audited consolidated balance sheet
and related statements of income, retained earnings and cash flows as of
the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all reported on by
PricewaterhouseCoopers LLP or other independent public accountants of
recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as
to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Company and its Consolidated Subsidiaries
on a consolidated basis in accordance with GAAP;
(iii) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by the Company or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Securities and Exchange Commission, or with any national
securities exchange, or distributed by the Company to its shareholders
generally, as the case may be;
(iv) concurrently with any delivery of financial statements under
clause (i) or (ii) above, a certificate of a Financial Officer of the
Company (a) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (b) setting forth reasonably
detailed calculations demonstrating compliance with Paragraphs 6A, 6E, 6H
and 6I hereof and (c) stating whether any change in GAAP or in the
application thereof has occurred since the date of the Company's audited
financial statements referred to in Paragraph 8B and, if any such change
has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(v) concurrently with any delivery of financial statements under
clause (ii) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any
Default or Event of Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(vi) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by the Company or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may
be;
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(vii) promptly upon receipt thereof, a copy of the report submitted
to the Company by independent accountants in connection with the regular
annual audit made by them of the annual financial statements of the
Company; and
(viii) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Company or any Subsidiary, or compliance with the terms
of any Transaction Document, as any Significant Holder may reasonably
request.
5B. Information Required by Rule 144A. The Company will, upon the request
of the holder of any Note, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other information as such
holder may reasonably determine to be necessary in order to permit compliance
with the information requirements of Rule 144A under the Securities Act in
connection with the resale of Notes, except at such times as the Company is
subject to the reporting requirements of section 13 or 15(d) of the Exchange
Act. For the purpose of this Paragraph 5B, the term "qualified institutional
buyer" shall have the meaning specified in Rule 144A under the Securities Act.
5C. Notices of Material Events. If, to the knowledge of any Financial
Officer or other executive officer of Company, any of the following events has
occurred:
(a) any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Company or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) any ERISA Event (as defined in the Revolving Credit Agreement) that,
alone or together with any other ERISA Events (as defined in the Revolving
Credit Agreement) that have occurred, could reasonably be expected to
result in liability of the Company or its Subsidiaries in an aggregate
amount exceeding $10,000,000; or
(d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect;
then the Company will furnish to each holder of the Notes prompt written notice
of such occurrence. Each notice delivered under this paragraph shall be
accompanied by a statement of a Financial Officer setting forth the details of
the event or development requiring such notice and any action taken or proposed
to be taken with respect thereto.
5D. Inspection of Property; Books and Records. (a) The Company will
maintain or cause to be maintained the books of record and account of the
Company and each Guarantor and other Consolidated Subsidiary, in good order in
accordance with sound business
8
practice so as to permit its financial statements to be prepared in accordance
with generally accepted accounting principles.
(b) The Company will permit any Person designated by any holder of Notes
in writing, at such holder's expense (or, if an Event of Default does exist, at
the Company's expense), to visit and inspect any of the properties of and to
examine the corporate books and financial records of the Company and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of the Company with its principal officers and its independent public
accountants, all at such reasonable times and as often as such holder may
reasonably request; provided that nothing in this paragraph shall require the
Company or any Guarantor to disclose any confidential or proprietary information
constituting trade secrets.
(c) With the consent of the Company (which consent will not be
unreasonably withheld) or, if an Event of Default has occurred and is
continuing, without the requirement of any such consent, the Company will permit
any Person designated by any holder of Notes in writing, at such holder's
expense (or, if an Event of Default does exist, at the Company's expense), to
visit and inspect any of the properties of and to examine the corporate books
and financial records of any Guarantor or other Consolidated Subsidiary and make
copies thereof or extracts therefrom and to discuss the affairs, finances and
accounts of such Guarantor or other Consolidated Subsidiary with its and the
Company's principal officers and the Company's independent public accountants,
all at such reasonable times and as often as such holder may reasonably request;
provided that nothing in this paragraph shall require the Company or any
Guarantor to disclose any confidential or proprietary information constituting
trade secrets.
5E. [INTENTIONALLY OMITTED]
5F Covenant to Secure Note Equally. The Company covenants that, if it or
any Subsidiary shall create or assume any Lien upon any of their property or
assets, whether now owned or hereafter acquired, other than Liens permitted by
the provisions of Paragraph 6B (unless prior written consent to the creation or
assumption thereof shall have been obtained pursuant to Paragraph 12C), the
Company will make or cause to be made effective provision whereby the Notes will
be secured by such Lien equally and ratably with any and all other Indebtedness
thereby secured so long as any such other Indebtedness shall be so secured;
provided that the creation and maintenance of such equal and ratable Lien shall
not in any way limit or modify the right of the holders of the Notes to enforce
the provisions of Paragraph 6B. Notwithstanding the foregoing, at no time shall
the Company, any Guarantor or any other Subsidiary create or assume any Lien
upon any of their property or assets, whether now owned or hereafter acquired,
securing any obligations in respect of the Revolving Credit Agreement (other
than those permitted by the provisions of clause (k) of Paragraph 6B).
5G. Maintenance of Properties; Compliance with Laws. The Company will, and
will cause each Subsidiary to, (i) keep and maintain all property material to
the conduct of its business in good working order and condition, ordinary wear
and tear excepted; except for such cases of non-compliance that, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect; and (ii) comply with all laws, rules, regulations and orders
9
of any Governmental Authority applicable to it, its operations or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
5H. Insurance. The Company will, and will cause each Subsidiary to,
maintain, with financially sound and reputable insurance companies, insurance
(a) against such casualties, contingencies and risks (and with such risk
retentions), (b) of such types, and (c) in such amounts as shall be customary
for companies of established reputation engaged in the same or similar
businesses, and will furnish, and cause each Subsidiary to furnish, to the
Required Holders (upon request), information in reasonable detail as to the
insurance carried by it.
5I. ERISA. (i) Compliance. The Company will, and will cause each ERISA
Affiliate to, at all times with respect to each Plan, make timely payments of
contributions required to meet not less than the minimum funding standard set
forth in ERISA or the Code with respect thereto and, with respect to each
Multiemployer Plan, make timely payment of contributions required to be paid
thereto as provided by Section 515 of ERISA and comply with all other provisions
of ERISA, except for such failures to make contributions and failures to comply
as would not have Material Adverse Effect.
(ii) Non-US Pension Plans. The Company will, and will cause each
Subsidiary to, make all required payments in respect of funding any non-US
pension Plan applicable to such Person and otherwise fully comply with all
applicable laws, statutes, rules and regulations governing or affecting
such non-US pension Plan if the failure to make such payments or so comply
could reasonably be expected to have a Material Adverse Effect.
5J. Payment of Notes and Maintenance of Office. The Company will
punctually pay, or cause to be paid, the principal and interest (and premium, if
any) to become due in respect of Notes according to the terms thereof and will
maintain an office at the address of the Company set forth in Paragraph 12H
hereof where notices, presentations and demands in respect hereof or the Notes
may be made upon it. Such office will be maintained at such address until such
time as the Company will notify the holders of the Notes of any change of
location of such office.
5K. Environmental Laws. (i) The Company will, and will cause each
Subsidiary to, (a) comply with Environmental Laws applicable to it, and obtain,
comply with and maintain any and all Environmental Permits necessary for its
operation as conducted and as planned; and (b) take all reasonable efforts to
ensure that all tenants, subtenants, contractors, subcontractors and invitees
comply with all Environmental Laws, and obtain, comply with and maintain any and
all Environmental Permits applicable to any of them insofar as any failure to so
comply, obtain or maintain reasonably could be expected to adversely affect the
Company or any of its Subsidiaries. For purposes of this Paragraph 5K,
non-compliance shall be deemed not to constitute a breach of this covenant
provided that, upon learning of any actual or suspected noncompliance, the
Company shall promptly undertake or cause to be undertaken reasonable efforts to
achieve compliance, and provided further, that, in any case, such noncompliance,
and any other noncompliance with any Environmental Law, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
10
(ii) The Company will, and will cause each Subsidiary to, promptly
comply with all orders and directives of all Governmental Authorities
regarding Environmental Laws, other than such orders or directives as to
which an appeal has been timely and promptly taken in good faith, provided
that no Default will arise under this clause to the extent the failure to
comply with any or all such appealed orders or directives could not
reasonably be expected to result in a Material Adverse Effect.
5L. Use of Proceeds. The Company will use the proceeds of the sale of the
Notes only to refinance Indebtedness under the Revolving Credit Agreement and
for general corporate purposes.
5M. Further Assurances. The Company will, and will cause each Subsidiary
to, execute any and all further documents, agreements and instruments, and take
all further action that may be required under applicable law, or that the
Required Holders may reasonably request, in order that the Guaranty Requirement
shall be satisfied at all times.
5N. Existence; Conduct of Business. The Company will, and will cause each
Subsidiary to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges, franchises, patents, copyrights, trademarks and tradenames
material to the conduct of the business of the Company and Subsidiaries, taken
as a whole; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation, dissolution or other transaction permitted under
Paragraph 6C.
5O. Payment of Obligations. The Company will, and will cause each
Subsidiary to, pay its Indebtedness and other obligations (including liabilities
in respect of any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority),
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings and the Company or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP or (b) failure to
pay could not reasonably be expected to result in a Material Adverse Effect.
6. NEGATIVE COVENANTS. So long as any Note or amount owing under this
Agreement shall remain unpaid, the Company covenants and agrees that:
6A. Subsidiary Indebtedness. The sum of (a) the total Indebtedness of all
Consolidated Subsidiaries (excluding (i) Indebtedness under this Agreement, (ii)
Indebtedness existing on January 8, 2004 and set forth on Schedule 6A, (iii)
Indebtedness owed to the Company or to a Subsidiary, (iv) reimbursement
obligations in respect of undrawn letters of credit incurred in the ordinary
course of business and (v) Indebtedness of any Guarantor) plus (b) the
consideration (other than any note of a Subsidiary that serves as a conduit in a
sale or financing transaction with respect to Receivables) directly or
indirectly received by any Consolidated Subsidiary from any Person (other than
the Company or a Consolidated Subsidiary)
11
for Receivables sold, which Receivables remain uncollected at such time, will at
no time exceed $100,000,000.
6B. Negative Pledge. Neither the Company nor any Consolidated Subsidiary
will create, incur, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(a) any Lien created under the Transaction Documents;
(b) Liens existing on the date hereof, securing Indebtedness outstanding
on the Date of Closing, and set forth on Schedule 6B;
(c) any Lien on any asset securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
asset, provided that such Lien attaches to such asset concurrently with or
within 180 days after the acquisition thereof;
(d) any Lien existing on any asset of any corporation at the time such
corporation becomes a Consolidated Subsidiary, provided that (i) such Lien
is not created in contemplation of or in connection with such corporation
becoming a Consolidated Subsidiary, (ii) such Lien shall not apply to any
other property or assets of the Company or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date such
corporation becomes a Consolidated Subsidiary and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;
(e) any Lien on any asset of any corporation existing at the time such
corporation is merged or consolidated with or into a Consolidated
Subsidiary and not created in contemplation of such event; provided that
such Lien shall not extend to other assets of such Consolidated Subsidiary
and shall secure only those obligations which it secures on the date of
such merger or consolidation and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof;
(f) any Lien existing on any asset prior to the acquisition thereof by the
Company or any Consolidated Subsidiary and not created in contemplation of
such acquisition;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by any of the
foregoing clauses of this paragraph; provided that such Indebtedness is
not increased and is not secured by any additional assets;
(h) Liens for taxes that are not yet subject to penalties for non-payment
or are being contested in good faith, or minor survey exceptions or minor
encumbrances, easements or other rights of others with respect to, or
zoning or other governmental restrictions as to the use of, real property
that do not, in the aggregate, materially impair the use of such property
in the operation of the businesses of the Company and the Subsidiaries;
12
(i) (i) Liens arising out of judgments or awards against the Company or
any Subsidiary with respect to which such Person is, in good faith,
prosecuting an appeal or proceedings for review and (ii) Liens incurred by
the Company or any Subsidiary for the purpose of obtaining a stay or
discharge in any legal proceeding to which the Company or any Subsidiary
is a party; provided that the Liens permitted by the foregoing clause (ii)
shall not secure obligations in an aggregate principal amount outstanding
in excess of 5.0% of Consolidated Tangible Net Worth;
(j) (i) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's or other like Liens arising in the ordinary course of business
for sums which are not overdue for a period of more than 60 days or which
are being contested in good faith by appropriate proceedings, (ii) pledges
or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation and deposits securing
liability to insurance carriers under insurance or self-insurance
arrangements, and (iii) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capitalized
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(k) Liens (if any) arising pursuant to Section 5 of the Subsidiary
Guarantee Agreement or Section 3 of the Indemnity, Subrogation and
Contribution Agreement (each used in this clause as defined in the
Revolving Credit Agreement) as in effect on the Closing Date, and Liens
that constitute rights of set-off in connection with the Revolving Credit
Agreement; provided that the Company and Guarantors shall not, at any
time, maintain aggregate cash balances in excess of $100,000,000 in all
accounts with the lenders under the Revolving Credit Agreement (or
Affiliate thereof) that are subject to such set-off or similar rights; and
(l) Liens not otherwise permitted by the foregoing clauses of this
paragraph securing Indebtedness (other than Indebtedness in respect of the
Revolving Credit Agreement) in an aggregate principal amount outstanding
not to exceed 5.0% of Consolidated Tangible Net Worth.
6C. Consolidations, Mergers and Sales of Assets. The Company will not, and
will not permit any Subsidiary to, consolidate or merge with, or sell, lease or
otherwise dispose of any of its assets to, or, in the case of a Subsidiary,
issue or sell any Equity Interests in such Subsidiary to, any Person (other than
the Company or a Subsidiary), except that, so long as no Default would result
under any other provision of this Agreement:
(a) any Person may merge with and into the Company or any Subsidiary
Guarantor; provided that the Company or such Subsidiary Guarantor, as the
case may be, is the surviving Person;
(b) any Person other than the Company or a Subsidiary Guarantor may merge
with and into any Subsidiary that is not a Subsidiary Guarantor; provided
that such Subsidiary
13
is the surviving Person;
(c) subject to Paragraph 6G, the Company or any Subsidiary may sell, lease
or otherwise dispose of any of its assets to the Company or any other
Subsidiary;
(d) the Company or any Subsidiary may sell, lease or otherwise dispose of
any of its inventory in the ordinary course of business and any of its
assets which are obsolete, excess or unserviceable;
(e) any Foreign Subsidiary may sell Receivables in one or more
transactions in the ordinary course of business and consistent with past
practice, the proceeds of which transactions are used for working capital;
(f) the Company and the Subsidiaries may carry out sale and leaseback
transactions permitted under Paragraph 6F;
(g) the Company or any Subsidiary may sell or otherwise dispose of Equity
Interests in any Subsidiary, and any Subsidiary may issue and sell its
Equity Interests, to one or more Persons other than the Company and the
Subsidiaries in an aggregate amount for all such transactions that will
not result in Subsidiaries in which Persons other than the Company and the
Subsidiaries hold minority interests representing more than 7.5% of
Consolidated Tangible Net Worth; and
(h) the Company or any Subsidiary may sell, lease or otherwise dispose of
any of its assets for fair value (other than as permitted by clauses (a)
through (g) above); provided that (i) no such transaction, when taken
together with all previous such transactions, shall result in all or
substantially all of the assets of the Company and the Subsidiaries having
been sold or otherwise disposed of, (ii) no such transaction shall result
in a reduction in the percentage of the Equity Interests of any Subsidiary
owned directly or indirectly by the Company unless all the Equity
Interests in such Subsidiary owned directly or indirectly by the Company
are disposed of and (iii) when applicable, the Net Proceeds (as defined in
the Revolving Credit Agreement) from any such transaction shall be used in
in such a manner as to comply with the provisions of (y) Section 2.10(c)
of the Revolving Credit Agreement (or any successor or equivalent
provision) and (z) Paragraphs 4D and 5E of this Agreement.
6D. Transactions with Affiliates. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, pay any funds to or for the
account of, make any investment in or engage in any transaction with any
Affiliate (other than the Company or a Subsidiary none of the Equity Interests
in which are owned directly or indirectly by an Affiliate of the Company that is
not a Subsidiary), except that:
(a) the Company may declare and pay a Restricted Payment permitted by
Paragraph 6E;
14
(b) the Company or any Subsidiary may make payments or provide
compensation, and reimburse related expenses, for services rendered by (i)
any Affiliate who is an officer, director or employee of the Company or
any Subsidiary and (ii) J. Spencer Standish;
(c) the Company or any Subsidiary may make any investment permitted by
Paragraph 6G;
(d) the Company or any Subsidiary may make sales to or purchases from any
Affiliate and, in connection therewith, extend credit, may make payments
or provide compensation for services rendered by any Affiliate, and may
engage in any other transaction with any Affiliate, in each case in the
ordinary course of business and consistent with past practice and on terms
and conditions at least as favorable to the Company or such Subsidiary as
the terms and conditions that would apply (i) in an arm's length
transaction with a Person not an Affiliate or (ii) in the case of a
transaction relating to pension, deferred compensation, insurance or other
benefit plans with an Affiliate employee, in a similar transaction with a
non-Affiliate employee; and
(e) the Company or any Subsidiary may engage in transactions with the
entities listed on Schedule 6D to the extent consistent with past
practice.
6E. Restricted Payments. The Company will not declare or make any
Restricted Payment unless, immediately after giving effect to such Restricted
Payment, (a) the Leverage Ratio does not exceed 2.25 to 1.00 and (b) no Default
shall have occurred and be continuing.
6F. Limitations on Sale-Leasebacks. The Company will not, and will not
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
with any Person whereby the Company or a Subsidiary shall sell or transfer
property, whether now owned or hereafter acquired, and then or thereafter rent
or lease as lessee such property or any part thereof or any other property which
the Company or any Subsidiary intends to use for substantially the same purpose
or purposes as the property being sold or transferred, unless (a) such
transaction is effected within 180 days of the property being placed in service
by the Company or such Subsidiary and results in a lease obligation incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such property, (b) when applicable, the Net Proceeds (as defined in the
Revolving Credit Agreement) from any such transaction shall be used in such a
manner as to comply with the provisions of (i) Section 2.10(c) of the Revolving
Credit Agreement (or any successor or equivalent provision) and (ii) Paragraphs
4D and 5E of this Agreement, or (c) after giving effect to any such sale or
transfer, the aggregate fair market value of all property of the Company and its
Subsidiaries so sold or transferred after the date hereof, and not permitted
under clauses (a) or (b) above, does not exceed $75,000,000.
6G. Investments, Loans, Advances, Guarantees and Acquisitions. The Company
will not, and will not permit any Subsidiary to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a Subsidiary
prior to such merger) any Equity Interests, evidences of Indebtedness or other
securities (other than any Hedging Agreement entered into in
15
the ordinary course of business) of, make or permit to exist any loans or
advances (excluding accounts receivable arising out of the sale of goods and
services reflected on the Company's consolidated balance sheet as current
assets) to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person constituting a business unit, except:
(a) Permitted Investments;
(b) (i) investments existing on the date hereof in the capital stock of
Subsidiaries or in Indebtedness of Subsidiaries and (ii) other investments
existing on the date hereof and set forth on Schedule 6G;
(c) acquisitions of assets of or Equity Interests in other Persons with an
aggregate fair market value for all such acquisitions not to exceed
$250,000,000 for consideration consisting solely of common stock of the
Company;
(d) acquisitions of assets of or Equity Interests in other Persons if, at
the time of and after giving pro forma effect to each such acquisition and
any related incurrence of Indebtedness, the Leverage Ratio is less than
2.50 to 1.00;
(e) (i) any investment, loan or advance by the Company or a Guarantor in
or to the Company or another Guarantor, (ii) any investment, loan or
advance by a Subsidiary that is not a Guarantor in or to the Company or a
Guarantor, (iii) any investment, loan or advance by any Subsidiary that is
not a Guarantor in or to any other Subsidiary that is not a Guarantor and
(iv) any investment, loan or advance by the Company or any Guarantor in or
to any Subsidiary that is not a Guarantor; provided that each investment,
loan or advance referred to in the preceding clause (iv) must be in an
outstanding principal amount which, together with the aggregate
outstanding principal amount of all other investments, loans and advances
permitted by such clause (iv), shall not exceed $75,000,000 at any time;
(f) Guarantees by a Subsidiary constituting Indebtedness permitted by
Paragraph 6A (provided that a Subsidiary shall not Guarantee any
obligation of the Company unless such Subsidiary also becomes a Guarantor
in respect of the Guarantied Obligations) and Guarantees by the Company of
Indebtedness of a Subsidiary permitted by Paragraph 6A;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(h) loans or other advances to employees consistent with past practice;
and
(i) other investments not permitted under clauses (a) through (h) above in
an aggregate amount not exceeding $75,000,000 at any time.
16
6H. Leverage Ratio. The Company will not permit the Leverage Ratio on any
date to exceed 3.00 to 1.00.
6I. Interest Coverage Ratio. The Company will not permit the ratio of
Consolidated EBITDA to Consolidated Interest Expense for any period of four
consecutive fiscal quarters, commencing with the period ending September 30,
2004, to be less than 3.00 to 1.00.
6J. Lines of Business. The Company will not, and will not permit any
Subsidiary to, engage at any time in any business or business activity other
than a business conducted by the Company and its Subsidiaries on the date hereof
and business activities reasonably related thereto.
6K. Terrorism Sanctions Regulations. The Company will not, and will not
permit any Guarantor or other Material Subsidiary to (a) become a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of
Executive Order No. 13,224 of September 24, 2001, Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended, or (b) engage in any
dealings or transactions with any such Person in violation of applicable law,
rule or regulation.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) default in the payment of any principal of, or Yield-Maintenance
Amount payable with respect to, any Note when the same shall become due,
either by the terms thereof or otherwise as herein provided; or
(ii) default in the payment of any interest on any Note for more
than five (5) days after the same becomes due and payable; or
(iii) The Company or any Subsidiary (a) shall fail to make any
payment (whether of principal, premium, fee or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable, or (b) any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice,
the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that, this clause (b) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness; or
17
(iv) any representation or warranty made or deemed made by or on
behalf of the Company or any Subsidiary in or in connection with any
Transaction Document (or any amendment or modification thereof or waiver
thereunder) or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Transaction
Document or any amendment or modification thereof or waiver thereunder,
shall prove to have been incorrect in any material respect when made or
deemed made; or
(v) the Company fails to perform or observe any agreement contained
in Paragraphs 5C, 5L, 5N (with respect to the Company's existence) or 6,
or in the last sentence of Paragraph 5F; or
(vi) [INTENTIONALLY OMITTED]
(vii) the Company or any Guarantor fails to perform or observe any
other agreement, term or condition contained herein or in any Transaction
Document and such failure shall continue unremedied for a period of 30
days after notice thereof from the Required Holders to the Company (which
notice will be given at the request of any holder of Notes); or
(viii) the Company or any Guarantor or Material Subsidiary shall
become unable (or admit in writing its inability) to pay its debts as such
debts become due, or is generally not paying its debts as such debts
become due; or
(ix) the Company or any Guarantor or Material Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, receivership, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (herein called the "Bankruptcy
Law"), (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (x)
of this paragraph, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Company or any Guarantor or Material Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing; or
(x) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company, any Guarantor or any Material Subsidiary
or its debts, or of a substantial part of its assets, under any Bankruptcy
Law or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Company, any
Guarantor or any Material Subsidiary or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered; or
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(xi) any order, judgment or decree is entered in any proceedings
against the Company or any Guarantor or Material Subsidiary decreeing the
dissolution, split-up or divestiture of assets of the Company or any
Guarantor or Material Subsidiary, and such order, judgment or decree
remains unstayed and in effect for more than 60 days; or
(xii) one or more judgments in an aggregate amount in excess of
$10,000,000 is rendered against the Company or any of the Guarantors or
Subsidiaries, or any combination thereof, and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Company or any
of the Guarantors or Subsidiaries to enforce any such judgment; or
(xiii) (A) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (B) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of such proceedings, (C) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA, shall exceed $10,000,000 in respect of any single fiscal year
or $25,000,000 in the aggregate, (D) the Company, a Guarantor or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (E) the
Company, a Guarantor or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (F) the Company, a Guarantor or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company, a Guarantor or any Subsidiary thereunder; and
any such event or events described in the foregoing clauses either
individually or together with any other such event or events, could
reasonably be expected to result in liability of the Company, a Guarantor
and any of the Subsidiaries in an aggregate amount exceeding (y)
$10,000,000 in any fiscal year or (z) $25,000,000 in the aggregate; or
(xiv) the AI Guaranty Agreement shall cease to be, or shall be
asserted by the Company or any Guarantor not to be, a legal, valid and
binding obligation of each Guarantor; or
(xv) a Change in Control shall occur;
then (a) if such event is an Event of Default specified in clause (ix) or (x) of
this Paragraph 7A with respect to the Guarantors or the Company, all of the
Notes at the time outstanding shall automatically become immediately due and
payable, together with interest accrued thereon and the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand,
19
protest or notice of any kind, all of which are hereby waived by the Company,
and (b) with respect to any other event constituting an Event of Default, the
Required Holder(s) may at its or their option, by notice in writing to the
Company, declare all of the Notes to be, and all of the Notes shall thereupon be
and become, immediately due and payable together with interest accrued thereon
and together with the Yield-Maintenance Amount, if any, with respect to each
Note, without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of the Yield-Maintenance Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
7B. Rescission of Acceleration. At any time after any or all of the Notes
shall have been declared immediately due and payable pursuant to Paragraph 7A,
the Required Holder(s) may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become due
otherwise than by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at the rate
specified in the Notes, (ii) the Company shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to Paragraph 12C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes or this Agreement. No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any Note shall be
declared immediately due and payable pursuant to Paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to Paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. Other Remedies. If any Event of Default or Default shall occur and be
continuing, the holder of any Note may proceed to protect and enforce its rights
under this Agreement and such Note by exercising such remedies as are available
to such holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid of the exercise of any
power granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in equity or by
statute or otherwise.
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8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company and Guarantors
represent, covenant and warrant as follows:
8A. Organization; Authorization; Enforceability. The Company and each of
the Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business,
and is in good standing, in every jurisdiction where such qualification is
required. The Transactions to be entered into by the Company and the Guarantors
and are within their respective corporate powers and have been duly authorized
by all necessary corporate and, if required, stockholder action. This Agreement
has been duly executed and delivered by the Company and the Guarantors and
constitutes, and each other Transaction Document to which the Company or any
Guarantor is to be a party, when executed and delivered by such Person, will
constitute, a legal, valid and binding obligation of the Company or such
Guarantor, as the case may be, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
8B. Financial Statements. The Company has heretofore furnished to the
Purchasers its consolidated balance sheet and statements of income, retained
earnings and cash flows (i) as of and for the fiscal year ended December 31,
2004, reported on by PricewaterhouseCoopers LLP, independent public accountants,
and (ii) as of and for the fiscal quarters and the portions of the fiscal year
ended March 31, 2005 and June 30, 2005, certified by its chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above. Except
as described in the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2005 and June 30, 2005, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect since December 31, 2004.
8C. Actions Pending. Except as disclosed on Schedule 8C, there are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Company, threatened
against or affecting the Company or any of the Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve any of
the Transaction Documents or the transactions contemplated thereby.
8D. Outstanding Indebtedness. Neither the Company, nor any Subsidiary, has
outstanding any Material Indebtedness except as set forth in Schedule 6A. There
exists no default under the provisions of any instrument evidencing such
Material Indebtedness or of any agreement relating thereto.
21
8E. Title to Properties. (a) The Company and each Subsidiary, has good
title to, or valid leasehold interests in, all its real and personal properties
and assets material to its business, except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize its properties and assets for their intended purposes. All such owned
properties and assets, and all such leasehold interests, are free and clear of
Liens, other than Liens expressly permitted under Paragraph 6B.
(b) The Company and each Subsidiary, owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Company and Subsidiaries,
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
8F. Taxes. The Company and each Subsidiary has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) any
Taxes that are being contested in good faith by appropriate proceedings and for
which the Company or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
8G. Conflicting Agreements and Other Matters. Neither the Company, nor any
Subsidiary, is a party to any contract or agreement or subject to any charter or
other corporate restriction which materially and adversely affects its business,
property or assets, or financial condition. Neither the execution nor delivery
of this Agreement or any other Transaction Document, nor the offering, issuance
and sale of the Notes, nor fulfillment of nor compliance with the terms and
provisions hereof and of the Notes and other Transaction Documents will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company, any
Guarantor or any other Subsidiary, pursuant to, the charter or by-laws of the
Company, any Guarantor or any other Subsidiary, any award of any arbitrator or
any agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which any the Company, any
Guarantor or any other Subsidiary is subject. Neither the Company, nor any
Subsidiary, is a party to, or otherwise subject to any provision contained in,
any instrument evidencing Indebtedness of the Company, any Guarantor or any
other Subsidiary, any agreement relating thereto or any other contract or
agreement (including its charter) which limits the amount of, or otherwise
imposes restrictions on the incurring of, Indebtedness of the Company or any
Guarantor of the type to be evidenced by the Notes, except as set forth in the
agreements listed in Schedule 8G attached hereto.
8H. Offering of Notes. None of the Company, or any Guarantor, or any agent
acting on any of their behalf has, directly or indirectly, offered the Notes or
any similar security of the Company or any Guarantor for sale to, or solicited
any offers to buy the Notes or any similar security of the Company or any
Guarantor from, or otherwise approached or negotiated with respect thereto with,
any Person other than the Purchaser(s), and none of the Company or any Guarantor
or any agent acting on any of their behalf has taken or will take any action
which
22
would subject the issuance or sale of the Notes to the provisions of Section 5
of the Securities Act or to the provisions of any securities or Blue Sky law of
any applicable jurisdiction.
8I. Use of Proceeds. The proceeds from the sale of the Notes will be used
by the Company to refinance outstanding indebtedness under the Revolving Credit
Agreement and for general corporate purposes. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock, except in compliance with the
provisions of applicable law, or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224). Margin stock does not
and will not at any time constitute more than 25% of the value of the
consolidated assets of the Company and its Subsidiaries. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall have
the meanings assigned to them in said Regulation U.
8J. ERISA. No accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan (other than a Multiemployer Plan). No liability to the PBGC has been
or is expected by the Company or any ERISA Affiliate to be incurred with respect
to any Plan (other than a Multiemployer Plan) by the Company, any Subsidiary or
any ERISA Affiliate which is or would be materially adverse to the business,
condition (financial or otherwise) or operations of the Company and Subsidiaries
taken as a whole. None of the Company, any Subsidiary, or any ERISA Affiliate
has incurred or presently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan which is or would be
materially adverse to the business, condition (financial or otherwise) or
operations of the Company and Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes will be exempt
from, or will not involve any transaction which is subject to, the prohibitions
of section 406 of ERISA and will not involve any transaction in connection with
which a penalty could be imposed under section 502(i) of ERISA or a tax could be
imposed pursuant to section 4975 of the Code. The representation by the Company
and Guarantors in the next preceding sentence is made in reliance upon and
subject to the accuracy of the representation in Paragraph 9B.
8K. Governmental Consent. Neither the nature of the Company or
Subsidiaries, nor any of their respective businesses or properties, nor any
relationship between the Company or Subsidiaries, and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
other action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the Date of Closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement, the offering,
issuance, sale or delivery of the Notes or fulfillment of or compliance with the
terms and provisions hereof or of the Notes.
8L. Compliance with Laws. The Company and each Subsidiary is in compliance
with all laws, regulations and orders of any Governmental Authority applicable
to it or its property, except where the failure to be in compliance,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
23
8M. Environmental Compliance. Neither the Company nor any Subsidiary (i)
has failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability, or (iv) knows
of any basis for any Environmental Liability, except, in each case, for failures
and liabilities that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
8N. Utility Company Status. None of the Company or the Subsidiaries is a
(i) "holding company," a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended or (ii) public utility within the meaning of the Federal Power
Act, as amended.
8O. Investment Company Status. None of the Company or the Subsidiaries is
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or an
"investment adviser" within the meaning of the Investment Advisers Act of 1940,
as amended.
8P. Rule 144A. The Notes are not of the same class as securities of the
Company, if any, listed on a national securities exchange, registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
8Q. Disclosure. Neither this Agreement nor any other document, certificate
or statement furnished to any Purchaser by or on behalf of the Company or
Guarantors in connection herewith (as modified or supplemented by other
information so furnished to the Purchasers) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which they were made, not misleading; provided, that, with respect to projected
financial information, the foregoing shall be limited to a representation and
warranty that such information was prepared in good faith, subject to the
express qualifications set forth in such projections, based upon assumptions
believed by it to be reasonable at the time.
8R. Foreign Assets Control Regulations, Etc.
(a) Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
(b) None of the Company or Guarantors, or any other Subsidiary (i) is a
Person described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (ii) engages in
24
any dealings or transactions with any such Person. The Company, Guarantors and
other Subsidiaries are in compliance, in all material respects, with the USA
Patriot Act.
(c) No part of the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.
8S. Subsidiaries. Schedule 6G sets forth the name and jurisdiction of
organization of, and the ownership of the Company and Guarantors in each
Subsidiary, identifying each such Subsidiary that is a Guarantor, in each case
as of the Date of Closing.
8T. Solvency. After giving effect to the issuance of the Notes, (a) the
fair value of the assets of the Company and each Guarantor will exceed its debts
and liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Company and each Guarantor will be greater
than the amount that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Company and each
Guarantor will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) the Company and each Guarantor will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Date of
Closing.
9. REPRESENTATIONS OF THE PURCHASER. Each Purchaser represents as follows:
9A. Nature of Purchase. Such Purchaser is not acquiring the Notes to be
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of its property shall at all times be and remain within its control.
Such Purchaser acknowledges that the Notes have not been registered under the
Securities Act and may not be offered or sold in the absence of an applicable
exemption from the registration requirements of the Securities Act.
9B. Source of Funds. At least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
such Purchaser to pay the purchase price of the Notes to be purchased by such
Purchaser hereunder:
(i) the Source is an "insurance company general account" (as the
term is defined in the United States Department of Labor's Prohibited
Transaction Exemption ("PTE") 95-60) in respect of which the reserves and
liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners
(the "NAIC Annual Statement")) for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount of the
25
reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer
(or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC Annual
Statement filed with such Purchaser's state of domicile; or
(ii) the Source is a separate account that is maintained solely in
connection with such Purchaser's fixed contractual obligations under which
the amounts payable, or credited, to any employee benefit plan (or its
related trust) that has any interest in such separate account (or to any
participant or beneficiary of such plan (including any annuitant)) are not
affected in any manner by the investment performance of the separate
account; or
(iii) the Source is either (a) an insurance company pooled separate
account, within the meaning of PTE 90-1 or (b) a bank collective
investment fund, within the meaning of the PTE 91-38 and, except as
disclosed by such Purchaser to the Company in writing pursuant to this
clause (iii), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iv) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of PTE 84-14 (the "QPAM Exemption")) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of the
QPAM Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (a) the identity
of such QPAM and (b) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this clause (iv); or
(v) the Source constitutes assets of a "plan(s)" (within the meaning
of Section IV of PTE 96-23 (the "INHAM Exemption")) managed by an
"in-house asset manager" or "INHAM" (within the meaning of Part IV of the
INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM
Exemption are satisfied, neither the INHAM nor a person controlling or
controlled by the INHAM (applying the definition of "control" in Section
IV(h) of the INHAM Exemption) owns a 5% or more interest in the Company
and (a) the identity of such INHAM and (b) the name(s) of the employee
benefit plan(s)
26
whose assets constitute the Source have been disclosed to the Company in
writing pursuant to this clause (v); or
(vi) the Source is a governmental plan; or
(vii) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit
plans, each of which has been identified to the Company in writing
pursuant to this clause (vii); or
(viii) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Paragraph 9B, the terms "employee benefit plan," "governmental
plan," and "separate account" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
10. AI GUARANTY AGREEMENT
10A. Guarantied Obligations. The Guarantors party to this Agreement, in
consideration of the execution and delivery of this Agreement and the purchase
of the Notes by the Purchasers, hereby irrevocably, unconditionally, absolutely,
jointly and severally guarantee, on a continuing basis, to each holder of Notes
as and for such Guarantor's own debt, until final and indefeasible payment in
cash has been made, the due and punctual payment by the Company of the principal
of, and interest, and the Yield-Maintenance Amount (if any) on, the Notes at any
time outstanding and the due and punctual payment of all other amounts payable,
and all other indebtedness owing, by the Company to the holders of the Notes
under this Agreement and the Notes, in each case when and as the same shall
become due and payable, whether at maturity, pursuant to mandatory or optional
prepayment, by acceleration or otherwise, all in accordance with the terms and
provisions hereof and thereof; it being the intent of the Guarantors that the
obligations guaranteed by the guaranty set forth in this Paragraph 10A are
referred to in this Paragraph 10 as the "Guarantied Obligations" and the
guaranty thereof set forth in this Paragraph 10A is referred to in this
Agreement, together with any AI Guarantor Joinder Agreement, as the "AI Guaranty
Agreement".
10B. Payments and Performance. In the event that the Company fails to
make, on or before the due date thereof, any payment to be made of any principal
amount of, or interest or Yield-Maintenance Amount on, or in respect of, the
Notes or of any other amounts due to any holder of Notes under the Notes or this
Agreement, after giving effect to any applicable grace periods or cure
provisions or waivers or amendments, each Guarantor shall cause forthwith to be
paid the moneys in respect of which such failure has occurred in accordance with
the terms and provisions of this Agreement and the Notes. In furtherance of the
foregoing, if any or all the Notes have been accelerated as provided in
Paragraph 7A (and such acceleration has not been rescinded by action of the
Required Holders), the Guarantied Obligations in respect of such Notes shall
forthwith become due and payable without notice, regardless of whether the
acceleration of such Notes shall be stayed, enjoined, delayed or deemed
ineffective. Nothing
27
shall discharge or satisfy the obligations of the Guarantors under the AI
Guaranty Agreement except the full, final and indefeasible payment in cash of
the Guarantied Obligations.
10C. Releases. Each of the Guarantors consent and agree that, without any
notice whatsoever to or by the Guarantors, except with respect to any action
(but not any failure to act) referred to in clauses (i), (ii) and (iv) below (it
being understood that the Guarantors shall be deemed to have notice of any
matter as to which the Company has knowledge), and without impairing, releasing,
abating, deferring, suspending, reducing, terminating or otherwise affecting the
obligations of the Guarantors hereunder, each holder of Notes, by action or
inaction, may:
(i) compromise or settle, renew or extend the period of duration or
the time for the payment, or discharge the performance of, or may refuse to, or
otherwise not, enforce, or may, be action or inaction, release all or any one or
more parties to, any one or more of the Notes, this Agreement, or any other
guaranty or agreement or instrument related thereto or hereto;
(ii) assign, sell or transfer, or otherwise dispose of, any one or
more of the Notes;
(iii) grant waivers, extensions, consents and other indulgences of
any kind whatsoever to the Company or any Guarantor or any other Person liable
in any manner in respect of all or any part of the Guarantied Obligations;
(iv) amend, modify or supplement in any manner whatsoever and at any
time (or from time to time) any one or more of the Notes, this Agreement, or any
other guaranty or any agreement or instrument related thereto or hereto;
(v) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations whether parties hereto or not; and
(vi) sell, exchange, release, accept, surrender or enforce rights
in, or fail to obtain or perfect or to maintain, or caused to be obtained,
perfected or maintained, the perfection of any security interest or other Lien
on, by action or inaction, any property at any time pledged or granted as
security in respect of the Guarantied Obligations, whether so pledged or granted
by the Company, a Guarantor or any other Person.
The Guarantors hereby ratify and confirm any such action specified in this
Paragraph 10C and agree that the same shall be binding upon each Guarantor. The
Guarantors hereby waive any and all defenses, counterclaims or offsets which the
Guarantors might or could have by reason thereof.
10D. Waivers. To the fullest extent permitted by law, each of the
Guarantors hereby waives:
(i) notice of acceptance of this Agreement;
28
(ii) notice of any purchase or acceptance of the Notes under this
Agreement, or the creation, existence or acquisition of any of the Guarantied
Obligations, subject to any such Guarantor's right to make inquiry of each
holder of Notes to ascertain the amount of the Guarantied Obligations at any
reasonable time;
(iii) notice of the amount of the Guarantied Obligations, subject to
any Guarantor's right to make inquiry of each holder of Notes to ascertain the
amount of the Guarantied Obligations at any reasonable time;
(iv) notice of adverse change in the financial condition of the
Company or any Guarantor or any other fact that might increase the Company's or
such Guarantor's risk hereunder;
(v) notice of presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument;
(vi) all other notices and demands to which the Company or any
Guarantor might otherwise be entitled (except if such notice or demand is
specifically otherwise required to be given to the Company or such Guarantor
under this Agreement);
(vii) the right by statute or otherwise to require any or each
holder of Notes to institute suit against the Company or any Guarantor or to
exhaust the rights and remedies of any or each holder of Notes against the
Company or any Guarantor, such Guarantor being bound to the payment of each and
all Guarantied Obligations, whether now existing or hereafter accruing, as fully
as if such Guarantied Obligations were directly owing to each holder of Notes by
such Guarantor;
(ix) any defense arising by reason of any disability or other
defense (other than the defense that the Guarantied Obligations shall have been
fully, finally and indefeasibly paid) of the Company or any Guarantor or by
reason of the cessation from any cause whatsoever of the liability of the
Company or any Guarantor in respect thereof;
(x) any stay (except in connection with a pending appeal),
valuation, appraisal, redemption or extension law now or at any time hereafter
in force that, but for this waiver, might be applicable to any sale of Property
of the Company or any Guarantor made under any judgment, order or decree based
on this Agreement, and the Company or such Guarantor covenants that it will not
ant any time insist upon or plead, or in any manner claim or take the benefit or
advantage of any such law; and
(xi) at all times prior to full, final and indefeasible payment of
the Guarantied Obligations, any claim of any nature arising out of any right of
indemnity, contribution, reimbursement, indemnification or any similar right or
any claim of subrogation (whether such right or claim arises under contract,
common law or statutory or civil law (including, without limitation, Section 509
of the United States Bankruptcy Code) arising in respect of any payment made
under this Agreement or in connection with this Agreement, against the Company
or any
29
Guarantor (including Liens on the property of the Company or any Guarantor), in
each case whether or not the Company or such Guarantor at any time shall be the
subject of any proceeding brought under any Bankruptcy Law, and the Company or
such Guarantor further agrees that it will not file any claims against either
Company or the estate of either Company in the course of any such proceeding or
otherwise, and further agrees that each holder of Notes may specifically enforce
the provisions of this clause (xi).
10E. Marshaling. Each of the Guarantors hereby consent and agree:
(i) that each holder of Notes, and each Person acting for the
benefit of one or more of the holders of Notes, shall be under no obligation to
marshal any assets in favor of the Guarantors or against or in payment of any or
all of the Guarantied Obligations; and
(ii) that, to the extent that any Guarantor makes a payment or
payments to any holder of the Notes, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required, for any of the foregoing reasons or for any other reason,
to be repaid or paid over to a custodian, trustee, receiver or any other party
under any Bankruptcy Law, other common or civil law, or equitable cause, then,
to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied thereby shall be revived and continued in full force
and effect as if such payment or payments had not been made and the Guarantor
shall be primarily liable for such obligation.
10F. Immediate Liability. The Guarantors agree that the liability of the
Guarantors in respect of this Guarantee shall be immediate and shall not be
contingent upon the exercise or enforcement by any holder of Notes or any other
Person of whatever remedies such holder of Notes or other Person may have
against the Company or any Guarantor or the enforcement of any Lien or
realization upon any security such holder of Notes or other Person may at any
time possess.
10G. Primary Obligations. The AI Guaranty Agreement is a primary and
original obligation of the Guarantors and is an absolute, unconditional,
continuing and irrevocable guaranty of payment and shall remain in full force
and effect without respect to any action by any holder of Notes specified in
Paragraph 10C hereof or any future changes in conditions, including, without
limitation, change of law or any invalidity or irregularity with respect to the
issuance or assumption of any obligations (including, without limitation, the
Notes) of or by the Company or any Guarantor, or with respect to the execution
and delivery of any agreement (including, without limitation, the Notes and this
Agreement) by the Company or any other Person.
10H. No Reduction or Defense. The obligations of the Guarantors under this
Agreement, and the rights of any holder of Notes to enforce such obligations by
any proceedings, whether by action at law, suit in equity or otherwise, shall
not be subject to any reduction, limitation, impairment or termination, whether
by reason of any claim of any character whatsoever or otherwise (other than
payment in full of all amounts owing hereunder or under the Notes), including,
with limitation, claims of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense (other than any defense based upon the
irrevocable
30
payment in full of the obligations of the Company and the Guarantors under this
Agreement and the Notes), set-off, counterclaim, recoupment or termination
whatsoever.
Without limiting the generality of the foregoing, the obligations of the
Guarantors shall not be discharged or impaired by:
(i) any default (including, without limitation, any Default or Event
of Default), failure or delay, willful or otherwise, in the performance of any
obligations by the Company or any Guarantor, or any of their respective
Subsidiaries or Affiliates;
(ii) any proceeding of, or involving, the Company or any Guarantor,
or any of their respective Subsidiaries or Affiliates under any Bankruptcy Law,
or any merger, consolidation, reorganization, dissolution, liquidation, sale of
assets or winding up or change in corporate constitution or corporate identity
or loss of corporate identity of the Company or any Guarantor, or any other
Subsidiary or Affiliate;
(iii) any incapacity or lack of power, authority or legal
personality of, or dissolution or change in the directors, stockholders or
status of, the Company or any Guarantor, or any other Subsidiary or Affiliate or
any other Person;
(iv) impossibility or illegality of performance on the part of the
Company or any Guarantor under this Agreement or the Notes;
(v) the invalidity, irregularity or unenforceability of the Notes,
this Agreement or any documents referred to therein or herein;
(vi) in respect of the Company or any Guarantor, or any Subsidiary
or Affiliate, any change of circumstances, whether or not foreseen or
foreseeable, whether or not imputable to the Company or any Guarantor, or any
Subsidiary or Affiliate, or impossibility of performance through fire,
explosion, accident, labor disturbance, floods, droughts, embargoes, wars
(whether or not declared), terrorist activities, civil commotions, acts of God
or the public enemy, delays or failure of suppliers or carriers, inability to
obtain materials or any other causes affecting performance, or any other force
majeure, whether or not beyond the control of the Company or any Guarantor, or
any Subsidiary or Affiliate and whether or not of the kind hereinbefore
specified;
(vii) any attachment, claim, demand, charge, Lien, order, process,
encumbrance or any other happening or event or reason, similar or dissimilar to
the foregoing, or any withholding or diminution at the source, by reason of any
taxes, assessments, expenses, indebtedness, obligations or liabilities of any
character, foreseen or unforeseen, and whether or not valid, incurred by or
against any Person, corporation or entity, or any claims, demands, charges,
Liens or encumbrances of any nature, foreseen or unforeseen, incurred by any
Person, or against any sums payable under this Agreement or the Notes, so that
such sums would be rendered inadequate or would be unavailable to make the
payments herein provided; or
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(viii) any order, judgment, decree, ruling or regulation (whether or
not valid) of any court of any government authority or agency thereof, or any
other action, happening, event or reason whatsoever which shall delay, interfere
with, hinder or prevent, or in any way adversely affect, the performance by the
Company or any Guarantor of any of their respective obligations under this
Agreement or the Notes, as the case may be.
10I. Subordination. In the event that, for any reason whatsoever, the
Company now or hereafter becomes indebted or obligated to any of the other
Guarantors in any manner, the Guarantors agree that (a) the amount of such
obligation, interest thereon if any, and all other amounts due with respect
thereto (collectively, "Intercompany Obligations"), shall, at all times during
the existence of an Event of Default, be subordinate as to time of payment and
in all other respects to all the Guarantied Obligations; provided however, that,
to the extent such Intercompany Obligations are also governed by provisions
under the "Subsidiary Guarantee Agreement" or "Indemnity, Subrogation and
Contribution Agreement" (each, used in this paragraph as defined in the
Revolving Credit Agreement) they shall be deemed to be excluded from this clause
(a) to the extent necessary to avoid characterization of this clause as a
prohibited Lien under the terms of the Revolving Credit Agreement (but only to
the extent not otherwise permitted thereunder), and (b) the Guarantors shall not
be entitled to enforce or receive payment thereof until all sums then due and
owing to the holders of the Notes in respect of the Guarantied Obligations shall
have been fully, finally and indefeasibly paid in full in cash, except that the
Guarantors may enforce (and shall enforce, at the request of the Required
Holders, and at the Guarantors' expense) any obligations in respect of any such
obligation owing to the Guarantors from the Company so long as all proceeds in
respect of any recovery of from such enforcement shall be held by the Guarantors
for its senior lenders as their interests may appear, to be paid thereto as
promptly as reasonably possible. If any other payment, other than pursuant to
the immediately preceding sentence, shall have been made to the Guarantors by
the Company in respect of any such obligation during any time that an Event of
Default exists and there are Guarantied Obligations outstanding, the Guarantors
shall hold all such payments for its senior lenders as aforesaid, to be paid
thereto as promptly as reasonably possible.
10J. No Election. Each holder of Notes shall, individually or
collectively, have the right to seek recourse against any or all of the
Guarantors to the fullest extent provided for herein for its obligations under
this Agreement. No election to proceed in one form of action or proceeding, or
against any party, or on any obligation, shall constitute a waiver of such
holder's right to proceed in any other form of action or proceeding or against
other parties unless such holder of Notes has expressly waived such right in
writing. Specifically, but without limiting the generality of the foregoing, no
action or proceeding by or on behalf of any holder of Notes against the Company
or any other Person under any document or instrument evidencing obligations of
the Company or any such other Person to or for the benefit of such holder of
Notes shall serve to diminish the liability of the Guarantors under this
Agreement except to the extent that such holder of Notes unconditionally shall
have realized payment by such action or proceeding.
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10K. Severability. Each of the rights and remedies granted under this
Paragraph 10 to each holder of Notes in respect of the Notes held by such holder
may be exercised by such holder without notice, or the consent of or any other
action by, any other holder of the Notes.
10L. Appropriations. Until all amounts which may be or become payable by
the the Company under or in connection with this Agreement or the Notes or by
the Guarantors, any holder of Notes (on its own behalf or under any trustee or
agent on its behalf) may refrain from applying or enforcing any moneys, security
or rights held or received by such holder of Notes (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce the same in such
manner and order as it sees fit (whether against those amounts or otherwise) and
the Guarantors shall not be entitled to the benefit of the same; provided,
however, that any payments received from the Company, or the Guarantors on
behalf of the Company, will be applied to amounts owing by the Company hereunder
or in respect of the Notes.
10M. Other Enforcement Rights. Each holder of Notes may proceed to protect
and enforce this Agreement by suit or suits or proceedings in equity, at law or
in bankruptcy or insolvency, and whether for the specific performance of any
covenant or agreement contained herein or in execution or aid of any power
herein granted, or for the recovery of judgment for the obligations hereby
guarantied or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.
10N. Invalid Payments. To the extent that any payment is made to any
holder of Notes in respect of the Guarantied Obligations by any Person, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required, for any of the foregoing
reasons or for any other reason, to be repaid or paid over to a custodian,
trustee, receiver, administrative receiver, administrator or any other party or
officer under any Bankruptcy Law, or any other common or civil law or equitable
cause, then to the extent of such payment or repayment, the obligation or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if said payment had not been made and the Guarantors shall be
primarily liable for such obligation.
10O. No Waivers or Election of Remedies; Expenses; etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement upon any holder of Notes shall be exclusive of any other right,
power or remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the obligations of the
Company under this Agreement, the Guarantors will pay to the holder of each Note
on demand all amounts specified in this Agreement and such further amount as
shall be sufficient to cover all reasonable costs and expenses of such holder of
Notes incurred in any enforcement or collection under this Agreement, including,
without limitation, reasonable attorney's fees, expenses and disbursements.
10P. Restoration of Rights and Remedies. If any holder of Notes shall have
instituted any proceeding to enforce any right or remedy under this Agreement or
any Note held
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by such holder and such proceeding shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to such holder, then and in
every such case each such holder of Notes, the Company and each Guarantor shall,
except as may be limited or affected by any determination in such proceeding, be
restored severally and respectively to its respective former position hereunder
and thereunder, and thereafter the rights and remedies of such holder of Notes
shall continue as though no such proceeding had been instituted.
10Q. No Setoff or Counterclaim. Except as otherwise required by law, each
payment by the Guarantors shall be made without setoff or counterclaim.
10R. Further Assurances. The Guarantors will cooperate with the holders of
the Notes and execute such further instruments and documents as the Required
Holders shall reasonably request to carry out, to the reasonable satisfaction of
the Required Holders, the transactions contemplated by this Agreement, the Notes
and the documents and instruments related hereto and thereto.
10S. Survival. So long as the Guarantied Obligations shall not have been
fully and finally performed and indefeasibly paid in full in cash, the
obligations of the Guarantors under the AI Guaranty Agreement shall survive the
transfer and payment of any Note and the payment in full of all the Notes.
10T. Acknowledgment of Common Interests; etc. Each of the Guarantors
acknowledges and confirms that: they are members of an affiliated group of
companies that includes the Company and other Guarantors; the proceeds of the
issue and sale of Notes will be used in part to benefit the Guarantors in the
operation of their respective businesses; and the Company and Guarantors are
engaged in related businesses, and the Company and each Guarantor will derive
substantial direct and indirect benefits from the issue and sale of Notes.
10U. Conversion of Currencies. (a) If, for the purpose of obtaining
judgment in any court, it is necessary to convert a sum owing under the AI
Guaranty Agreement in one currency into another currency, each Guarantor agrees,
to the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with normal financial procedures in
the relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each Guarantor in respect of any sum due under the
AI Guaranty Agreement or any holder of the Guarantied Obligations or other
obligations owing thereunder (the "Applicable Creditor") shall, notwithstanding
any judgment in a currency (the "Judgment Currency") other than the currency in
which such sum is stated to be due hereunder (the "Agreement Currency"), be
discharged only to the extent that, on the Business Day following receipt by the
Applicable Creditor of any sum adjudged to be so due in the Judgment Currency,
the Applicable Creditor may in accordance with normal financial procedures in
the relevant jurisdiction purchase the Agreement Currency with the Judgment
Currency; if the amount of the Agreement Currency so purchased is less than the
sum originally due to the Applicable Creditor in the Agreement Currency, such
Guarantor agrees, as a separate obligation
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and notwithstanding any judgment, to indemnify the Applicable Creditor against
such loss. The obligations of the Guarantors contained in the Paragraph 10U
shall survive termination of the AI Guaranty Agreement and the payment of all
amounts owing hereunder and thereunder
11. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this Agreement,
the terms defined in Paragraphs 11A and 11B (or within the text of any other
paragraph) shall have the respective meanings specified therein and all
accounting matters shall be subject to determination as provided in Paragraph
11C.
11A. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Called Principal" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Paragraph 4B or has become or is
declared to be immediately due and payable pursuant to Paragraph 7A, as the
context requires.
"Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on the Notes is payable, if interest is
payable other than on a semi-annual basis) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields reported as
of 10:00 a.m. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date on the display designated as
"Page PX1" (or such other display as may replace Page PX1 on Bloomberg Financial
Markets ("Bloomberg"), or, if Bloomberg shall cease to report such yields or
shall cease to be Prudential Capital Group's customary source of information for
calculating yield-maintenance amounts on privately placed notes, then such
source as is then Prudential Capital Group's customary source of such
information), or if such yields shall not be reported as of such time or the
yields reported as of such time shall not be ascertainable, (ii) the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15(519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly
35
between yields reported for various maturities. The Reinvestment Yield shall be
rounded to that number of decimal places as appears in the coupon of the
applicable Note.
"Remaining Average Life" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of years (calculated
to the nearest one-twelfth year) which will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Paragraph 4B or has become or is declared to be immediately due and payable
pursuant to Paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
11B. Other Terms.
"Adjusted Net Proceeds" in respect of any Pro Rata Prepayment Event means
the Net Proceeds (as defined in the Revolving Credit Agreement) of the
associated Prepayment Event (as defined in the Revolving Credit Agreement),
actually required to be applied to a prepayment of outstanding Borrowings (as
defined in the Revolving Credit Agreement) under the Revolving Credit Agreement
pursuant to Section 2.10(c) thereof.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, a the Company,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise. The status of any
individual as an officer or director of any Person shall not, in and of itself,
be deemed to make such individual an Affiliate of such Person.
"Agreement" shall mean this Note Agreement and Guaranty, as amended,
supplemented and in effect from time to time.
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"AI Guarantor Joinder Agreement" shall mean shall mean a Joinder
Agreement, in the form of Exhibit B hereto, to be executed by Guarantors added
pursuant to Paragraph 5M hereof.
"AI Guaranty Agreement" shall have the meaning specified in Paragraph 10A.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
Paragraph 7A.
"Capitalized Lease Obligation" shall mean, for any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" shall mean (a) the ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Exchange Act and the rules of the Securities and Exchange Commission thereunder
as in effect on January 8, 2004) other than Permitted Shareholders, of shares
representing 35% or more of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company at a time when Permitted
Shareholders together (i) do not have the unrestricted power directly or
indirectly to vote or direct the vote of shares representing a percentage of
such aggregate ordinary voting power that is greater than the percentage so
owned by any such Person or group or (ii) do not Control the Company; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Company by Persons who were neither (i) nominated by the board
of directors of the Company nor (ii) appointed by directors so nominated; or (c)
the occurrence of any "change in control" or similar event, however denominated,
resulting in an obligation on the part of the Company or any Subsidiary to
repay, redeem or repurchase, or to offer to repay, redeem or repurchase,
Material Indebtedness.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Competitor" shall mean any Person which is primarily or substantially
engaged in the paper machine clothing or high performance door manufacturing
sectors; provided, that a Person which is an Institutional Investor shall not be
deemed to be engaged in such business solely by reason of the ownership of a
passive investment (including but not limited to the ownership of nonvoting
equity securities) in any Person engaged in such business or the exercise of
rights or influence in connection with a workout of any troubled passive
investment in any Person engaged in any such business.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income
for such period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income, the sum of (a) Consolidated
Interest Expense for such period, (b) income tax expense for such period, (c)
depreciation and amortization for such period and (d) all non-cash charges
(including any non-cash expenses relating to stock option exercises) during such
period (provided that any cash payment made with respect to any such non-cash
charge
37
shall be subtracted in computing Consolidated EBITDA for the period in which
such cash payment is made), and minus, without duplication, all non-cash gains
and income for such period, all determined on a consolidated basis for the
Company and its Subsidiaries in accordance with GAAP; provided that charges in
connection with cost-cutting measures, which charges are (x) certified to the
Required Holders by a Financial Officer of the Company and (y) approved by the
Board of Directors of the Company, to the extent such charges would otherwise be
deducted in determining Consolidated EBITDA under this definition, shall not
reduce Consolidated EBITDA.
"Consolidated Interest Expense" shall mean, for any period, the gross
interest expense, whether expensed or capitalized (including the interest
component in respect of Capital Lease Obligations), accrued or paid by the
Company and its Subsidiaries during such period, determined on a consolidated
basis in accordance with GAAP. For purposes of the foregoing, gross interest
expense shall be determined after giving effect to any net payments received by
the Company or its Subsidiaries under interest rate protection agreements, the
effect of which is required to be reflected in the Company's income statement
under "Interest Expense".
"Consolidated Net Income" means, for any period, net income or loss of the
Company and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.
"Consolidated Subsidiary" shall mean at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements if such financial statements were prepared
on such date.
"Consolidated Tangible Net Worth" shall mean at any date the consolidated
common shareholders' equity of the Company and its Consolidated Subsidiaries
less their consolidated Intangible Assets, all determined as of such date. For
purposes of this definition, "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated common shareholders' equity) of (i)
all write-ups (other than write-ups resulting from foreign currency transactions
and write-ups of assets of a going concern business made within twelve months
after the acquisition of such business) subsequent to September 30, 2003 in the
book value of any asset owned by the Company or a Consolidated Subsidiary, (ii)
all investments in unconsolidated Subsidiaries and all equity investments in
Persons which are not Subsidiaries, in each case to the extent that the carrying
value of such investment on any Company's books exceeds its historical cost and
(iii) all unamortized debt discount and expense, unamortized deferred charges
(but only to the extent that the aggregate amount thereof exceeds $15,000,000),
goodwill, patents, trademarks, service marks, trade names, copyrights,
organization or developmental expenses and other intangible assets.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
38
"Default" shall mean any of the events specified in Paragraph 7A, whether
or not any requirement for such event to become an Event of Default has been
satisfied.
"Domestic Subsidiary" means a Subsidiary that is incorporated or organized
in the United States of America or any state or other political subdivision,
territory or possession thereof.
"Environmental Laws" shall mean all laws, rules, regulations, codes,
ordinances, permits, licenses, orders, decrees, judgments, injunctions, notices
or binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the presence, management, release or threatened release of
any Hazardous Material or to health and safety matters.
"Environmental Liability" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Laws, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the presence, release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"Environmental Permits" means any and all permits, licenses, approvals,
registrations, notifications, exemptions, and any other authorization required
under any Environmental Law.
"Equity Interests" means any shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights to acquire any such equity ownership
interests.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any corporation which is a member of the same
controlled group of corporations as the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the Company within the meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events specified in Paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
39
"Financial Officer" shall mean, as to any Person, the chief financial
officer, principal accounting officer, treasurer or controller of such Person.
"Foreign Subsidiary" means any Subsidiary other than a Domestic
Subsidiary.
"GAAP" shall have the meaning set forth in Paragraph 11C.
"Governmental Authority" shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" shall mean, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary Co-Issuer") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary Co-Issuer so as to enable the primary Co-Issuer to pay
such Indebtedness or other obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business.
"Guarantied Obligations" shall have the meaning specified in Paragraph
10A.
"Guarantor" shall mean each of the Subsidiaries party hereto as a
guarantor, and each other Subsidiary that becomes a Guarantor pursuant to
Paragraph 5M.
"Guaranty Requirement" shall mean, at any time, that (a) the AI Guaranty
Agreement shall have been executed by (i) each Subsidiary that is or becomes a
Borrowing Subsidiary (as defined in the Revolving Credit Agreement) or a
Subsidiary Guarantor (as defined in the Revolving Credit Agreement), and (ii)
each other Domestic Subsidiary (other than (A) any Domestic Subsidiary that is a
subsidiary of a Foreign Subsidiary and (B) any Domestic Subsidiary that (x) does
not conduct any business operations, (y) has assets with a total book value not
in excess of $1,000 and (z) does not have any Indebtedness outstanding) existing
at such time, shall have been delivered to the Required Holders and shall be in
full force and effect and (b) the Indemnity, Subrogation and Contribution
Agreement (or a supplement thereto) shall have been executed by the Company and
each Domestic Subsidiary party to the AI Guaranty Agreement, shall have been
delivered to the Required Holders and shall be in full force and effect.
40
"Hazardous Materials" shall mean (i) any material or substance defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous material," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of their deleterious properties,
(ii) any oil, petroleum or petroleum derived substance, (iii) any flammable
substances or explosives, (iv) any radioactive materials, (v) asbestos in any
form, (vi) electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million, (vii) pesticides or (viii) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or authority or which may or could pose a hazard to the health and safety of
persons in the vicinity thereof.
"Hedging Agreement" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Immaterial Subsidiary" means any Subsidiary (other than any Guarantor or
any Subsidiary that directly or indirectly owns capital stock of the Company or
any Guarantor) with respect to which both: (a) the sum of (i) the consolidated
book value of the assets of such Subsidiary and (ii) the aggregate consolidated
book value of the assets of each other Subsidiary that has a lower consolidated
book value than the assets of the Subsidiary specified in subclause (i) of this
clause (a) is less than 3.0% of the aggregate consolidated book value of the
total assets of the Company and all the Subsidiaries, in each case determined as
of the last day of the most recently ended fiscal year for which financial
statements are available; and (b) the sum of (i) such Subsidiary's consolidated
net income and (ii) the aggregate consolidated net income of each other
Subsidiary that has a lower consolidated net income than that of the Subsidiary
specified in subclause (i) of this clause (b) is less than 3.0% of Consolidated
Net Income, in each case for the most recently ended fiscal year for which
financial statements are available.
"Including" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable and obligations under Hedging Agreements, in
each case incurred in the ordinary course of business), (e) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g)
all Capitalized Lease Obligations of such Person, (h) all obligations of such
Person as an account party in respect of letters of credit and letters of
guaranty and (i) all obligations of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any
41
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnity, Subrogation and Contribution Agreement" shall mean an
Indemnity, Subrogation and Contribution Agreement substantially in the form of
Exhibit D hereto.
"Institutional Investor" shall mean any insurance company, commercial,
investment or merchant bank, finance company, mutual fund, registered money or
asset manager, savings and loan association, credit union, registered investment
advisor, pension fund, investment company, licensed broker or dealer, "qualified
institutional buyer" (as such term is defined under Rule 144A promulgated under
the Securities Act, or any successor law, rule or regulation) or "accredited
investor" (as such term is defined under Regulation D promulgated under the
Securities Act, or any successor law, rule or regulation).
"Leverage Ratio" shall mean, on any date, the ratio of (i) Total Debt at
such date to (ii) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Company ended on or most recently prior to such date (and solely
for purposes of this definition, if any Person shall have been acquired or
divested by the Company or its Consolidated Subsidiaries or if the Company shall
have merged with any Person during such period, Consolidated EBITDA shall be
determined on a pro forma basis as if such acquisition, divestiture or merger
had occurred at the beginning of such period).
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset, and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition, financial or otherwise, or prospects
of the Company and the Subsidiaries taken as a whole, or (b) the validity or
enforceability of any of the Transaction Documents or the rights and remedies of
the holders of the Notes thereunder.
"Material Indebtedness" means Indebtedness (other than the obligations
under this Agreement, the Notes or the Guaranty Agreement), or obligations in
respect of one or more Hedging Agreements, of any one or more of the Company or
Subsidiaries in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Company or any Subsidiary in respect of any Hedging Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements provided for in such Hedging Agreement) that the Company or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Material Subsidiary" shall mean each Subsidiary that is not an Immaterial
Subsidiary.
42
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"Officer's Certificate" shall mean a certificate signed in the name of the
Company or the applicable Guarantor, in each case by its respective Chief
Executive Officer, President, Chief Financial Officer or Treasurer.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from Standard & Poor's or from Moody's Investors
Service, Inc.;
(c) investments in certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
(e) shares of money market mutual or similar funds that invest exclusively
in assets satisfying the requirements of clauses (a) through (d) above;
provided that, in the case of any investment by a Foreign Subsidiary, "Permitted
Investments" shall also include: (i) direct obligations of the sovereign nation
(or any agency thereof) in which such Foreign Subsidiary is organized and is
conducting business or obligations fully and unconditionally guaranteed by such
sovereign nation (or any agency thereof), (ii) investments of the type and
maturity described in clauses (a) through (d) above of foreign obligors, which
investments or obligors (or the parents of such obligors) have ratings described
in such clauses or equivalent ratings from comparable foreign rating agencies
and (iii) shares of money market mutual or similar funds which invest
exclusively in assets otherwise satisfying the requirements of this definition
(including this proviso).
43
"Permitted Shareholders" means (a) J. Spencer Standish, (b) any of J.
Spencer Standish's descendants or legatees, (c) any executor, personal
representative or spouse of J. Spencer Standish or any of his descendants, (d)
any corporation, trust or other entity holding voting stock of the Company as to
which one or more of the Persons identified in the foregoing clauses (a) through
(c) have Control, (e) any trust as to which Persons so identified in clauses (a)
through (c) above hold at least 85.0% of the beneficial interest in the income
and principal of the trust disregarding the interests of the contingent
remaindermen and (f) any employee stock ownership plan for the benefit of
employees of the Company.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
"Plan" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company, a Guarantor or
any ERISA Affiliate.
"Preferred Stock" shall mean any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Pro Rata Prepayment" shall mean a prepayment of the Notes in an aggregate
amount equal to the product of the Adjusted Net Proceeds in respect of the
applicable Pro Rata Prepayment Event, multiplied by a fraction, (x) the
numerator of which is the aggregate outstanding principal balance of the Notes
on the date of such Pro Rata Prepayment Event and (y) the denominator of which
is such numerator plus the aggregate Commitments (as defined in the Revolving
Credit Agreement) of the Lenders under the Revolving Credit Agreement on such
date immediately prior to giving effect to such Pro Rata Prepayment Event.
"Pro Rata Prepayment Event" shall mean the making of all or any portion of
a prepayment pursuant to the terms of Section 2.10(c) of the Revolving Credit
Agreement (or any successor or equivalent provision).
"Proposed Prepayment Date" shall have the meaning specified in Paragraph
4D.
"Purchaser" shall mean each Person named on the Purchaser Schedule
attached hereto.
"Receivables" means all accounts, contract rights, chattel paper,
instruments, general intangibles and other assets arising out of or in
connection with the sale or lease of goods or the rendering of services.
"Required Holder(s)" shall mean the holder or holders of more than 50% of
the aggregate principal amount of the Notes from time to time outstanding.
44
"Restricted Payment" shall mean any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests of the Company, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such Equity Interests or any option, warrant or other right to acquire any
such Equity Interests; provided that none of (a) any dividend or distribution
consisting solely of common stock of the Company, (b) the payment of cash in
lieu of fractional shares in connection with any such common stock dividend or
distribution or (c) the acceptance of shares of common stock of the Company in
payment of the exercise price of any option to acquire any such shares of common
stock of the Company shall constitute a Restricted Payment.
"Revolving Credit Agreement" shall mean that certain Five-Year Revolving
Credit Facility Agreement dated as of January 8, 2004 among the Company, the
Borrowing Subsidiaries, the lenders party thereto and JP Morgan Chase Bank, as
administrative agent (and any replacement or successor revolving credit facility
permitting aggregate borrowings or other credit extensions in an amount of $100
million or more, in each case, as the same may be amended or modified from time
to time).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Significant Holder" shall mean (i) each Purchaser, so long as it shall
hold (or be committed under this Agreement to purchase) any Note, or (ii) any
other holder of at least 10% of the aggregate principal amount of the Notes from
time to time outstanding.
"subsidiary" shall mean, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Company.
"Subsidiary Guarantor" shall mean any subsidiary of the Company that is
also a Guarantor.
"Taxes" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" shall mean, at any time, the sum of (a) all Indebtedness that
is or should be reflected as a liability on a consolidated balance sheet of the
Company and the Subsidiaries in
45
accordance with GAAP and (b) the consideration (other than any note of a
Subsidiary that serves as a conduit in a sale or financing transaction with
respect to Receivables) received by the Company or any Consolidated Subsidiary
from any Person (other than the Company or a Consolidated Subsidiary) for
Receivables sold, which Receivables remain uncollected at such time; less (x)
the sum of all cash and cash equivalents (as determined in accordance with
GAAP), (y) the cash surrender value of life insurance policies naming the
Company as beneficiary (as determined in accordance with GAAP) and (z) the fair
market value of any Marketable Securities held by the Company and the
Consolidated Subsidiaries. For the purposes of this definition, "Marketable
Securities" means any debt or equity securities for which an active trading
market exists and price quotations are available.
"Transaction Documents" means this Agreement, the AI Guaranty Agreement,
the Notes, and the Indemnity, Subrogation and Contribution Agreement.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased under this Agreement.
"USA Patriot Act" shall mean United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
"Voting Stock" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
11C. Accounting and Legal Principles, Terms and Determinations. All
references in this Agreement to "GAAP" shall mean generally accepted accounting
principles, as in effect in the United States from time to time; provided that
if the Company notifies the Required Holders that the Company requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Required Holders notify the Company that
the Required Holders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance with
GAAP, applied on a basis consistent with the most recent audited consolidated
financial statements of the Company and its Subsidiaries delivered pursuant to
Paragraph 5A(i) or (ii) or, if no such statements have been so delivered, the
most recent audited financial statements referred to in clause (i) of Paragraph
8B. Any reference herein to any specific citation, section or
46
form of law, statute, rule or regulation shall refer to such new, replacement or
analogous citation, section or form should citation, section or form be
modified, amended or replaced.
12. MISCELLANEOUS.
12A. Note Payments. So long as any Purchaser shall hold any Note, the
Company will make payments of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note, which comply with
the terms of this Agreement, by wire transfer of immediately available funds for
credit (not later than 12:00 noon, New York City time, on the date due) to such
Purchaser's account or accounts as specified in the Purchaser Schedule attached
hereto, or such other account or accounts in the United States as such Purchaser
may designate in writing, notwithstanding any contrary provision herein or in
any Note with respect to the place of payment. Each Purchaser agrees that,
before disposing of any Note, it will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made thereon and of the
date to which interest thereon has been paid. The Company agrees to afford the
benefits of this Paragraph 12A to any Transferee which shall have made the same
agreement as the Purchasers have made in this Paragraph 12A.
12B. Expenses. The Company agrees to pay, and save you and any Transferee
harmless against liability for the payment of, all reasonable out-of-pocket
expenses arising in connection with (i) all document production and duplication
charges and the fees and expenses of one special counsel (and any local counsel)
engaged in connection with any subsequent proposed modification of, or proposed
consent under, this Agreement or the Notes, whether or not such proposed
modification shall be effected or proposed consent granted (but in either event
only if requested by the Company), and (ii) the costs and expenses, including
attorneys' fees, incurred by you or any Transferee in enforcing any rights under
this Agreement or the Notes. In addition, with respect to you only, the Company
agrees to pay, and save you harmless against liability for the payment of, all
reasonable out-of-pocket expenses incurred by you in connection with your
responding to any subpoena or other legal process or informal investigative
demand issued in connection with and arising pursuant to this Agreement or the
transactions contemplated hereby or by reason of your having acquired any Note
(but not including any general investigation or proceeding involving your
investments or activities generally), including without limitation reasonable
costs and expenses incurred in any bankruptcy case. The obligations of the
Company under this Paragraph 12B shall survive the transfer of any Note or
portion thereof or interest therein and the payment of any Note.
12C. Consent to Amendments. This Agreement may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by them, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
except that, without the written consent of the holder or holders of all Notes
at the time outstanding, no amendment to this Agreement shall change the stated
maturity of any Note, or change the principal of, or the rate, method of
computation or time of payment of interest on or any Yield-Maintenance Amount
payable with respect to any Note, or affect the time, amount or allocation of
any prepayments, or change the proportion of the principal amount of the Notes
required with respect to any consent, amendment, waiver or declaration. Each
holder of any Note at the time or thereafter outstanding shall be bound by any
47
consent authorized by this Paragraph 12C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein and in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
12D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. The
Notes are issuable as registered notes without coupons in denominations of at
least $10,000,000 (and increments of $1,000,000 in excess thereof), except as
may be necessary to (i) reflect any principal amount not evenly divisible by
$1,000,000 or (ii) enable the registration of transfer by a holder of its entire
holding of Notes. The Company shall keep, at the Company's principal office, a
register in which the Company shall provide for the registration of Notes and of
transfers of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its expense, execute
and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees;
provided, however, that Notes shall not be transferred to a Competitor, and the
Company shall not be required to re-register any transfer of Notes to a
Competitor. At the option of the holder of any Note, such Note may be exchanged
for other Notes of like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged at the
principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes which
the holder making the exchange is entitled to receive. Every Note surrendered
for registration of transfer or exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by the holder of
such Note or such holder's attorney duly authorized in writing. Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note. The Company shall give to any holder of a Note that is an
Institutional Investor promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.
12E. Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfers permitted hereunder, the Company may treat the Person
in whose name any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participations in
such Note to any Person (other than a Competitor) on such terms and conditions
as may be determined by such holder in its sole and absolute discretion.
48
12F. Survival of Representations and Warranties; Entire Agreement. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer by a Purchaser of any
Note or portion thereof or interest therein and the payment of any Note, and may
be relied upon by any Transferee, regardless of any investigation made at any
time by or on behalf of any Purchaser or any Transferee. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement and
understanding between the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
12G. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so expressed or not.
12H. Notices. All written communications provided for hereunder shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to a Purchaser, addressed to it at the address specified for
such communications in the Purchaser Schedule attached hereto, or at such other
address as such Purchaser shall have specified to the Company in writing, (ii)
if to any other holder of any Note, addressed to such other holder at such
address as such other holder shall have specified to the Company in writing or,
if any such other holder shall not have so specified an address to the Company,
then addressed to such other holder in care of the last holder of such Note
which shall have so specified an address to the Company, and (iii) if to the
Company, addressed to it at c/o Albany International Corp., 1373 Broadway,
Albany, New York 12204, Attention: Chief Financial Officer, Fax number (518)
447-6575, or at such other address as the Company shall have specified to the
holder of each Note in writing. Notices under this Paragraph 12H will be deemed
given only when actually received or refused.
12I. Payments Due on Non-Business Days. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day. If the date for any payment is extended to the
next succeeding Business Day by reason of the preceding sentence, the period of
such extension shall not be included in the computation of the interest payable
on such Business Day.
12J. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF NEW YORK.
12K. Consent to Jurisdiction; Waiver of Immunities. The Company and each
of the Guarantors irrevocably submits to the jurisdiction of any New York state
or Federal court sitting in New York in any action or proceeding arising out of
or relating to this Agreement, and the Company and each of the Guarantors hereby
irrevocably agrees that all claims in respect of such
49
action or proceeding may be heard and determined in New York state or Federal
Court. The Company and Guarantors each consents to process being served by or on
behalf of any holder of Notes in any suit, action or proceeding of the nature
referred to in this Paragraph 12K by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid,
return receipt requested, to it at its address specified in Paragraph 12H or at
such other address of which such holder shall then have been notified pursuant
to said paragraph. The Company and each Guarantor agree that such service upon
receipt (i) shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding and (ii) shall, to the fullest extent
permitted by applicable law, be taken and held to be valid personal service upon
and personal delivery to it. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service. The Company and
each of the Guarantors agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Paragraph 12K shall affect the right of any holder of the Notes to serve legal
process in any other manner permitted by law or affect the right of any holder
of the Notes to bring any action or proceeding against the Company or any of the
Guarantors or its property in the courts of any other jurisdiction. To the
extent that the Company or any Guarantor has or hereafter may acquire immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Company and
each Guarantor hereby irrevocably waives such immunity in respect of its
obligations under this agreement.
12L. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12M. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
12N. Counterparts. This Agreement may be executed in any number of
counterparts (or counterpart signature pages), each of which counterparts shall
be an original but all of which together shall constitute one instrument.
12O. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not (i) avoid the occurrence of an Event of Default or Default if such
action is taken or such condition exists or (ii) in any way prejudice an attempt
by the holders to prohibit (through equitable action or otherwise) the taking of
any action by the Company or any Subsidiaries which would result in an Event of
Default or Default.
50
12P. WAIVER OF JURY TRIAL. THE COMPANY AND THE GUARANTORS AND THE HOLDERS
OF THE NOTES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES, ANY
OTHER TRANSACTION DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THE HOLDERS OF THE NOTES, THE COMPANY AND GUARANTORS EACH ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE
HOLDERS OF THE NOTES, THE COMPANY AND GUARANTORS FURTHER WARRANT AND REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
12Q. Independent Investigation. Each Purchaser has made its own
independent investigation of the condition (financial and otherwise), prospects
and affairs of the Company and its Subsidiaries in connection with its purchase
of the Notes hereunder and has made and shall continue to make its own appraisal
of the creditworthiness of the Company. No holder of Notes shall have any duty
or responsibility to any other holder of Notes, either initially or on a
continuing basis, to make any such investigation or appraisal or to provide any
credit or other information with respect thereto. No holder of Notes is acting
as agent or in any other fiduciary capacity on behalf of any other holder of
Notes.
51
Please sign the form of acceptance on the enclosed counterpart of this
letter and return the same to the Company, whereupon this letter shall become a
binding agreement between the Company, the Guarantors party hereto and each
Purchaser.
Very truly yours,
ALBANY INTERNATIONAL CORP.
By: /s/ Michael C. Nahl
----------------------------------------
Title: Executive Vice President & CFO
ALBANY INTERNATIONAL HOLDINGS
TWO, INC., as a Guarantor
By: /s/ David C. Michaels
----------------------------------------
Title: Vice President & Assistant
Secretary
ALBANY INTERNATIONAL TECHNIWEAVE, INC.,
as a Guarantor
By: /s/ Michael C. Nahl
----------------------------------------
Title: Vice President & Assistant
Secretary
ALBANY INTERNATIONAL RESEARCH CO.,
as a Guarantor
By: /s/ Charles J. Silva, Jr.
----------------------------------------
Title: Vice President, Asst. Treasurer &
Asst. Secretary
GESCHMAY CORP., as a Guarantor
By: /s/ David C. Michaels
----------------------------------------
Title: Vice President & Assistant
Secretary
52
BRANDON DRYING FABRICS, INC., as a Guarantor
By: /s/ David C. Michaels
----------------------------------------
Title: Vice President & Assistant
Secretary
GESCHMAY WET FELTS, INC., as a Guarantor
By: /s/ David C. Michaels
----------------------------------------
Title: Vice President & Assistant
Secretary
GESCHMAY FORMING FABRICS CORP.,
as a Guarantor
By: /s/ David C. Michaels
----------------------------------------
Title: Vice President & Assistant
Secretary
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Christopher Carey
- -------------------------
Vice President
THE PRUDENTIAL LIFE INSURANCE
COMPANY, LTD.
By: Prudential Investment Management (Japan),
Inc., as Investment Manager
By: Prudential Investment Management, Inc.,
as Sub-Adviser
By: /s/ Christopher Carey
---------------------
Vice President
53
GIBRALTAR LIFE INSURANCE CO., LTD.
By: Prudential Investment Management (Japan),
Inc., as Investment Manager
By: Prudential Investment Management, Inc.,
as Sub-Adviser
By: /s/ Christopher Carey
---------------------
Vice President
SECURITY BENEFIT LIFE INSURANCE
COMPANY, INC.
By: Prudential Private Placement Investors,
L.P. (as Investment Advisor)
By: Prudential Private Placement Investors, Inc.
(as its General Partner)
By: /s/ Christopher Carey
---------------------
Vice President
54
PURCHASER SCHEDULES
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
--------- ---------------
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA $101,000,000 $84,000,000
$17,000,000
Pro Rata Share
of Structuring Fee: $16,800.00 in respect of the First Note
$3,400.00 in respect of the Second Note
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No.: P86188 (please do not include spaces)
Account Name: Prudential Managed Portfolio (in the
case of payments on account of the Note originally
issued in the principal amount of $84,000,000) (the
"First Note")
Account No.: P86189 (please do not include spaces)
Account Name: The Prudential - Privest Portfolio (in
the case of payments on account of the Note originally
issued in the principal amount of $17,000,000) (the
"Second Note")
JPMorgan Chase Bank
New York, NY
ABA No.: 021-000-021
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, PPN ____, INV ___", and the due date
and application (as among principal, interest and
Yield-Maintenance Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Investment Operations Group
Gateway Center Two, 10th Floor
100 Mulberry Street
Newark, NJ 07102-4077
Attention: Manager, Billings and Collections
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
1114 Avenue of the Americas, 30th Floor
New York, New York 10036
Attention: Managing Director
Tel: 212-626-2060
Fax: 212-626-2077
(4) Recipient of telephonic prepayment notices:
Manager, Trade Management Group
Telephone: (973) 367-3141
Facsimile: (800) 224-2278
(5) Address for Delivery of Notes:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Three Gateway Center, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Philip Corsello, Esq.
(6) Tax Identification No.: 22-1211670
2
Aggregate Principal
Amount of Notes Note
to be Purchased Denomination(s)
------------------- ---------------
THE PRUDENTIAL LIFE INSURANCE COMPANY, LTD. $15,000,000 $15,000,000
Pro Rata Share of Structuring Fee: $3,000.00
(1) All principal, interest and Yield-Maintenance Amount
payments on account of Notes held by such purchaser
shall be made by wire transfer of immediately
available funds for credit to:
JPMorgan Chase Bank
New York, NY
ABA No.: 021-000-021
Account No.: 304243809
Account Name: The Prudential Life Insurance Company, Ltd.
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, Security No. INV_____, PPN _____"
and the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the payment
being made.
(2) All payments, other than principal, interest or
Yield-Maintenance Amount (e.g., the Structuring Fee),
on account of Notes held by such purchaser shall be
made by wire transfer of immediately available funds
for credit to:
JPMorgan Chase Bank
New York, NY
ABA No. 021-000-021
Account No. 304199036
Account Name: Prudential International Insurance Service Co.
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, Security No. INV_____, PPN _____"
and the due date and application (e.g., type of fee)
of the payment being made.
(3) Address for all notices relating to payments:
The Prudential Life Insurance Company, Ltd.
2-13-10, Nagatacho
Chiyoda-ku, Tokyo 100-0014, Japan
Telephone: 81-3-5501-5190
Facsimile: 81-03-5501-5037
E-mail: osamu.egi@prudential.com
Attention: Osamu Egi, Team Leader of Financial Reporting
Team
3
(4) Address for all other communications and notices:
Prudential Capital Group
Gateway Center 3, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Albert Trank, Managing Director
Telephone: (973) 802-8608
Facsimile: (973) 367-3234
E-mail: albert.trank@prudential.com
(5) Address for Delivery of Notes:
Send physical security by nationwide overnight delivery service to:
c/o Prudential Capital Group
Three Gateway Center, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Philip Corsello, Esq.
(6) Tax Identification No.: 00544574
4
Aggregate Principal
Amount of Notes Note
to be Purchased Denomination(s)
------------------- ---------------
GIBRALTAR LIFE INSURANCE CO., LTD. $30,000,000 $30,000,000
Pro Rata Share of Structuring Fee: $6,000.00
(1) All principal, interest and Yield-Maintenance Amount
payments on account of Notes held by such purchaser
shall be made by wire transfer of immediately
available funds for credit to:
JPMorgan Chase Bank
New York, NY
ABA No.: 021-000-021
Account No.: P86246 (please do not include spaces)
Account Name: Gibraltar Private
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, Security No. INV_____, PPN _____"
and the due date and application (as among principal,
interest and Yield-Maintenance Amount) of the payment
being made.
(2) All payments, other than principal, interest or
Yield-Maintenance Amount (e.g., Structuring Fee) , on
account of Notes held by such purchaser shall be made
by wire transfer of immediately available funds for
credit to:
JPMorgan Chase Bank
New York, NY
ABA No. 021-000-021
Account No. 304199036
Account Name: Prudential International Insurance Service
Company
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, Security No. INV_____, PPN _____"
and the due date and application (e.g., type of fee)
of the payment being made.
(3) Address for all notices relating to payments:
The Gibraltar Life Insurance Co., Ltd.
2-13-10, Nagatacho
Chiyoda-ku, Tokyo 100-8953, Japan
Telephone: 81-3-5501-6680
Facsimile: 81-3-5501-6432
E-mail: yoshiki.saito@gib-life.co.jp
Attention: Yoshiki Saito, Vice President of Investment
Operations Team
5
(4) Address for all other communications and notices:
Prudential Capital Group
Gateway Center 3, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Albert Trank, Managing Director
Telephone: (973) 802-8608
Facsimile: (973) 367-3234
E-mail: albert.trank@prudential.com
(5) Address for Delivery of Notes:
Send physical security by nationwide overnight delivery service to:
c/o Prudential Capital Group
Three Gateway Center, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Philip Corsello, Esq.
(6) Tax Identification No.: 98-0408643
6
Aggregate Principal
Amount of Notes Note
to be Purchased Denomination(s)
------------------- ---------------
SECURITY BENEFIT LIFE INSURANCE COMPANY, INC. $4,000,000 $4,000,000
Notes/Certificates to be registered in the name of:
UMBTRU&CO
Pro Rata Share of Structuring Fee: $800.00
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
UMB Bank N.A.
ABA No.: 101000695
Account Name: Trust Operations
Account No.: 9870161974
Reference: Security Benefit Life Ins. Co. Acct. #126139.1
Each such wire transfer shall set forth the name of
the Company, a reference to "5.34% Senior Notes due
October 25, 2017, PPN ____" and the due date and
application (as among principal, interest and
Yield-Maintenance Amount) of the payment being made.
(2) All notices of payments and written confirmations of
such wire transfers:
UMB Bank
928 Grand Blvd., 10th Floor
Kansas City, MO 64106
Attention: Mike Ortiz
(3) Address for all other communications and notices:
Prudential Private Placement Investors, L.P.
Gateway Center 3, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Albert Trank, Managing Director
Telephone: (973) 802-8608
Facsimile: (973) 367-3234
7
(4) Address for Delivery of Notes:
(a) Send physical security by nationwide overnight
delivery service to:
Bingham McCutchen LLP
One State Street
Hartford, CT 06103
Attention: Nicole M. Pappa
Phone: 860-240-2834
(b) Send copy by nationwide overnight delivery
service to:
Prudential Capital Group
Three Gateway Center, 18th Floor
100 Mulberry Street
Newark, NJ 07102
Attention: Philip Corsello, Esq.
(5) Tax Identification No.: 43-6295832
8
EXHIBIT A
---------
THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND THIS NOTE
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM AND FROM ANY APPLICABLE STATE
SECURITIES LAWS.
[FORM OF NOTE]
ALBANY INTERNATIONAL CORP.
5.34% SENIOR NOTE DUE OCTOBER 25, 2017
No. R-__ October __, 2005
$ _________
FOR VALUE RECEIVED, the undersigned, ALBANY INTERNATIONAL CORP., a
corporation organized and existing under the laws of the State of Delaware
(herein the "Company"), hereby promises to pay to _____________________________,
or registered assigns, the principal sum of ______________________________
DOLLARS on __________________, _________, with interest (computed on the basis
of a 360-day year--30-day month) (a) on the unpaid balance thereof at the rate
of 5.34% per annum from the date hereof, payable quarterly on the 25th day of
January, April, July and October in each year, commencing with the January 25th
, next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Yield-Maintenance Amount (as defined in the Note Agreement
referred to below), payable quarterly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to 7.34%.
Payments of principal of, interest on and any Yield-Maintenance Amount
payable with respect to this Note are to be made at the main office of the Bank
of New York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Note Agreement and Guaranty, dated as of October 25, 2005
(herein called the "Agreement"), among the Company, the Guarantors party thereto
and the original purchasers of the Notes named in the Purchaser Schedule
attached thereto and is entitled to the benefits thereof.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
This Note is intended to be performed in the State of New York and shall
be construed and enforced in accordance with the internal law of such State.
ALBANY INTERNATIONAL CORP.
By: _____________________
Its: _____________________
2
EXHIBIT B
---------
[FORM OF GUARANTOR JOINDER AGREEMENT]
GUARANTOR JOINDER AGREEMENT, dated as of ___________________, ______, made by
[Name and Jurisdiction of New Guarantor] (the "New Guarantor"), in favor of THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA and the other Purchasers party to, and
holders and Transferees of Notes issued pursuant to, the Note Agreement referred
to below (collectively with their respective successors and assigns, the
"Holders"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings ascribed thereto in the Note Agreement referred to
below.
WHEREAS, Albany International Corp., a Delaware corporation (the
"Company"), and certain Guarantors described therein on the one hand, and the
Holders, on the other hand, are parties to that certain Note Agreement and
Guaranty, dated as of October __, 2005 (herein, as amended, supplemented and
modified from time to time, called the "Note Agreement");
WHEREAS, pursuant to Paragraph 5M of the Note Agreement, the Company
covenants that the Guaranty Requirement shall be satisfied at all times by,
inter alia, executing and delivering to the Holders a Guarantor Joinder
Agreement
WHEREAS, the New Guarantor is a member of an affiliated group of companies
that includes the Company and Guarantors under the Note Agreement; the proceeds
of the issue and sale of Notes under the Note Agreement will in part benefit the
Company and Guarantors (including the New Guarantor) in the operation of their
respective businesses; and the Company and Guarantors (including the New
Guarantor) are engaged in related businesses, and the Company and each such
Guarantor (including the New Guarantor) derived and will derive substantial
direct and indirect benefits from the issue and sale of Notes under the Note
Agreement; and
WHEREAS, the New Guarantor has agreed to execute this Guarantor Joinder
Agreement to become a party to, and Guarantor under, the AI Guaranty Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Note Agreement. By executing and delivering this Guarantor Joinder Agreement,
the New Guarantor, as provided in the Note Agreement, hereby becomes a party to
the AI Guaranty Agreement as a Guarantor thereunder with the same force and
effect as if originally named therein as a Guarantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder and under the AI Guaranty Agreement. The
New Guarantor hereby represents and warrants that each of the representations
and warranties of the Guarantors contained in Paragraph 8 of the Note Agreement
is true and correct with respect to such New Guarantor on and as of the date
hereof (after giving effect to this Guarantor Joinder Agreement) as if made on
and as of such date.
2. GOVERNING LAW. THIS GUARANTOR JOINDER AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE INTERNAL LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Guarantor Joinder
Agreement to be duly executed and delivered to the Holders as of the date first
above written.
[NAME OF NEW GUARANTOR]
By: _______________________
Name:
Title:
2
EXHIBIT C-1
-----------
[FORM OF OPINION OF COMPANY'S
AND GUARANTORS' SPECIAL COUNSEL]
[Letterhead of ________________]
[Date of Closing]
[Names and addresses
of Purchasers]
Ladies and Gentlemen:
We have acted as counsel for Albany International Corp., a Delaware
corporation (the "Company") and [List of Guarantors] (collectively, the
"Guarantors;" and together with the Company hereinafter referred to as the "AI
Parties")) in connection with the Note Agreement and Guaranty, dated as of
October __, 2005, among the Company, the Guarantors party thereto and you (the
"Note Agreement"), pursuant to which the Company has have issued to you today
its 5.34% Senior Notes due October __, 2017 in the aggregate principal amount of
$150,000,000. Capitalized terms used and not otherwise defined herein shall have
the respective meanings specified in the Note Agreement. This letter is being
delivered to you in satisfaction of the condition set forth in Paragraph
[3A(ii)] of the Note Agreement and with the understanding that you are
purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the AI Parties and copies certified to
our satisfaction of corporate documents and records of the AI Parties and of
other papers, and have made such other investigations, as we have deemed
relevant and necessary as a basis for our opinion hereinafter set forth. We have
relied upon such certificates of public officials and of officers of the AI
Parties with respect to the accuracy of material factual matters contained
therein which were not independently established. With respect to the opinion
expressed in paragraph 3 below, we have also relied upon the representation made
by each of you in Paragraph 9A of the Note Agreement.
Based on the foregoing, it is our opinion that:
1. The Note Agreement constitutes valid obligations of the AI Parties,
legally binding upon and enforceable against the AI Parties in accordance with
its respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
2. The Notes are valid obligations of the Company, legally binding upon
and enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and (b) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance, sale and
delivery of the Notes under the circumstances contemplated by the Note Agreement
to register the Notes under the Securities Act or to qualify an indenture in
respect of the Notes under the Trust Indenture Act of 1939, as amended.
4. The extension, arranging and obtaining of the credit represented by the
Notes do not result in any violation of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
5. The offering, issuance and the sale of the Notes to the Purchasers
pursuant to the Note Agreement do not, and the performance by each AI Party of
its respective obligations in the Note Agreement will not, require any consent,
approval, authorization, registration or qualification of or with any
governmental authority of the United States of America or the States of New York
or Delaware [Other jurisdictions of organization] that in our experience would
be normally applicable to general business entities with respect to such
offering, issuance, sale and performance pursuant to any applicable law
(including any securities or Blue Sky law), statute, rule or regulation, order,
judgment or decree to which the AI Parties or any of their Subsidiaries is a
party or otherwise subject.
Very truly yours,
EXHIBIT C-2
-----------
[FORM OF OPINION OF COMPANY'S
AND GUARANTORS' IN-HOUSE COUNSEL]
[Letterhead of ________________]
[Date of Closing]
[Names and addresses
of Purchasers]
Ladies and Gentlemen:
We have acted as counsel for Albany International Corp., a Delaware
corporation (the "Company") and [List of Guarantors] (collectively, the
"Guarantors;" and together with the Company hereinafter referred to as the "AI
Parties")) in connection with the Note Agreement and Guaranty, dated as of
October __, 2005, among the Company, the Guarantors party thereto and you (the
"Note Agreement"), pursuant to which the Company has have issued to you today
its 5.34% Senior Notes due October __, 2017 in the aggregate principal amount of
$150,000,000. Capitalized terms used and not otherwise defined herein shall have
the respective meanings specified in the Note Agreement. This letter is being
delivered to you in satisfaction of the condition set forth in Paragraph
[3A(ii)] of the Note Agreement and with the understanding that you are
purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the AI Parties and copies certified to
our satisfaction of corporate documents and records of the AI Parties and of
other papers, and have made such other investigations, as we have deemed
relevant and necessary as a basis for our opinion hereinafter set forth. We have
relied upon such certificates of public officials and of officers of the AI
Parties with respect to the accuracy of material factual matters contained
therein which were not independently established. With respect to the opinion
expressed in paragraph 3 below, we have also relied upon the representation made
by each of you in Paragraph 9A of the Note Agreement.
Based on the foregoing, it is our opinion that:
1. Each AI Parties is a corporation duly organized and validly existing in
good standing under the laws of the State of its incorporation.
2. The Note Agreement has been duly authorized by all requisite corporate
action and duly executed and delivered by authorized officers of the AI Parties.
3. The Notes have been duly authorized by all requisite corporate action
and duly executed and delivered by authorized officers of the Company.
4. The execution and delivery of the Note Agreement and the Notes, the
offering, issuance and the sale of the Notes and fulfillment of an compliance
with the respective provisions of the Note Agreement and the Notes will not (a)
conflict with, result in a breach of or constitute a default under (i) the
organizational documents or by-laws of any AI Party or, to the best of my
knowledge, the provisions of any material agreement or material instrument to
which any AI Party is a party or by which any of them or any of their respective
assets is or may be bound, or (ii) to my knowledge, any order or decree of any
court or government agency or instrumentality, or (b) to my knowledge, result in
the creation of an imposition of any Lien upon, or with respect to, any property
or assets now owned by any AI Party.
Very truly yours,
EXHIBIT D
---------
[FORM OF INDEMNIFICATION, SUBROGATION
AND CONTRIBUTION AGREEMENT]
INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT dated as of October __, 2005,
among ALBANY INTERNATIONAL CORP., a Delaware corporation (the "Company"), each
Subsidiary of the Company listed on Schedule I hereto or becoming a party hereto
as provided in Section 12 (the "Subsidiary Guarantors") and each Purchaser party
to the Note Agreement referred to below (together with their successors and
assigns, the "Purchasers").
Reference is made to the Note Agreement and Guaranty, dated as of October
__, 2005, among the Company, the Subsidiary Guarantors and the original
Purchasers named in the Purchaser Schedule attached thereto (as the same may be
amended, modified and supplemented from time to time, the ("Note Agreement").
Capitalized terms used herein and not otherwise defined herein have the meanings
specified in the Note Agreement.
The Company has agreed to sell the Notes to each original Purchaser and,
subject to the terms and conditions in the Note Agreement, each Purchaser has
agreed to purchase its portion of the Notes from the Company. The Guarantors
have guaranteed the Notes and other Guarantied Obligations under the Note
Agreement and other Transaction Documents pursuant to the AI Guaranty Agreement.
The obligations of the original Purchasers to purchase the Notes is conditioned
on, among other things, the execution and delivery by the Company and the
Guarantors of an agreement in the form hereof.
Accordingly, the Company, each Guarantor and each Purchaser agree as
follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3 below), the Company agrees that in the event a payment
shall be made by any Guarantor under the AI Guaranty Agreement, the Company
shall indemnify such Guarantor for the full amount of such payment, and the
Company shall be subrogated to the rights of the Guarantor to whom such payment
shall have been made to the extent of such payment.
SECTION 2. Contribution and Subrogation. Each Guarantor (a "Contributing
Guarantor") agrees (subject to Section 3 below) that, in the event a payment
shall be made by any other Guarantor under the AI Guaranty Agreement and such
other Guarantor (the "Claiming Guarantor") shall not have been fully indemnified
by the Company, as provided in Section 1 above, each Contributing Guarantor
shall indemnify the Claiming Guarantor in an amount equal to the amount of such
payment multiplied by a fraction of which the numerator shall be the net worth
of the Contributing Guarantor on the date hereof or on the date on which
enforcement is being sought, whichever is greater, and the denominator shall be
the aggregate net worth of all the Guarantors on the date hereof (or, in the
case of any Guarantor becoming a party hereto pursuant to Section 12 below, the
date of the Supplement hereto executed and delivered by such Guarantor) or on
the date on which enforcement is being sought, whichever is greater; provided
that, notwithstanding the foregoing, any Guarantor that is a Foreign Subsidiary
shall indemnify the Claiming Guarantor only to the extent that the Claiming
Guarantor made a payment with respect to an obligation of a direct or indirect
subsidiary of such Foreign Subsidiary (and such Foreign Subsidiary shall not
have any liability whatsoever with respect to any payment made by a Claiming
Guarantor which is either the Company or any Domestic Subsidiary). Any
Contributing Guarantor making any payment to a Claiming Guarantor pursuant to
this Section shall be subrogated to the rights of such Claiming Guarantor under
Section 1 above to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of this Agreement
to the contrary, effective upon any payment made by a Guarantor under the AI
Guaranty, all rights of the Guarantors under Sections 1 and 2 hereof in relation
to such payment, and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise relating thereto shall become fully
subordinated to the indefeasible payment in full in cash of the Guarantied
Obligations; provided however, that, such subordination shall only arise and
apply while an Event of Default is continuing; and provided further, that, to
the extent such rights are also governed by provisions under the "Subsidiary
Guarantee Agreement" or "Indemnity, Subrogation and Contribution Agreement"
(each, used in this paragraph as defined in the Revolving Credit Agreement),
they shall be deemed to be excluded from this first sentence of this Section 3
to the extent necessary to avoid characterization of this clause as a prohibited
Lien under the terms of the Revolving Credit Agreement (but only to the extent
not otherwise permitted thereunder). No failure on the part of the Company or
any Guarantor to make the payments required by Sections 1 and 2 hereof (or any
other payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of any Guarantor with respect to its
obligations under the AI Guaranty Agreement, and each Guarantor shall remain
liable for the full amount of the obligations of such Guarantor under the AI
Guaranty Agreement.
SECTION 4. Termination. This Agreement (a) shall, subject to clause (b)
below, terminate when all the Guarantied Obligations have been indefeasibly paid
in full in cash and (b) shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Guarantied
Obligation is rescinded or must otherwise be restored by any Purchaser or any
Guarantor upon the bankruptcy or reorganization of the Company, any Guarantor or
otherwise. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the AI Guaranty Agreement in accordance with such AI
Guaranty Agreement and the Note Agreement, such Guarantor will cease to have any
rights or obligations under this Agreement.
SECTION 5. GOVERNING LAW. THIS AGREEEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 6. Waivers: Amendment. (a) No failure or delay of any Purchaser in
exercising any right or power hereunder or under any other Transaction Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. All rights and remedies hereunder are
cumulative and are not exclusive of any rights or remedies otherwise provided by
law. No waiver of any provision of this Agreement or consent to any departure by
any party hereto therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose of which
given.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Required Holders, the Company and the Guarantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with the Note Agreement.
SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the Note Agreement and addressed as specified
therein.
SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party permitted hereby; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. None of the Company or the Guarantors may assign or
otherwise transfer any of its rights or obligations
hereunder or any interest herein (except in connection with any transaction
permitted by the Note Agreement), and any such attempted assignment or transfer
shall be null and void.
SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Company and each Guarantor herein and in the certificates
or other instruments prepared or delivered in connection with this Agreement
shall be considered to have been relied upon by the Purchasers and each other
Guarantor and shall survive the execution and delivery of this Agreement, and
the purchase and sale of the Notes, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Notes or any fee or
any other amount payable under the Note Agreement, this Agreement or any other
Transaction Document is outstanding and unpaid.
(b) In the event that any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 10. Counterparts; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which taken together shall
constitute a single contract. This Agreement shall become effective with respect
to any Guarantor when a counterpart hereof bearing the signature of such
Guarantor shall have been delivered to the Required Holders and a counterpart
hereof shall have been executed by the Required Holders and the Company. This
Agreement shall become effective with respect to the Company upon effectiveness
of the Note Agreement. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of interpretation specified
in paragraphs 11A, 11B and 11C of the Note Agreement shall be applicable to this
Agreement.
SECTION 12. Additional Guarantors. Pursuant to Paragraph 5M of the Note
Agreement, certain additional Subsidiaries may be required under the terms of
the Note Agreement from time to time to enter into this Agreement as Guarantors.
Upon execution and delivery by the Required Holders and a Subsidiary of an
instrument in the form of Annex I hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of such instrument shall not
require the consent of the Company or any Guarantor hereunder. The rights and
obligations of the Company and each Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party to
this Agreement.
SECTION 13. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the Supreme Court of the State of
New York and sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any Purchaser may otherwise have to bring any action or proceeding
relating to this Agreement or any other Transaction Document against any
Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (a) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of any inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7 hereof. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted to law.
SECTION 14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF,
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
ALBANY INTERNATIONAL CORP.
By: ___________________________________
Title:
ALBANY INTERNATIONAL HOLDINGS TWO, INC.
By: ___________________________________
Title:
ALBANY INTERNATIONAL TECHNIWEAVE, INC.
By: ___________________________________
Title:
ALBANY INTERNATIONAL RESEARCH CO.
By: ___________________________________
Title:
GESCHMAY CORP.
By: ___________________________________
Title:
BRANDON DRYING FABRICS, INC.
By: ___________________________________
Title:
GESCHMAY WELT FELTS, INC.
By: ___________________________________
Title:
GESCHMAY FORMING FABRICS CORP.
By: ___________________________________
Title:
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: ___________________________________
Vice President
THE PRUDENTIAL LIFE INSURANCE
COMPANY, LTD.
By: Prudential Investment Management
(Japan), Inc., as Investment Manager
By: Prudential Investment Management,
Inc.,
as Sub-Adviser
By: ________________________
Vice President
GIBRALTAR LIFE INSURANCE CO., LTD.
By: Prudential Investment Management
(Japan), Inc., as Investment Manager
By: Prudential Investment Management,
Inc.,
as Sub-Adviser
By: _________________________
Vice President
SECURITY BENEFIT LIFE INSURANCE
COMPANY, INC.
By: Prudential Private Placement
Investors, L.P. (as Investment Advisor)
By: Prudential Private Placement
Investors, Inc. (as its General Partner)
By: ___________________________
Vice President
SCHEDULE I
TO EXHIBIT D - INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT
SUBSIDIARY GUARANTORS
---------------------
Albany International Holdings Two, Inc.
Albany International Techniweave, Inc.
Albany International Research Co.
Geschmay Corp.
Brandon Drying Fabrics, Inc.
Geschmay Welt Felts, Inc.
Geschmay Forming Fabrics Corp.
ANNEX I TO
EXHIBIT D - INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT
SUPPLEMENT NO. [ ] dated as of [ ], 200[ ] to the INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT dated as of October __, 2005 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Indemnity,
Subrogation and Contribution Agreement"), among ALBANY INTERNATIONAL CORP., a
Delaware corporation (the "Company"), each Subsidiary of the Company listed on
Schedule I thereto or becoming a party thereto as provided in Section 12 thereof
(the "Subsidiary Guarantors") and each Purchaser party to the Note Agreement
referred to below (together with their successors and assigns the "Purchasers").
Reference is made to Note Agreement and Guaranty, dated as of October __,
2005, among the Company, the Guarantors party thereto and the original
Purchasers named in the Purchaser Schedule attached thereto (as the same may be
amended, modified and supplemented from time to time, the ("Note Agreement").
Capitalized terms used herein and not otherwise defined herein have the
respective meanings specified in the Note Agreement and the Indemnity,
Subrogation and Contribution Agreement.
The Company, the Guarantors and the Purchasers have entered into the
Indemnity, Subrogation and Contribution Agreement in order to induce the
original Purchasers to purchase the Notes. Pursuant to paragraph 5M of the Note
Agreement, certain additional Subsidiaries may be required under the terms of
the Note Agreement from time to time to enter into the Indemnity, Subrogation
and Contribution Agreement as Guarantors. Section 12 of the Indemnity,
Subrogation and Contribution Agreement provides that additional Subsidiaries may
become Guarantors under the Indemnity, Subrogation and Contribution by execution
and delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary of the Company (the "New Guarantor") is executing this Supplement in
accordance with the requirements of the Note Agreement to become a Guarantor
under the Indemnity, Subrogation and Contribution Agreement as consideration for
the prior purchase and sale of the Notes previously issued.
Accordingly, the Required Holders and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation and
Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Required
Holders and the other beneficiaries of the AI Guaranty Agreement that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Required
Holders shall have received a counterpart of this Supplement that bears the
signature of the New Guarantor and the Required Holders have executed a
counterpart hereof. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 6. In the event that any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement.
SECTION 8. The New Guarantor agrees to reimburse the Required Holders for
their out-of-pocket expenses in connection with this Supplement, including the
fees, other charges and disbursements of counsel for the Required Holders.
IN WITNESS WHEREOF, the New Guarantor and the Required Holders have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[NAME OF NEW GUARANTOR]
By: ___________________________
Name:
Title:
[REQUIRED HOLDERS]
By: ___________________________
Name:
Title:
SCHEDULE 1A
-----------
Albany International Holdings Two, Inc.
Albany International Techniweave, Inc.
Albany International Research Co.
Geschmay Corp.
Brandon Drying Fabrics, Inc.
Geschmay Wet Felts, Inc.
Geschmay Forming Fabrics Corp.
SCHEDULE 6A
-----------
Subsidiary Indebtedness existing as of January 8, 2004 Amount(1)
- ------------------------------------------------------ ---------
Wurttembergische Filztuchfabrik D. Geschmay GmbH
Short and Medium-Term Borrowings from Local Banks $1,300,000
Albany Door Systems AB (including Subsidiaries)
Short- and Medium-Term Borrowings from Local Banks $200,000
Albany Nordiskafilt Kabushiki Kaisha
Short- and Medium-Term Borrowings from Local Banks $5,600,000
Albany International Pty. Ltd.
Short- and Medium-Term Borrowings from Local Banks $37,000
Albany International Canada Corp.
Short- and Medium-Term Borrowings from Local Banks $38,000
Albany International France S.A.S.
Finance Lease of premises in Gond Pontouvre w/Batimap $5,025,000
- ----------
(1) Dollar amounts are converted from local currencies.
SCHEDULE 6B
-----------
Existing Liens
- --------------
Wurttembergische Filztuchfabrik D. Geschmay GmbH
Mortgage on real property to secure borrowings disclosed in Schedule 6.01, in an
amount not to exceed Euro 5,133,000.
SCHEDULE 6D
-----------
Beier Albany & Co.
The Company has a 50% interest in a South African business enterprise in the
Company's core business of papermachine clothing and industrial fabrics. This
enterprise was originally organized in 1978 as a partnership, and is now
conducted through a corporation with 50/50 ownership. The Company's decision to
conduct business in South Africa in this way arose due to the advantages of
having an established local business with experience operating in South Africa.
The Company and its other subsidiaries engage in intercompany sales and other
transactions with Beier Albany to the same extent as they would any wholly-owned
subsidiary. The other 50% interest is owned by an entity controlled by members
of the Beier family who, apart from their ownership of this interest, are not,
to the Company's best knowledge, Affiliates of the Company.
Spectra Systems Corporation (SSC)
The Company made an investment of approximately $4 million in 1997 in this
entity, which is engaged in the development of textiles using dispersed laser
technology. At the same time, the Company entered into an exclusive supply
arrangement pursuant to which SSC is obligated to purchase all of its
monofilament or textile products from the Company, and to pay certain royalties
to the Company on sales of SSC products that incorporate materials supplied by
the Company. SSC also granted to the Company an exclusive license to use SSC
products in papermachine clothing and related products. In addition, the
Company's subsidiary, Albany International Research Co., provides research and
technical support to SSC. The remaining interests of SSC are not, to the
Company's best knowledge, held by Affiliates of the Company.
Nevo Cloth Ltd.
Albany Nordiskafilt AB, the Company's principal Swedish subsidiary, established
a 50/50 equity joint venture with a local Russian partner to gain a
manufacturing presence in Russia in the Company's core papermachine clothing
business. Albany Nordiskafilt supplies papermachine clothing and related
products to this entity for resale to customers in Russia. The other shareholder
is not, to the Company's best knowledge, an Affiliate of the Company.
Loading Bay Specialists Limited
The Company made an investment of approximately $2,025,000 to acquire a 49.9%
interest in a distributor of high-performance industrial doors in England, where
the Company's door products did not have the same level of penetration as in
other European markets. The Company sells high-performance doors and related
products to this entity for resale in the U.K. The other shareholder is not, to
the Company's best knowledge, an Affiliate of the Company.
Albany International Receivables Corp. (AIRC)
During 2001, the Company entered into a program to sell a portion of its North
American accounts receivable to AIRC, with no recourse. The accounts receivable
are sold on an ongoing basis to AIRC, a qualified special purpose entity which,
in accordance with GAAP, is not consolidated in the Company's financial
statements. The agreements pursuant to which receivables are sold have been
filed with the SEC as exhibits to the Company's Exchange Act reports.
SCHEDULE 6G
-----------
Existing Investments
i. Albany International Corp. and Subsidiaries
Beier Albany & Co. Ltd. 50% ownership of ordinary shares
Spectra Systems Corporation 1,777,778 shares Series C Preferred, $0.01
(Delaware) par value (<20%)
Loading Bay Specialists Limited 4,999 ordinary shares
(England and Wales)
Nevo Cloth Ltd. (Russia) 50% equity ownership
Ichikawa Ltd. (Japan) 300,000 shares Common Stock
Parco Scientifico Technlogico di Venezia s.c.a.r.l. 176 quotas valued at ITL 17,600,000
(approx. US$ 9,800)
Albany International Receivables Corp. 100% ownership of equity; loan from Albany
International Canada Corp. of CAD 5,300,000
Albany International AB(2) Surety Bond, dated May 25, 1994, by Albany
International Corp. for the benefit of
Forsakringsbolaget Pensionsgaranti, securing the
obligations of Albany International AB under certain
insurance policies relating to the pension obligations
of Albany International AB to employees in Sweden
(approximately 168,000,000 Swedish kroner)
Albany International Germany Holding(1) Guaranty by Albany International Corp. in favor of
Deutsche Bank of borrowings by Albany International
Germany Holding of Euro 714,889 (approximately US$
860,000)
- ----------
(2) Wholly-owned subsidiaries of Albany International Corp.
ii. Subsidiaries
Affiliate Direct Subsidiary of Guarantors Country of Jurisdiction of
Incorporation Incorporation
- ----------------------------------------------------------------------------------------------------------------------------
47 Albany Troy Road Albany International Corp. United States New York
Corporation
AI (Switzerland) GmbH Albany International Holding Switzerland Switzerland
(Switzerland) AG
Albany Door Systems A/S Albany Door Systems GmbH Denmark Denmark
Albany Door Systems AB Albany International Holding Sweden Norrkoping
AB
Albany Door Systems AG Albany Door Systems AB Switzerland Zurich
Albany Door Systems B.V. Albany Door Systems AB Netherlands Dieren
Albany Door Systems GmbH Albany International BV Germany Germany
Albany Door Systems GmbH Albany Door Systems AB Austria Sierning
(Austria)
Albany Door Systems S.A.R.L. Albany Door Systems AB France Selestat
Albany Door Systems Sp. zo.o. Albany International Corp. Poland Poland
Albany Dritek Corp. Albany International Corp. United States New York
Albany Felt Company Inc. Albany International Corp. United States New York
Albany International (China) Albany International Corp. China Panyu, Guangdong
Co., Ltd.
Albany International AB Albany International Holding Sweden Halmstad
AB
Albany International AS Albany International AB Norway Oslo
Albany International B.V. Albany International Holding Netherlands The Hague
(Switzerland) AG
Albany International Canada AI (Switzerland) GmbH Canada Nova Scotia
Corp.
Albany International Corp. United States Delaware
Albany International de Albany International Mexico Mexico
Mexico S.A. de C.V. Holding S.A de C.V.
Albany International France, Albany International Canada France Selestat
S.A.S. Corp.
Albany International Germany Albany International Germany Germany
Holding GmbH Holdings Two, Inc.
Albany International GmbH Albany International Germany Germany Germany
Holding GmbH
Albany International Holding Albany International Switzerland Switzerland
(Switzerland) AG Holdings Two, Inc.
Albany International Albany International Holding Sweden Sweden
Holding AB (Switzerland) AG
Albany International Holding Albany International Corp. Mexico Mexico
S.A. de C.V.
Albany International Albany International Corp. x United States Delaware
Holdings Two, Inc.
Affiliate Direct Subsidiary of Guarantors Country of Jurisdiction of
Incorporation Incorporation
- ----------------------------------------------------------------------------------------------------------------------------
Albany International Italia Albany International Holding Italy Italy
S.a.r.l. (Switzerland) AG
Albany International Korea, Albany International Korea Chungjoo-shi
Inc. Holdings Two, Inc.
Albany International Ltd. Albany International Holding United Kingdom United Kingdom
(Switzerland) AG
Albany International Oy Albany International AB Finland Helsinki
Albany International Pty., Albany International Australia Australian Capital Terr
Ltd. HoldingsTwo, Inc.
Albany International Albany International Cayman Islands Cayman Islands
Receivables Corporation Holdings Two, Inc.
Albany International Albany International Corp. X United States Delaware
Research Co.
Albany International S.p.A. Albany International Italia Italy Italy
S.a.r.l.
Albany International Service Albany International Holding Mexico Mexico
Company S.A. de C.V. S.A. de C.V.
Albany International Albany International Corp. X United States New Hampshire
Techniweave, Inc.
Albany International Tecidos Albany International Canada Brazil JUCESC - Public
Tecnicos Ltda. Corp. Department
Albany Nordiskafilt Albany International AB Japan Tokyo
Kabushiki Kaisha
Beier Albany and Company Albany International Corp. South Africa Republic of South Africa
(Proprietary Limited)
Brandon Drying Fabrics, Inc. Geschmay Corp. X United States Delaware
Foretagshalsan Tre Hjartan AB Albany International AB Sweden Halmstad
Geschmay Corp. Albany International Corp. X United States Delaware
Geschmay Forming Fabrics Geschmay Corp. X United States Delaware
Corp.
Geschmay Wet Felts, Inc. Geschmay Corp. X United States Delaware
Loading Bay Specialists Albany Door Systems GmbH United Kingdom Cardiff
Limited
Martel Wire S.A. de C.V. Albany International Holding Mexico Mexico
S.A. de C.V.
Nevo-Cloth Ltd. Albany International AB Russia St. Petersburg
Albany International S.A. Albany International AB South Africa Durban
Pty., Ltd.
SA Alfadoor NV Albany Door Systems AB Belgium Belgium
Transamerican Manufacturing Albany International Corp. United States Delaware
Inc.
Transglobal Enterprises Inc. Albany International Corp. United States Delaware
Wurttembergische Albany International Holding Germany Germany
Filztuchfabrik D. Geschmay GmbH
GmbH & Co. KG
Albany International (Asia) Albany International Australia Australian Capital Terr
Affiliate Direct Subsidiary of Guarantors Country of Jurisdiction of
Incorporation Incorporation
- ----------------------------------------------------------------------------------------------------------------------------
Pty., Ltd. Holdings Two, Inc. Suzhou City,
Albany International Applied Albany International Holding China Zhangjiagang
Technology (Suzhou) Company, (Switzerland) AG
Ltd.
SCHEDULE 8C
-----------
Albany International Corp. ("Albany") is a defendant in suits brought in various
courts in the United States by plaintiffs who allege that they have suffered
personal injury as a result of exposure to asbestos-containing products
previously manufactured by Albany. Albany's production of asbestos-containing
paper machine clothing products was limited to certain synthetic dryer fabrics
marketed during the period from 1967 to 1976 and used in certain paper mills.
Such fabrics generally had a useful life of three to twelve months.
Albany was defending against 24,452 claims as of July 22, 2005. This compares
with 25,679 such claims as of April 22, 2005, 29,411 claims as of December 31,
2004, 28,838 claims as of December 31, 2003, 22,593 claims as of December 31,
2002, 7,347 claims as of December 31, 2001, 1,997 claims as of December 31,
2000, and 2,276 claims as of December 31, 1999. These suits allege a variety of
lung and other diseases based on alleged exposure to products previously
manufactured by Albany.
Albany anticipates that additional claims will be filed against it and the
related companies in the future but is unable to predict the number and timing
of such future claims. These suits typically involve claims against from twenty
to over two hundred defendants, and the complaints usually fail to identify the
plaintiffs' work history or the nature of the plaintiffs' alleged exposure to
Albany's products. In cases in which work histories have been provided,
approximately one-third of the claimants have alleged time spent in a paper
mill, and only a portion of those claimants have alleged time spent in a paper
mill to which Albany is believed to have supplied asbestos-containing products.
Approximately 19,166 of the claims pending against Albany are filed in various
counties in Mississippi, of which 10,424 such claims are included in only five
proceedings.
Recent changes in the application of procedural rules regarding the mass joinder
of numerous asbestos claims in a single proceeding against numerous defendants
resulted in the dismissal during the quarter of a number of claims pending
against Albany in that State. As the result of a 2004 ruling of the Mississippi
Supreme Court, courts in counties throughout the State began to issue orders
severing the individual claims of plaintiffs in mass joinder asbestos cases.
Once severed, the courts are requiring the plaintiffs to file amended complaints
which include more detailed information regarding their allegations of asbestos
exposure, and have begun to dismiss or transfer improperly filed cases. As a
consequence, a number of plaintiffs have already voluntarily dismissed their
claims. As to the plaintiffs filing amended complaints, these cases are being
transferred to the proper counties within Mississippi, or, in limited instances,
are being removed to federal court. The Company expects more of the remaining
claims pending in Mississippi to be dismissed, amended or transferred; and that
the only claimants remaining in Mississippi at the conclusion of this process
will be those who are residents of, or who allege exposure to asbestos in, that
State, and whose amended complaints satisfy the requirement for specific
information regarding their exposure claims.
The Company expects that only a portion of these remaining claimants will be
able to demonstrate time spent in a paper mill to which Albany supplied
asbestos-containing products during a period in which Albany's
asbestos-containing products were in use. Based on past experience,
communications from certain plaintiffs' counsel and the advice of the Company's
Mississippi counsel, the Company expects the percentage of claimants with paper
mill exposure in the Mississippi proceedings to be considerably lower than the
total number of claims previously asserted. However, due to the fact that the
effects of the mandate of the Mississippi Supreme Court may take some time to be
fully realized, the Company does not believe a meaningful estimate can be made
regarding the expected reduction in claims or the range of possible loss with
respect to the remaining claims.
It is the position of Albany and the other paper machine clothing defendants
that there was insufficient exposure to asbestos from any paper machine clothing
products to cause asbestos-related injury to any plaintiff. Furthermore,
asbestos contained in Albany's synthetic products was encapsulated in a
resin-coated yarn woven into the interior of the fabric, further reducing the
likelihood of fiber release. While the Company believes it has meritorious
defenses to these claims, it has settled certain of these cases for amounts it
considers reasonable given the facts and circumstances of each case. The
Company's insurer, Liberty Mutual, has defended each case under a standard
reservation of rights. As of July 22, 2005, the Company had resolved, by means
of settlement or dismissal, 13,491 claims, and had reached tentative agreement
to resolve an additional 4,563 claims reported above as pending. The total cost
of resolving all 18,054 such claims was $6,081,000. Of this amount, $6,046,000,
or 99%, was paid by the Company's insurance carrier. The Company has more than
$130 million in confirmed insurance coverage that should be available with
respect to current and future asbestos claims, as well as additional insurance
coverage that it should be able to access.
Brandon Drying Fabrics, Inc.
Brandon Drying Fabrics, Inc. ("Brandon"), a subsidiary of Geschmay Corp., is
also a separate defendant in most of these cases. Brandon was defending against
9,549 claims as of July 22, 2005. This compares with 9,670 such claims as of
April 22, 2005, 9,985 claims as of December 31, 2004, 10,242 claims as of
December 31, 2003, 11,802 claims as of December 31, 2002, 8,759 claims as of
December 31, 2001, 3,598 claims as of December 31, 2000, and 1,887 claims as of
December 31, 1999. The Company acquired Geschmay Corp., formerly known as
Wangner Systems Corporation, in 1999. Brandon is a wholly-owned subsidiary of
Geschmay Corp. In 1978, Brandon acquired certain assets from Abney Mills
("Abney"), a South Carolina textile manufacturer. Among the assets acquired by
Brandon from Abney were assets of Abney's wholly-owned subsidiary, Brandon
Sales, Inc. which, among other things, had sold dryer fabrics containing
asbestos made by its parent, Abney. It is believed that Abney ceased production
of asbestos-containing fabrics prior to the 1978 transaction. Although Brandon
manufactured and sold dryer fabrics under its own name subsequent to the asset
purchase, none of such fabrics contained asbestos. Under the terms of the Assets
Purchase Agreement between Brandon and Abney, Abney agreed to indemnify, defend,
and hold Brandon harmless from any actions or claims on account of products
manufactured by Abney and its related corporations prior to the date of the
sale, whether or not the product was sold subsequent to the date of the sale. It
appears that Abney has since been dissolved. Nevertheless, a representative of
Abney has been notified of the pendency of these actions and demand has been
made that it assume the defense of these actions. Because Brandon did not
manufacture asbestos-containing products, and because it does not believe that
it was the legal successor to, or otherwise responsible for obligations of,
Abney with respect to products manufactured by Abney, it believes it has strong
defenses to the claims that have been asserted against it. In some instances,
plaintiffs have voluntarily dismissed claims against it, while in others it has
entered into what it considers to be reasonable settlements. As of July 22,
2005, Brandon has resolved, by means of settlement or dismissal, 7,077 claims
for a total of $152,499. Brandon's insurance carriers initially agreed to pay
88.2% of the total indemnification and defense costs related to these
proceedings, subject to the standard reservation of rights. The remaining 11.8%
of the costs had been borne directly by Brandon. During 2004, Brandon's
insurance carriers agreed to cover 100% of indemnification and defense costs,
subject to policy limits and the standard reservation of rights, and to
reimburse Brandon for all indemnity and defense costs paid directly by Brandon
related to these proceedings.
Mount Vernon
In some of these cases, the Company is named both as a direct defendant and as
the "successor in interest" to Mount Vernon Mills ("Mount Vernon"). The Company
acquired certain assets from Mount Vernon in 1993. Certain plaintiffs allege
injury caused by asbestos-containing products alleged to have been sold by Mount
Vernon many years prior to this acquisition. Mount Vernon is contractually
obligated to indemnify the Company against any liability arising out of such
products. The Company denies any liability for products sold by Mount Vernon
prior to the acquisition of the Mount Vernon assets. Pursuant to its contractual
indemnification obligations, Mount Vernon has assumed the defense of these
claims. On this basis, the Company has successfully moved for dismissal in a
number of actions.
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While the Company does not believe, based on currently available information and
for the reasons stated above, that a meaningful estimate of a range of possible
loss can be made with respect to such claims, based on its understanding of the
insurance policies available, how settlement amounts have been allocated to
various policies, its recent settlement experience, the absence of any judgments
against the Company or Brandon, the ratio of paper mill claims to total claims
filed, and the defenses available, the Company currently does not anticipate any
material liability relating to the resolution of the aforementioned pending
proceedings in excess of existing insurance limits. Consequently, the Company
currently does not anticipate, based on currently available information, that
the ultimate resolution of the aforementioned proceedings will have a material
adverse effect on the financial position, results of operations or cash flows of
the Company. Although the Company cannot predict the number and timing of future
claims, based on the foregoing factors and the trends in claims against it to
date, the Company does not anticipate that additional claims likely to be filed
against it in the future will have a material adverse effect on its financial
position, results of operations or cash flows. However, the Company is aware
that litigation is inherently uncertain, especially when the outcome is
dependent primarily on determinations of factual matters to be made by juries.
The Company is also aware that numerous other defendants in asbestos cases, as
well as others who claim to have knowledge and expertise on the subject, have
found it difficult to anticipate the outcome of asbestos litigation, the volume
of future asbestos claims and the anticipated settlement values of those claims.
For these reasons, there can be no assurance that the foregoing conclusions will
not change.
Legislation has been introduced in the United States Senate that is intended to
address asbestos litigation by creating a privately funded trust to provide
compensation to persons injured as the result of exposure to asbestos. The
FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2005 was introduced on April 19,
2005 and approved by the Senate's Judiciary Committee on May 26, 2005. If
enacted into law, the Company would be required to make payments of up to
$500,000 per year for up to 30 years to the privately funded, publicly
administered trust fund. The payments would not be covered by any of the
Company's insurance policies. The proposed legislation remains subject to
negotiation and modification in the full Senate. The Company cannot predict
whether the proposed legislation will ultimately be enacted into law.
SCHEDULE 8G
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1. Five-Year Revolving Credit Agreement, dated as of January 8, 2004, among
Albany International Corp., certain banks listed therein, JP Morgan Chase
Bank as the Administrative Agent, J.P. Morgan Europe Limited as the London
Agent, J.P. Morgan Securities Inc. as Lead Arranger and Sole Bookrunner,
Fleet National Bank and ABN AMRO Bank N.V. as Co-Syndication Agents, and
Sumitomo Mitsui Banking Corp., New York, and Wachovia Bank, N.A., as
Co-Documentation Agents.
2. Receivables Sale Agreement, dated as of September 28, 2001, among Albany
International Corp. as the Collection Agent, Albany International
Receivables Corporation as the Seller, ABN AMRO Bank N.V., as the Agent
the Committed Purchasers party thereto, and Amsterdam Funding Corporation,
including all Amendments thereto.
3. Purchase and Sale Agreement, dated as of September 28, 2001, among Albany
International Corp., Geschmay Corp., Albany International Research Co.,
Albany International Techniweave, Inc., Albany International Canada Inc.,
M&I Door Systems Ltd., as Originators, and Albany International
Receivables Corporation as Buyer, including all Amendments thereto.
4. Letter of Credit Agreement dated as of July 1, 1987, between Albany
International Corp. and Norstar Bank of Upstate NY, in connection with the
Rensselaer County Industrial Development Agency $10,000,000 Flexible Rate
Demand Industrial Development Revenue Bonds, Series 1987, as amended by
amendment dated December 1987.