ANVIL HOLDINGS, INC.
July __, 1997
CERTIFICATE OF DESIGNATIONS OF THE POWERS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER
SPECIAL RIGHTS OF 13% SERIES B SENIOR EXCHANGEABLE
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Anvil Holdings, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Company (the "Board of Directors") by its Restated Certificate of Incorporation
(hereinafter referred to as the "Certificate of Incorporation"), and pursuant to
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, by unanimous written consent dated July __,
1997, duly approved and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issue of 13% Series B Senior
Exchangeable Preferred Stock, par value $0.01 per share, with a liquidation
preference of $25.00 per share, consisting of up to 2,300,000 shares,
having the designations, preferences, relative, participating, optional and
other special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
(a) Designation. There is hereby created out of the authorized
and unissued shares of preferred stock of the Company a series of preferred
stock designated as the "13% Series B Senior Exchangeable Preferred Stock"
(the "Senior Preferred Stock"). The number of shares constituting such
series shall be 2,300,000 shares of Senior Preferred Stock, consisting of an
initial issuance of 1,200,000 shares of Senior Preferred Stock plus up to
1,100,000 additional shares of Senior Preferred Stock which may be issued to
pay dividends on the Senior Preferred Stock if the Company elects to pay
dividends in additional shares of Senior Preferred Stock. The liquidation
preference of the Senior Preferred Stock shall be $25.00 per share.
(b) Rank. The Senior Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company, rank senior to all classes of common stock of the
Company and each other class of capital stock or series of Preferred Stock of
the Company hereafter created by the Board of Directors the terms of which do
not expressly provide that it ranks on a parity with the Senior Preferred
Stock as to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to with the
Common Stock of the Company as "Junior Securities"). The Senior
Preferred Stock shall, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Company, rank on a parity with each series of Preferred Stock existing on the
date hereof the terms of which do not expressly provide that it ranks junior
to any Senior Preferred Stock as to dividend distributions and distributions
upon the liquidation, winding-up and dissolution of the Company and any class
of capital stock or series of Preferred Stock hereafter created by the Board
of Directors, the terms of which expressly provide that such class or series
shall rank on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Securities");
provided that any such Parity Securities that were not approved by the
Holders in accordance with paragraph (f)(ii)(A) hereof shall be deemed to be
Junior Securities and not Parity Securities.
(c) Dividends.
(i) Beginning on the Senior Preferred Stock Issue Date, the
Holders of the outstanding shares of Senior Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors,
out of funds legally available therefor, dividends on each share of
Senior Preferred Stock, at a rate per annum equal to 13% of the
liquidation preference per share of the Senior Preferred Stock. All
dividends shall be cumulative, whether or not earned or declared, on a
daily basis from the Senior Preferred Stock Issue Date and shall be
payable quarterly in arrears on each Dividend Payment Date, commencing on
the first Dividend Payment Date after the Senior Preferred Stock Issue
Date, provided that if any dividend payable on any Dividend Payment Date
on or before March 15, 2002 is not declared and paid in full in cash on
such Dividend Payment Date, the amount payable as dividends on such
Dividend Payment Date that is not paid in cash (including partial
payments in cash) on such Dividend Payment Date shall be paid by the
Company in additional fully paid and non-assessable shares (including
fractional shares, if applicable) of Senior Preferred Stock having an
aggregate liquidation preference equal to the amount of such dividends
(rounded to the nearest whole cent). After March 15, 2002, dividends
shall be paid only in cash. If any dividend (or portion thereof) payable
on any Dividend Payment Date after March 15, 2002 is not declared or paid
in full in cash on such Dividend Payment Date, the amount of such
dividend that is payable and that is not paid in cash on such date shall
increase at the rate of 13% per annum, compounded quarterly, from such
Dividend Payment Date until declared and paid in full. Each distribution
in the form of a dividend (whether in cash or in additional shares of
Senior Preferred Stock) shall be payable to Holders of record as they
appear on the stock register of the Company on such record dates, not
less than 10 nor more than 60 days preceding the related Dividend Payment
Date, as shall be fixed by the Board of Directors. Dividends shall cease
to accumulate in respect of shares of the Senior Preferred Stock on the
Exchange Date or on the date of their earlier redemption unless the
Company shall have failed to issue the appropriate aggregate principal
amount of Exchange Debentures (as defined in paragraph (g)(i)(A) hereof)
in respect of the Senior Preferred Stock on the Exchange Date or shall
have failed to pay the relevant redemption price on the date filed for
redemption.
(ii) All dividends paid with respect to shares of the Senior
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to
the Holders entitled thereto.
2
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Company to pay or set apart for payment, any dividends on
shares of the Senior Preferred Stock at any time.
(iv) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption pursuant
to paragraph (e)(i) may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to Holders of record on
such date, not more than 45 days prior to the payment thereof, as may be
fixed by the Board of Directors.
(v) No full dividends shall be declared by the Board of
Directors or paid or funds set apart for payment of dividends by the
Company on any Parity Securities for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in
full, or declared and (in the case of dividends payable in cash) a sum in
cash set apart sufficient for such payment, on the Senior Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment
of such full dividends on such Parity Securities. If any dividends are
not paid in full, as aforesaid, upon the shares of the Senior Preferred
Stock and any other Parity Securities, all dividends declared upon shares
of the Senior Preferred Stock and any other Parity Securities shall be
declared pro rata so that the amount of dividends declared per share on
the Senior Preferred Stock and such Parity Securities shall in all cases
bear to each other the same ratio that accrued dividends per share on the
Senior Preferred Stock and such Parity Securities bear to each other.
(vi) (A) Holders of shares of the Senior Preferred Stock
shall be entitled to receive the dividends provided for in paragraph
(c)(i) hereof in preference to and in priority over any dividends upon
any of the Junior Securities.
(B) So long as any shares of Senior Preferred Stock are
outstanding, the Company shall not declare, pay or set apart for
payment any dividend on any of the Junior Securities or make any
payment on account of, or set apart for payment money for a sinking or
other similar fund for, the purchase, redemption or other retirement
of, any of the Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Junior
Securities, or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or shares of
the Company or other property (other than dividends on Junior
Securities paid in additional shares of Junior Securities), and shall
not permit any corporation or other entity directly or indirectly
controlled by the Company to purchase or redeem any of the Junior
Securities or any such warrants, rights, calls or options unless full
cumulative dividends determined in accordance herewith have been paid
in full on the Senior Preferred Stock.
(C) So long as any shares of Senior Preferred Stock are
outstanding, the Company shall not make any payment on account of, or
set apart for payment money for a sinking or other similar fund for,
the purchase, redemption or other retirement of, any of the Parity
Securities or any warrants, rights, calls or options exercisable for
or convertible into any of the Parity Securities, and shall not permit
any corporation or other entity directly or indirectly controlled by
the
3
Company to purchase or redeem any of the Parity Securities or any
such warrants, rights calls or options unless the dividends determined
in accordance herewith on the Senior Preferred Stock have been paid in
full.
(vii) Dividends payable on shares of the Senior Preferred
Stock for any period less than a year shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed in the period for which payable. If any Dividend Payment Date
occurs on a day that is not a Business Day, any accrued dividends
otherwise payable on such Dividend Payment Date shall be paid on the next
succeeding Business Day.
(d) Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Company, the Holders of
shares of Senior Preferred Stock then outstanding shall be entitled to be
paid, out of the assets of the Company available for distribution to its
stockholders, $25.00 per share of Senior Preferred Stock, plus an amount
in cash equal to all accumulated and unpaid dividends thereon to the date
fixed for liquidation, dissolution or winding-up (including an amount
equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or
winding-up), before any payment shall be made or any assets distributed
to the holders of any of the Junior Securities, including, without
limitation, Common Stock of the Company. Except as provided in the
preceding sentence, Holders of shares of Senior Preferred Stock shall not
be entitled to any distribution in the event of liquidation, dissolution
or winding-up of the affairs of the Company. If the assets of the
Company are not sufficient to pay in full the liquidation preference
payable to the Holders of outstanding shares of the Senior Preferred
Stock and all Parity Securities, then the holders of all such shares
shall share equally and ratably in such distribution of assets of the
Company in accordance with the amounts which would be payable on such
distribution if the amount to which the Holders of outstanding shares of
Senior Preferred Stock and the holders of outstanding shares of all
Parity Securities are entitled were paid in full.
(ii) After payment of the full amount of the liquidation
preferences and all accumulated and unpaid dividends to which they are
entitled, the holders of shares of the Senior Preferred Stock shall not
be entitled to any further participation in any distribution of assets of
the Company.
(iii) For the purposes of this paragraph (d), neither the
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Company nor the consolidation or merger of the
Company with or into one or more corporations shall be deemed to be a
liquidation, dissolution or winding-up of the affairs of the Company
(unless such sale, conveyance, exchange or transfer is in connection with
a dissolution or winding-up of the business of the Company).
4
(e) Redemption.
(i) Optional Redemption.
(A) The Company may (subject to contractual and other
restrictions with respect thereto and the legal availability of funds
therefor), at the option of the Board of Directors, redeem at any time
on or after March 15, 2002, from any source of funds legally available
therefor, in whole or in part, in the manner provided in paragraph
(e)(iii) hereof, any or all of the shares of the Senior Preferred
Stock, at the redemption prices (expressed as a percentage of the
liquidation preference thereof) set forth below plus, without
duplication, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Optional
Redemption Price"), if redeemed during the 12-month period beginning
on March 15 of each of the calendar years indicated below:
YEAR PERCENTAGE
---- ----------
2002. . . . . . . . . . . . . . . . . . . . . . . . . . . 106.500%
2003. . . . . . . . . . . . . . . . . . . . . . . . . . . 104.333%
2004. . . . . . . . . . . . . . . . . . . . . . . . . . . 102.167%
2005 and thereafter . . . . . . . . . . . . . . . . . . . 100.000%
provided that no optional redemption pursuant to this paragraph (e)(i)(A)
shall be authorized or made (1) unless prior thereto full unpaid cumulative
dividends for all Dividend Periods terminating on or prior to the
Redemption Date and for an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption
Date to the Redemption Date shall have been or immediately prior to the
Redemption Notice (as defined in paragraph (e)(iii)(A) hereof) are declared
and paid in cash or declared and a sum set apart sufficient for such cash
payment on the Redemption Date, on the outstanding shares of the Senior
Preferred Stock or (2) at less than 101% of the liquidation preference of
the Senior Preferred Stock at any time when the Company is making or
purchasing shares of Senior Preferred Stock under an Offer (as defined in
paragraph (h)(ii) hereof) in accordance with the provisions of paragraph
(h) hereof.
(B) In addition, at any time, the Company any redeem, in
the manner provided in paragraph (e)(iii) hereof, shares of the Senior
Preferred Stock, in whole or in part, at the option of the Company, at
a redemption price equal to 113% of the liquidation preference
thereof, plus an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately
prior to the Redemption Date to the Redemption Date) (the "Contingent
Redemption Price"), with the proceeds of a Public Equity Offering,
provided that such redemption occurs within 60 days after consummation
of such Public Equity Offering; and provided, further, that no
optional redemption pursuant to this paragraph (e)(i)(B) shall be
authorized or made unless prior thereto full unpaid cumulative
dividends for
5
all Dividend Periods terminating on or prior to the Redemption Date
and for an amount equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date shall have been or immediately prior to the
Redemption Notice are declared and paid in cash or declared and a
sum set apart sufficient for such cash payment on the Redemption
Date, on the outstanding shares of the Senior Preferred Stock.
(C) In the event of a redemption of only a portion of
the then outstanding shares of the Senior Preferred Stock, the
Company shall effect such redemption as it determines, pro rata
according to the number of shares held by each Holder of the Senior
Preferred Stock or by lot, as may be determined by the Company in
its sole discretion, except that the Company may redeem such shares
held by any Holders of fewer than 100 shares (or shares held by
Holders who would hold less than 100 shares as a result of such
redemption), without regard to any pro rata redemption requirement.
(ii) Mandatory Redemption. On March 15, 2009, the Company
shall redeem (subject to the legal availability of funds therefor) from
any source of funds legally available therefor, in the manner provided in
paragraph (e)(iii) hereof, all of the shares of the Senior Preferred
Stock then outstanding at a redemption price equal to 100% of the
liquidation preference per share, plus an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount equal to
a prorated dividend for the period from the Redemption Date immediately
prior to the Redemption Date to the Redemption Date) (the "Mandatory
Redemption Price").
(iii) Procedures for Redemption.
(A) At least 30 days and not more than 60 days prior
to the date fixed for any redemption of the Senior Preferred Stock,
written notice (the "Redemption Notice") shall be given by
first-class mail, postage prepaid, to each Holder of record on the
record date fixed for such redemption of the Senior Preferred Stock
at such Holder's address as the same appears on the stock register
of the Company, provided that no failure to give such notice nor
any deficiency therein shall affect the validity of the procedure
for the redemption of any shares of Senior Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Company has
failed to give said notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i)(A),
(e)(i)(B) or (e)(ii) hereof;
(2) the Optional Redemption Price, the Contingent Redemption Price or
the Mandatory Redemption Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Senior Preferred Stock are to be redeemed and the total number
of shares of the Senior Preferred Stock being redeemed;
6
(4) the number of shares of Senior Preferred Stock held, as of the
appropriate record date, by the Holder that the Company intends
to redeem;
(5) the date fixed for redemption;
(6) that the Holder is to surrender to the Company, at the place or
places where certificates for shares of Senior Preferred Stock
are to be surrendered for redemption, in the manner and at the
price designated, the certificate or certificates representing
the shares of Senior Preferred Stock to be redeemed; and
(7) that dividends on the shares of the Senior Preferred Stock to be
redeemed shall cease to accrue on such Redemption Date unless
the Company defaults in the payment of the Optional Redemption
Price, the Contingent Redemption Price or the Mandatory
Redemption Price, as the case may be.
(B) Each Holder of Senior Preferred Stock shall surrender the
certificate or certificates representing such shares of Senior
Preferred Stock to the Company, duly endorsed, in the manner and at
the place designated in the Redemption Notice, and on the Redemption
Date the full Optional Redemption Price, Contingent Redemption Price
or Mandatory Redemption Price, as the case may be, for such shares
shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less
than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares.
(C) Unless the Company defaults in the payment in full of the
applicable redemption price, dividends on the Senior Preferred Stock
called for redemption shall cease to accumulate on the Redemption
Date, and the Holders of such redemption shares shall cease to have
any further rights with respect thereto on the Redemption Date, other
than the right to receive the Optional Redemption Price, the
Contingent Redemption Price or the Mandatory Redemption Price, as the
case may be, without interest.
(f) Voting Rights.
(i) The Holders of shares of the Senior Preferred Stock, except
as otherwise required under the laws of the State of Delaware or as set
forth in paragraphs (ii) and (iii) below and in paragraph (m) hereof,
shall not be entitled or permitted to vote on any matter required or
permitted to be voted upon by the stockholders of the Company.
(ii) (A) So long as any shares of the Senior Preferred Stock
are outstanding, the Company shall not authorize any class of Parity
Securities without the affirmative vote or consent of Holders of at least
50% of the outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in
7
person or by proxy, either in writing or by resolution adopted at an annual
or special meeting, except that without the approval of Holders of the
Senior Preferred Stock, the Company may authorize or issue shares of Parity
Securities in exchange for, or the proceeds of which are used to
redeem or repurchase, any or all shares of Senior Preferred Stock then
outstanding, provided that (1) in the case of Parity Securities issued in
exchange for, or the proceeds of which are used to redeem or repurchase,
less than all shares of Senior Preferred Stock then outstanding, the
aggregate liquidation preference of such Parity Securities shall not
exceed the aggregate liquidation preference of, premium and accrued and
unpaid dividends on, and expenses in connection with the refinancing of,
the Senior Preferred Stock so exchanged, redeemed or repurchased and
(2) such Parity Securities shall not be mandatorily redeemable prior to
March 15, 2009.
(B) So long as any shares of the Senior Preferred Stock are
outstanding, the Company shall not amend this Certificate of
Designations so as to affect adversely the specified rights,
preferences, privileges or voting rights of Holders of shares of
Senior Preferred Stock or to authorize the issuance of any additional
shares of Senior Preferred Stock without the affirmative vote or
consent of Holders of a least 50% of the outstanding shares of Senior
Preferred Stock, voting or consenting, as the case may be, separately
as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) Prior to the exchange of Senior Preferred Stock for
Exchange Debentures, the Company shall not amend or modify the
indenture for the Exchange Debentures in the form as executed on the
Senior Preferred Stock Issue Date (the "Exchange Debenture Indenture")
(except as expressly provided therein) without the affirmative vote or
consent of Holders of at least a majority of the shares of Senior
Preferred Stock then outstanding, voting or consenting, as the case
may be, separately as one class, given in person or by proxy, either
in writing or by resolution adopted at an annual or special meeting.
(D) Except as set forth in paragraphs (f)(ii)(A) above, (1)
the creation, authorization or issuance of any shares of any Junior
Securities or Parity Securities, (2) the decrease in the amount of
authorized capital stock of any class, including any preferred stock,
or (3) the increase in the amount of authorized capital stock of any
class of Junior Securities shall not require the consent of Holders of
Senior Preferred Stock and shall not, unless not complying with
paragraph (f)(ii)(A), be deemed to affect adversely the rights,
preferences, privileges or voting rights of Holders of shares of
Senior Preferred Stock.
(iii) (A) If (1) dividends on the Senior Preferred Stock are
in arrears and unpaid (and, in the case of dividends payable after
March 15, 2002, are not paid in cash) for four consecutive quarterly
periods (a "Dividend Default"); (2) the Company fails to discharge any
redemption obligation of the Senior Preferred Stock when required
(a "Redemption Default"), whether or not the Company is permitted to do so
by the terms of any indenture, the credit agreement or any other
obligations of the Company; (3) the Company fails to make an offer to
purchase all outstanding shares of Senior Preferred Stock following a
Change of Control if such offer to purchase is required to be made pursuant
to
8
paragraph (h) hereof or fails to purchase shares of Senior Preferred Stock
from holders who elect to have such shares purchased pursuant to such
Change of Control offer (a "Change of Control Default"), whether or not
the Company is permitted to do so by the terms of any indenture, the credit
agreement or any other obligation of the Company; (4) the Company breaches
or violates one of the provisions set forth in paragraph (m) hereof and
the breach or violation continues for a period of 30 days or more (a
"Restriction Default"); or (5) a default occurs on the obligations to pay
principal of, interest on or any other payment obligation when due (a
"Payment Default") at final maturity on one or more classes of Indebtedness
of the Company or any Subsidiary of the Company, whether such Indebtedness
exists on the Senior Preferred Stock Issue Date or is incurred thereafter,
having individually or in the aggregate, an outstanding principal amount
of $25,000,000 or more, or any other Payment Default occurs on one or
more such classes of Indebtedness and such class or classes of Indebtedness
are declared due and payable prior to their respective maturities, then, in
any such case, the number of directors constituting the Board of Directors
shall be adjusted as set forth in the Certificate of Incorporation to
permit the Holders of the majority of the then outstanding Senior Preferred
Stock, voting separately as one class, to elect two directors. Subject
to Section (f)(iii)(B) below, Holders of a majority of the issued and
outstanding shares of the Senior Preferred Stock, voting separately as one
class, shall have the exclusive right to elect two directors at a meeting
therefor called upon occurrence of such Dividend Default, Redemption
Default, Change of Control Default, Restriction Default or Payment Default,
as the case may be, and at every subsequent meeting at which the terms of
office of the directors so elected by the Holders of the Senior Preferred
Stock expire (other than as described in (f)(iii)(B) below). Each such
event described in clauses (1), (2), (3), (4) and (5) is a "Voting Rights
Triggering Event."
(B) The right of the Holders of Senior Preferred Stock
voting separately as one class to elect members of the Board of
Directors as set forth in paragraph (f)(iii)(A) above shall continue
until such time as (1) in the event such right arises due to a
Dividend Default, all accumulated dividends that are in arrears on the
Senior Preferred Stock are paid in full (and, in the case of Dividends
payable after March 15, 2002, are paid in cash); and (2) in the event
such right arises due to a Redemption Default, a Change of Control
Default, a Restriction Default or a Payment Default, the Company
remedies any such failure, breach or default, at which time the term
of any directors elected pursuant to paragraph (f)(iii)(A) shall
terminate, subject always to the same provisions for the renewal and
divestment of such special voting rights in the case of any future
Voting Rights Triggering Event. At any time after voting power to
elect directors shall have become vested and be continuing in the
Holders of shares of the Senior Preferred Stock pursuant to this
paragraph (f)(iii), or if vacancies shall exist in the offices of
directors elected by the Holders of shares of the Senior Preferred
Stock, a proper officer of the Company may, and upon the written
request of the Holders of record of at least 10% of the shares of
Senior Preferred Stock then outstanding addressed to the Secretary of
the Company shall, call a special meeting of the Holders of Senior
Preferred Stock, for the purpose of electing the directors which such
Holders are entitled to elect. If such meeting shall not be called by
the proper officer of the Company within 20 days after personal
service of said written request upon the Secretary of the Company, or
within 20 days after mailing the same within the United States by
certified mail, addressed
9
to the Secretary of the Company at its principal executive offices,
then the Holders of record of at least 20% of the outstanding shares
of the Senior Preferred Stock may designate in writing one of their
numbers to call such meeting at the expense of the Company, and such
meeting may be called by the Person
so designated upon the notice required for the annual meeting of
stockholders of the Company and shall be held at the place for holding
the annual meetings of stockholders or such other place in the United
States as shall be designated in such notice. Notwithstanding the
provisions of this paragraph (f)(iii)(B), no such special meeting
shall be called if any such request is received less than 30 days
before the date fixed for the next ensuing annual or special meeting
of stockholders of the Company. Any Holder of shares of the Senior
Preferred Stock so designated shall have, and the Company shall
provide, access to the lists of Holders of shares of the Senior
Preferred Stock for purposes of calling a meeting pursuant to the
provisions of this paragraph (f)(iii)(B).
(C) At any meeting held for the purpose of electing
directors at which the Holders of Senior Preferred Stock shall have
the right, voting separately as one class, to elect directors as
aforesaid, the presence in person or by proxy of the Holders of at
least a majority of the outstanding Senior Preferred Stock shall be
required to constitute a quorum of such Senior Preferred Stock.
(D) Any vacancy occurring in the office of a director
elected by the Holders of shares of the Senior Preferred Stock may be
filled by the remaining director elected by the Holders of shares of
the Senior Preferred Stock unless and until such vacancy shall be
filled by the Holders of shares of the Senior Preferred Stock.
(iv) In any case in which the Holders of shares of the Senior
Preferred Stock shall be entitled to vote pursuant to this paragraph
(f) or pursuant to the laws of the State of Delaware, each Holder of
shares of the Senior Preferred Stock shall be entitled to one vote
for each share of Senior Preferred Stock held.
(g) Exchange.
(i) Requirements.
(A) The Company may at its option exchange all, but not
less than all, of the then outstanding shares of Senior Preferred
Stock into the Company's 13% Subordinated Exchange Debentures due
2009 (the "Exchange Debentures") on any Dividend Payment Date,
provided that on the date of such exchange: (1) there shall be no
contractual impediments to such exchange; (2) there shall be legally
available funds sufficient therefor (including, without limitation,
legally available funds sufficient therefor under Sections 160 and 170
(or any successor provisions) of the Delaware General Corporation
Law); (3) either (a) a registration statement relating to the Exchange
Debentures shall have been declared effective under the Securities Act
of 1933, as amended (the "Securities Act"), prior to such exchange and
shall continue to be in effect on the date of such exchange or (b)(i)
the Company shall have obtained a written opinion of counsel that an
exemption from the registration
10
requirements of the Securities Act is available for such exchange and
that upon receipt of such Exchange Debentures pursuant to such
exchange made in accordance with such exemption, the holders (assuming
such holder is not an Affiliate of the Company) thereof shall not be
subject to any restrictions imposed by the Securities Act upon the
resale thereof and (ii) such exemption is relied upon by the Company
for such exchange; (4) the Exchange Debenture Indenture and the
Trustee shall have been qualified under the Trust Indenture Act of
1939, as amended; (5) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the
Exchange Debenture Indenture) would exist under the Exchange Debenture
Indenture; and (6) the Company shall have delivered to the Trustee a
written opinion of counsel, dated the date of exchange, regarding
the satisfaction of the conditions set forth in clauses (1), (2),
(3), (4) and (5). In the event that the issuance of the Exchange
Debentures is not permitted on the date of exchange or any of the
conditions set forth in clauses (1) through (6) of the preceding
sentence are not satisfied on the date of exchange, the Company shall
use its best efforts to satisfy such conditions and effect such
exchange as soon as practicable.
The Company shall send a written notice (the "Exchange Notice")
of exchange by mail to each Holder, which notice shall state: (v) that the
Company is exercising its option to exchange the Senior Preferred Stock for
Exchange Debentures pursuant to this Certificate of Designations; (w) the
date fixed for exchange (the "Exchange Date"), which date shall not be less
than 30 days nor more than 60 days following the date on which the Exchange
Notice is mailed (except as provided in the last sentence of this
paragraph); (x) that the Holder is to surrender to the Company, at the
place or places where certificates for shares of Senior Preferred Stock are
to be surrendered for exchange, in the manner designated in the Exchange
Notice, the certificate or certificates representing the shares of Senior
Preferred Stock to be exchanged; (y) that dividends on the shares of Senior
Preferred Stock to be exchanged shall cease to accrue on the Exchange Date
whether or not certificates for shares of Senior Preferred Stock are
surrendered for exchange on the Exchange Date unless the Company shall
default in the delivery of Exchange Debentures; and (z) that interest on
the Exchange Debentures shall accrue from the Exchange Date whether or not
certificates for shares of Senior Preferred Stock are surrendered for
exchange on the Exchange Date. On the Exchange Date, if the conditions set
forth in clauses (1) through (6) above are satisfied, the Company shall
issue Exchange Debentures in exchange for the Senior Preferred Stock as
provided in the next paragraph.
(B) Upon any exchange pursuant to paragraph (g)(i)(A),
Exchange Debentures shall be issued in exchange for Senior Preferred
Stock, in registered form without coupons, in a principal amount
equal to the liquidation preference thereof, plus an amount in cash
equal to all accumulated and unpaid dividends (including a prorated
dividend for the period from the immediately preceding Dividend
Payment Date to the Exchange Date). Exchange Debentures will be
issued in principal amounts of $1,000 and integral multiples thereof
to the extent possible, and will also be issued in principal amounts
less than $1,000 so that each Holder of Senior Preferred Stock will
receive certificates representing the entire amount of Exchange
Debentures to which his shares of Senior Preferred Stock entitle him,
provided that
11
the Company may, at its option, pay cash in lieu of issuing an
Exchange Debenture in a principal amount of less than $1,000.
(ii) Procedure for Exchange.
(A) On or before the date fixed for exchange, each Holder
of Senior Preferred Stock shall surrender the certificate or
certificates representing such shares of Senior Preferred Stock, in
the manner and at the place designated in the Exchange Notice. The
Company shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange
Notice of the certificates for any shares of Senior Preferred Stock
so exchanged (properly endorsed or assigned for transfer, if the
notice shall so state), such shares shall be exchanged by the Company
into Exchange Debentures. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein
from the Exchange Date.
(B) If notice has been mailed as aforesaid, and if before
the Exchange Date (1) the Exchange Debenture Indenture shall have been
duly executed and delivered by the Company and the Trustee and (2) all
Exchange Debentures necessary for such exchange shall have been duly
executed by the Company and delivered to the Trustee with irrevocable
instructions to authenticate the Exchange Debentures necessary for
such exchange, then on the Exchange Date, dividends shall cease to
accrue on the outstanding shares of Senior Preferred Stock and all of
the rights of the Holders of shares of the Senior Preferred Stock as
stockholders of the Company shall cease (except the right to receive
Exchange Debentures), and the Person or Persons entitled to receive
the Exchange Debentures issuable upon exchange shall be treated for
all purposes as the registered holder or holders of such Exchange
Debentures as of the date of exchange.
(h) Change of Control.
(i) Upon the occurrence of a Change of Control, each Holder of
Senior Preferred Stock shall have the right to require the Company to
purchase all or any part of such Holder's Senior Preferred Stock pursuant
to an Offer at a purchase price in cash equal to 101% of the aggregate
liquidation preference thereof plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends per share (including
an amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Change of Control Purchase
Date (as defined in paragraph (h)(ii)(B) hereof) to the Change of Control
Purchase Date) (the "Change of Control Payment").
(ii) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder stating: (A) that an offer ("Offer")
is being made pursuant to this Certificate of Designations and that, to
the extent lawful, all shares of Senior Preferred Stock validly tendered
and not properly withdrawn shall be accepted for payment; (B) a description
of the transaction or transactions that constitute the Change of Control;
(C) the purchase price and the expiration date of the Offer, which shall
be the date 20 Business Days following the commencement of the Offer;
(D) that any shares of Senior Preferred Stock not
12
validly tendered and any shares of Senior Preferred Stock properly
withdrawn shall continue to accrue dividends in accordance with the terms
of this Certificate of Designations; (E) that, unless the Company defaults
in the payment of the Change of Control Payment, all shares of Senior
Preferred Stock accepted for payment pursuant to the Offer shall cease to
accrue dividends after the date on which payment is made in respect of the
shares purchased, which shall be not later than five Business Days after
the termination of the Offer (the "Change of Control Purchase Date"); and
(F) a description of the procedures to be followed by such Holder in order
to have its shares of Senior Preferred Stock validly tendered and a
description of the procedures to be followed by such Holder in order to
withdraw tendered shares.
(iii) On the Change of Control Purchase Date, (A) the Company
shall, to the extent lawful, (1) accept for payment shares of Senior
Preferred Stock tendered pursuant to the Offer, (2) deposit with the
transfer agent an amount equal to the Change of Control Payment in respect
of all shares of Senior Preferred Stock so tendered, (3) deliver or cause
to be delivered to the transfer agent the Senior Preferred Stock so
accepted together with an officers' certificate stating the total number
of shares of Senior Preferred Stock being purchased by the Company,
(4) promptly mail to each Holder of shares of Senior Preferred Stock so
accepted payment in an amount equal to the purchase price for such shares
and (5) arrange to have promptly authenticated and mailed (or cause to be
transferred by book entry) to each Holder a new share certificate
representing any unpurchased shares of the Senior Preferred Stock
represented by the certificate tendered pursuant to the Offer, if any, and
(B) unless the Company defaults in the payment for the shares of Senior
Preferred Stock tendered pursuant to the Offer, dividends shall cease to
accrue with respect to the shares of Senior Preferred Stock tendered and
all rights of Holders of such tendered shares shall terminate, except for
the right to receive payment therefor, on the Change of Control Purchase
Date. The Company shall publicly announce the results of the Offer on the
Change of Control Purchase Date.
(iv) The Company shall comply with Rule 14e-1 under the
Exchange Act and any securities laws and regulations, to the extent such
laws and regulations are applicable to the repurchase of shares of the
Senior Preferred Stock in connection with a Change of Control.
(i) Conversion or Exchange. The Holders of shares of Senior
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any
other series of any class or classes of Capital Stock of the Company.
(j) Preemptive Rights. No shares of Senior Preferred Stock shall
have any rights of preemption whatsoever as to any securities of the Company,
or any warrants, rights or options issued or granted with respect thereto,
regardless of how such securities or such warrants, rights or options may be
designated, issued or granted.
(k) Reissuance of Senior Preferred Stock. Shares of Senior
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, shall (upon compliance with any
applicable provisions of the laws of Delaware) have
13
the status of authorized but unissued shares of Preferred Stock of the Company
undesignated as to series and may be designated or redesignated and issued or
reissued, as the case may be, as part of any series of Preferred Stock of the
Company, provided that any issuance of such shares as Senior Preferred Stock
must be in compliance with the terms hereof.
(l) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
(m) Certain Additional Provisions.
(i) Merger or Consolidation. Without the consent of Holders
of a majority of the outstanding shares of Senior Preferred Stock, voting
as a separate class, the Company shall not, in a single transaction or
series of related transactions, consolidate or merge with or into (whether
or not the Company is the surviving corporation), or directly and/or
indirectly through its Restricted Subsidiaries sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets determined on a consolidated basis for the Company
and its Restricted Subsidiaries taken as a whole in one or more related
transactions, to another corporation, Person or entity unless (A) the
Company is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than the Company)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (B) the Senior Preferred Stock shall be converted into or
exchanged for and shall become shares of the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition such successor, transferee or resulting
corporation, having in respect of such successor, transferee or resulting
corporation substantially the same powers, preferences and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereon, that the Senior Preferred Stock had
immediately prior to such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition; (C) immediately after
such transaction, no Voting Rights Triggering Event, and no event that
after the giving of notice or lapse of time or both would become a
Voting Rights Triggering Event, shall have occurred and be continuing;
(D) the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition will have
been made will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction; and (E) prior to the
consummation of any such proposed transaction, the Company shall have
delivered to the transfer agent an Officers' Certificate and an opinion
of counsel to the effect that such transaction complies with the terms
of the Certificate of Designations and that all conditions precedent to
such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of
one or more Subsidiaries of the Company, the Capital Stock of which
14
constitutes all or substantially all of the properties and assets of the
Company, shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.
(ii) Junior Payments. The Company shall not, directly or
indirectly, (A) declare or pay any dividend or make any distribution on
account of any Junior Securities (other than dividends or distributions
payable in Junior Securities (other than Disqualified Stock)),
(B) purchase, redeem or otherwise acquire or retire for value any Junior
Securities or (C) make any Restricted Investment (all such dividends,
distributions, purchases, redemptions, acquisitions, retirements and
Restricted Investments being collectively referred to as "Junior
Payments"), if, at the time of such Junior Payment:
(x) a Voting Rights Triggering Event shall have occurred
and be continuing or would occur as a consequence thereof; or
(y) all dividends on the Senior Preferred Stock payable on
Dividend Payment Dates after March 15, 2002, have not been declared
and paid in cash.
Notwithstanding the foregoing, this Certificate of Designations shall
not prohibit as Junior Payments:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration, such payment
would comply with all of the provisions hereof (including, but not
limited to, this paragraph (m)(ii));
(2) the making of any Restricted Investment in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of
the Company (other than Disqualified Stock);
(3) (X) the redemption, repurchase, retirement or other acquisition of any
Parity Securities of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, or from substantially concurrent
additional capital contributions in respect of, other Parity or
Junior Securities of the Company (other than any Disqualified Stock)
and (Y) the redemption, repurchase, retirement or other acquisition of
any Junior Securities of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, or from substantially concurrent
additional capital contributions in respect of, other Junior
Securities of the Company (other than any Disqualified Stock);
(4) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any of its Restricted
Subsidiaries held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management
agreement, stock option agreement or plan or stockholders agreement;
provided that (X) the aggregate price paid for all such repurchased,
redeemed,
15
acquired or retired Equity Interests will not exceed $2.0 million in
any fiscal year (plus any amount available for such payments hereunder
since the date of the Certificate of Designations which have not been
used for such purpose) or (Y) $8.0 million in the aggregate (in each
case, net of the cash proceeds received by the Company from subsequent
reissuances of such Equity Interests to new members of management);
(5) loans to members of management of the Company or any Restricted
Subsidiary the proceeds of which are used for a concurrent purchase
of Equity Interests of the Company;
(6) the payment of director's fees and reasonable expenses of its
directors in an aggregate amount not to exceed $125,000 per year
(including indemnification obligations and professional fees and
expenses) and to pay salaries and other compensation of employees who
perform services for both Anvil and the Company;
(7) an amount not to exceed $200,000 in aggregate to enable the Company
to make payments to holders of Capital Stock in lieu of issuing
fractional shares thereof;
(8) repurchases of Capital Stock deemed to occur upon exercise of stock
options or warrants if such Capital Stock represents a portion of the
exercise price thereof; and
(9) payments made in connection with the application of the net proceeds
of the Recapitalization as set forth under "Use of Proceeds" in the
Offering Memorandum relating to the Units Offering.
(iii) Transactions with Affiliates.
(A) Except as otherwise set forth in this paragraph
(m)(iii), neither the Company will not, and will not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose
of any of its properties or assets to, or purchase any property or
assets from, or enter into or make any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of,
any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (x) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (y)
the Company delivers to the transfer agent (i) with respect to any
Affiliate Transaction entered into after the date of the Certificate
of Designations involving aggregate consideration in excess of $2.0
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with clause (x) above and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors and (ii) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $7.5 million, an
opinion as to the fairness to the Company or such Restricted
Subsidiary of such Affiliate Transaction from a financial point of
view issued by an investment banking firm of national standing.
16
(B) Notwithstanding the foregoing, the following
transactions will not be deemed to be Affiliate Transactions: (1)
reasonable fees and compensation paid to, and indemnity provided on
behalf of, officers and directors of the Company, Anvil or any
Restricted Subsidiary as determined in good faith by the appropriate
Board of Directors or senior management; (2) the provision of
administrative or management services by the Company or any of its
officers to the Company or any of its Restricted Subsidiaries in the
ordinary course of business consistent with past practice, (3)
transactions between the Company or one or more of its Restricted
Subsidiaries and the relevant Securitization Entity effected as part
of a Qualified Securitization Transaction, (4) any agreement as in
effect as of the Senior Preferred Stock Issue Date (including, without
limitation, the New Credit Agreement) or any amendment thereto or any
transactions contemplated thereby (including pursuant to any amendment
thereto) and any replacement agreement so long as any such amendment
or replacement agreement is not more disadvantageous to the Holders
of the Senior Preferred Stock or the Exchange Debentures in any
material respect than the original agreement as in effect on the
Senior Preferred Stock Issue Date, (5) payments or loans to employees
or consultants which are approved by the Board of Directors of the
Company in good faith, (6) the existence of, or the performance by
the Company or any of its Restricted Subsidiaries of its obligations
under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto)
to which it is a party as of the Senior Preferred Stock Issue Date
and any similar agreement which it may enter into thereafter;
provided, however, that the existence of, or the performance by the
Company or any of its Restricted Subsidiaries of obligations under
any similar agreement entered into after the Senior Preferred Stock
Issue Date shall only be permitted by this clause (6) to the extent
that the terms of any such new agreement are not otherwise
disadvantageous to the Holders of the Senior Preferred Stock or
Exchange Debentures in any material respect, (7) transactions with
customers, clients, suppliers, joint venture partners or purchasers
or sellers of goods or services, in each case in the ordinary course
of business (including, without limitation, pursuant to joint venture
agreements) and otherwise in compliance with the terms of the
Exchange Debenture Indenture which are at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party,
(8) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted
Subsidiary (including, without limitation, any such employment
agreements existing prior to the Senior Preferred Issue Date), (9) the
granting of stock options to employees and directors of the Company
and its Restricted Subsidiaries in accordance with the New Stock
Option Plan at exercise prices equal to the fair market value of the
Common Stock and the issuance of Common Stock upon the exercise of
such options, (10) transactions between or among the Company and/or
its Wholly Owned Subsidiaries, (11)(i) the payment of customary
management, consulting and advisory fees and related expenses to BRS
and 399 Venture and their Affiliates not to exceed $750,000 per year
in aggregate and (ii) payments by Anvil or any of its Restricted
Subsidiaries to BRS or 399 Venture and their Affiliates made pursuant
to any financial advisory, financing, underwriting or
17
placement agreement or in respect of other investment banking
activities, including, without limitation, in connection with
acquisitions or divestitures which are approved by the Board of
Directors of Anvil, the Company or such Restricted Subsidiary in good
faith not to exceed $750,000 per year in aggregate and (12)
transactions permitted by the covenant described in paragraph (m)(ii).
(iv) Reports. So long as any shares of Senior Preferred Stock
are outstanding, the Company will furnish to the Holders of Senior
Preferred Stock, within 15 days after it is or would have been required to
file such with the Commission, (A) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (B) all current reports that would be required to be
filed with the Commission on Form 8-K if the Company was required to file
such reports. In addition, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors
upon request. In addition, the Company has agreed that, for so long as any
shares of Senior Preferred Stock remain outstanding, it will furnish to
the Holders and to securities analysts and prospective investors, upon
their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
(n) Definitions. As used in this Certificate of Designations,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, which correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Anvil" means Anvil Knitwear, Inc., a Delaware corporation.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
18
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities no more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which the Company shall
have a perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at least
100% of the amount of repurchase obligations, and (e) interests in money market
mutual funds which invest solely in assets or securities of the type described
in subparagraphs (a), (b), (c) or (d) hereof.
"Change of Control" means such time as (i) prior to the initial public
offering by the Company or any direct or indirect parent of the Company of its
common stock (other than a public offering pursuant to a registration statement
on Form S-8), the Permitted Holders cease to have, directly or indirectly, in
the aggregate at least 51% of the voting power of the voting stock of Anvil or
the Company or any other direct or indirect parent or the Company ceases to own,
directly or indirectly, 100% of the voting power of the voting stock of Anvil
(other than by reason of a merger of the Company and Anvil) or (ii) after the
initial public offering by the Company or any direct or indirect parent of Anvil
of its common stock (other than a public offering pursuant to a registration
statement on Form S-8), (A) any Schedule 13D, Form 13F or Schedule 13G under the
Exchange Act, or any amendment to such Schedule or Form, is received by Anvil or
the Company which indicates that, or Anvil or the Company otherwise becomes
aware that, a "person" or "group" (within the meaning of Sections 13(d) and
14(d) (2) of the Exchange Act) has become, directly or indirectly, the
"beneficial owner," by way of merger, consolidation or otherwise, of 40% or more
of the voting power of the voting stock of Anvil or the Company on a
fully-diluted basis after giving effect to the conversion and exercise of all
outstanding warrants, options and other securities of Anvil or the Company, as
the case may be (whether or not such securities are then currently convertible
or exercisable) and (B) such person or group has become, directly or indirectly,
the beneficial owner of a greater percentage of the voting capital stock of
Anvil, calculated on such fully-diluted basis, than beneficially owned by the
Permitted Holders, or (iii) the sale, lease or transfer of all or
19
substantially all of the assets of the Company to any person or group (other
than the Permitted Holders), or (iv) during any period of two consecutive
calendar years individuals who at the beginning of such period constituted the
Board of Directors of Anvil or the Company (together with any new directors
whose election by the Board of Directors of Anvil or the Company or whose
nomination for election by the shareholders of Anvil or the Company, as the
case may be, was approved by a vote of a majority of the directors then still
in office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved or was approved
by the Permitted Holders) cease for any reason to constitute a majority of the
directors of Anvil or the Company, as the case may be, then in office.
"Commission" means the Securities and Exchange Commission.
"Consolidated Net Worth" of a Person at any date means the amount by
which the assets of such Person and its consolidated Restricted Subsidiaries
(less any revaluation or other write-up subsequent to the date of the Exchange
Debenture Indenture in any such assets (other than write-ups resulting from
foreign currency translations and write-ups of tangible assets of a going
concern business made within twelve months after the acquisition of such
business)) exceed the sum of (a) the total liabilities of such Person and its
consolidated Restricted Subsidiaries, plus (b) any Disqualified Stock of such
Person or any consolidated Restricted Subsidiaries of such Person issued to any
Person other than such Person or a wholly-owned Restricted Subsidiary of such
Person, in each case determined in accordance with GAAP.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
on which is 91 days after the mandatory redemption date of the Senior Preferred
Stock or the maturity date of the Exchange Debentures.
"Dividend Payment Date" means March 15, June 15, September 15 and
December 15 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Exchange Debenture Indenture.
20
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a holder of shares of Senior Preferred Stock.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person), the maximum fixed repurchase price of
Disqualified Stock issued by such Person in each case, if held by any Person
other than the Company or a Wholly Owned Subsidiary of the Company, and, to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
"Initial Dividend Period" means the dividend period commencing on the
Senior Preferred Stock Issue Date and ending on the day before the first
Dividend Payment Date to occur thereafter.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary course of business
that are recorded as accounts receivable on the books of such Person) or capital
contributions (excluding commission, travel, relocation and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; provided that an acquisition
of assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company or of any direct or
indirect parent of the Company shall not be deemed to be an Investment.
"Legal Holiday" means a Saturday, a Sunday or a day on which federal
offices or banking institutions in the City of New York, in the city of the
Corporate Trust Office of the trustee under the Exchange Debenture Indenture, or
at a place of payment are authorized by law, regulation or executive order to
remain closed. If a payment date is a Legal Holiday, payment may be made
21
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"New Stock Option Plan" means Holdings' 1997 Stock Option Plan to be
approved by the Board of Directors of Holdings providing for the issuance of
options to purchase Common Stock to directors and employees of Holdings, Anvil
or its Restricted Subsidiaries which may provide for the grant of options in
respect of up to 5% of the fully diluted Common Stock of the Company at exercise
prices equal to the fair market value thereof on the date of grant or any
successor plan thereto.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum, dated March 11,
1997, relating to the offering and placement of the Units, consisting of
$30,000,000 aggregate liquidation preference of the Senior Preferred Stock and
390,000 shares of Class B Common Stock, par value $0.01 per share, of the
Company, to the public.
"Permitted Holders" means, collectively, (i) BRS and its Affiliates,
and their respective employees and directors, (ii) 399 Venture and its
Affiliates, and their respective employees and directors, (iii) all full-time
executive officers of the Company and its Subsidiaries who acquire Capital Stock
of the Company and (iv) (A) any spouse, lineal descendant (including by adoption
and stepchildren), or sibling of such natural persons and (B) any trust,
corporation, limited liability company or partnership, the beneficiaries,
members, stockholders or partners of which consist entirely of such natural
persons or the individuals described in clause (A) above.
22
"Permitted Investments" means (a) any Investments in the Company or in
a Wholly Owned Subsidiary of the Company that is engaged in the same or a
similar line of business as the Company and its Restricted Subsidiaries were
engaged in on the date of the Exchange Debenture Indenture and reasonable
extensions or expansions thereof; (b) any Investments in Cash Equivalents; (c)
Investments by the Company or any Restricted Subsidiary of the Company in a
Person if as a result of such Investment (i) such Person becomes a Wholly Owned
Subsidiary of the Company that is engaged in the same or a similar line of
business as the Company and its Restricted Subsidiaries were engaged in on the
date of the Exchange Debenture Indenture and reasonable extensions or expansions
thereof or (ii) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Wholly Owned Subsidiary of the Company that is engaged in
the same or a similar line of business as the Company and its Restricted
Subsidiaries were engaged in on the date of the Exchange Debenture Indenture and
reasonable extensions or expansions thereof; (d) Investments made as a result of
the receipt of non-cash consideration from an Asset Sale (as defined in the
Exchange Debenture Indenture) that was made pursuant to and in compliance with
the covenant described under Section 4.8 of the Exchange Debenture Indenture;
(e) Investments by the Company or any Restricted Subsidiary in cash in an amount
not to exceed $10.0 million in the aggregate at any one time; (f) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to Anvil or any Subsidiary or in
satisfaction of judgments or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of Anvil's trade creditors or
customers; (g) the contribution of shares of stock or other equity securities of
an Unrestricted Subsidiary to another Subsidiary; (h) loans and advances to
employees and officers of Anvil and its Restricted Subsidiaries in the ordinary
course of business not to exceed an aggregate of $750,000; (i) accounts
receivable created or acquired in the ordinary course of business; (j) currency
agreements and interest swap obligations entered into in the ordinary course of
Anvil's or its Restricted Subsidiaries' businesses and otherwise in compliance
with the Exchange Debenture Indenture; and (k) any Investment by Anvil or a
Wholly Owned Subsidiary of Anvil in a Securitization Entity or any Investment by
a Securitization Entity in any other Person in connection with a Qualified
Securitization Transaction; provided that any Investment in a Securitization
Entity is in the form of a Purchase Money Note or an Equity Interest.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, or other business entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all of the assets of any such entity,
subdivision or business).
"Public Equity Offering" means an underwritten public offering
pursuant to a registration statement filed with the Commission in accordance
with the Securities Act of (i) Equity Interests other than Disqualified Stock of
the Company or (ii) of Equity Interests other than Disqualified Stock of the
Company's parent or indirect parent corporation to the extent that the cash
proceeds therefrom are contributed to the equity capital of the Company or are
used to purchase Equity Interests (other than Disqualified Stock) of the
Company.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Subsidiary of the Company in connection with a Qualified Securitization
Transaction to a Securitization Entity, which
23
note shall be repaid from cash available to the Securitization Entity, other
than amounts required to be established as reserves pursuant to agreements,
amounts paid to investors in respect of interest, principal and other amounts
owing to such investors and amounts owing to such investors and amounts paid
in connection with the purchase of newly generated receivables.
"Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any or its Subsidiaries may sell,
convey or otherwise transfer to (a) a Securitization Entity (in the case of a
transfer by the Company or any of its Subsidiaries) and (b) any other Person (in
the case of a transfer by a Securitization Entity), or may grant a security
interest in, any accounts receivable or equipment (whether now existing or
arising or acquired in the future) of the Company or any of its Subsidiaries,
and any assets related thereto including, without limitation, all collateral
securing such accounts receivable and equipment, all contracts and contract
rights and all guarantees or other obligations in respect of such accounts
receivable and equipment, proceeds of such accounts receivable and equipment and
other assets (including contract rights) which are customarily transferred or in
respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable and equipment;
provided that such transaction or transactions are otherwise permitted by the
terms of the Exchange Debenture Indenture including the provisions of Section
4.8 of the Exchange Debenture Indenture.
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each March 15, June 15, September 15 and December 15 and ending on the day
before the following Dividend Payment Date.
"Redemption Date" with respect to any shares of Senior Preferred
Stock, means the date on which such shares of Senior Preferred Stock are
redeemed by the Company.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. and its successors.
"Securitization Entity" means a Wholly Owned Subsidiary of the Company
(or another Person in which the Company or any Subsidiary of the Company makes
an Investment and to which the Company or any Subsidiary of the Company
transfers accounts receivable or equipment and related assets) which engages in
no activities other than in connection with the financing of accounts receivable
or equipment and which is designated by the Board of Directors of the Company
(as provided below) as a Securitization Entity (a) no portion of the
Indebtedness or any other obligations (contingent or otherwise) of which (i) is
guaranteed by the Company or any Subsidiary of the Company (excluding guarantees
of obligations (other than the principal of, and interest on, Indebtedness))
pursuant to Standard Securitization Undertakings, (ii) is recourse to or
obligates the Company or any Subsidiary of the Company in any way other than
pursuant to Standard Securitization Undertakings, or (iii) subjects any property
or asset of or any Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof other than
24
pursuant to Standard Securitization Undertakings, (b) with which neither the
Company nor any Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the
Company or such Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing receivables of such
entity, and (c) to which neither the Company nor any Subsidiary of the Company
has any obligation to maintain or preserve such entity's financial condition or
cause such entity to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing conditions.
"Senior Preferred Stock Issue Date" means the date on which the Senior
Preferred Stock is originally issued by the Company under this Certificate of
Designations.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Anvil or any Subsidiary of
Anvil which are reasonably customary in an accounts receivable or equipment
transaction.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"399 Venture" means 399 Venture Partners, Inc.
"Trustee" means the party named as such in the Exchange Debenture
Indenture until a successor replaces it in accordance with the applicable
provisions of the Exchange Debenture Indenture and thereafter means the
successor serving thereunder.
"Units Offering" means the offer and sale of Units, consisting of
$30,000,000 liquidation preference of the Senior Preferred Stock and 390,000
shares of Class B Common Stock, par value $0.01 per share, of the Company as
contemplated by the Offering Memorandum.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a duly
adopted Board resolution; but only to the extent that such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such
25
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and (d) has not guaranteed or otherwise directly
or indirectly provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant set forth in Section
4.9 of the Exchange Debenture Indenture. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Exchange Debenture Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant set forth in Section 4.10 of the
Exchange Debenture Indenture, the Company shall be in default of such covenant).
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant set forth in Section 4.10 of the Exchange Debenture Indenture, and
(ii) no Default or Event of Default (each as defined in the Exchange Debenture
Indenture) under the Exchange Debenture Indenture would be in existence
following such designation.
"Wholly Owned Subsidiary" of any Person means a Restricted Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of the Exchange Debenture Indenture.
* * * * *
IN WITNESS WHEREOF, Anvil Holdings, Inc. has caused this Certificate
of Designations to be signed by Jacob Hollander, in his capacity as Secretary,
on the date and year first above written.
ANVIL HOLDINGS, INC.
By:____________________________
Name: Jacob Hollander
Title: Secretary